Experts: US grain exports to Japan likely to slow
Wednesday, March 16, 2011
INDIANAPOLIS (AP) — The U.S. will likely send less food to Japan in the coming weeks as damage from Friday’s earthquake and tsunami makes shipping to some areas difficult and demand drops while people focus on burying the dead and other emergency work, agriculture experts said.
It’s unclear what Japan will need from America’s bread basket in the longer term. The island nation with the world’s third-largest economy is typically a top buyer of U.S. grains and meats. It buys more corn than any other country — nearly 600 million bushels last year to process into livestock feed — and is a top export market for soybeans, pork and California rice.
Despite photos from Japan of long lines and empty grocery stores, analysts said they weren’t worried about a food shortage. Japan keeps large quantities of rice in reserve, and a U.S. Department of Agriculture statement said stockpiles spread throughout the island nation meant there was no urgent need for rice imports.
While Japan does import most of its pork and nearly three-fourths of its beef, Rich Nelson, director of research for Allendale Inc., a commodity advisory firm in McHenry, Ill., said he expected to see demand for those kinds of products fall off in the short term as fewer Japanese citizens eat in restaurants.
With damage reports still coming in, there was widespread uncertainty among analysts about what Japan would need, when and how much.
Only two of the 12 ports that handle bulk commodity shipments were damaged by the earthquake, aftershocks or tsunami, said Justin DeJong, a spokesman for the U.S. Department of Agriculture. However, many smaller ports in the country’s northeast region were severely damaged, he said.
The rolling blackouts the Japanese government has imposed to conserve power amid its nuclear crisis could affect seaports’ ability to unload cargo shipments and some ships may head elsewhere to drop off their goods, said Paul Bertels, vice president of production and utilization for the National Corn Growers Association in St. Louis. Damaged roads and highways also may slow shipments, he said.
Mike Callahan, the U.S. Grains Council’s senior director of international operations, said in a Tuesday podcast his group hadn’t heard of any cancellations of grain shipments to Japan but buyers have been directing incoming vessels to other ports or feed mills unharmed by the disaster.
Callahan said the scope of damage still wasn’t clear, but the Japanese have a history of quickly rebounding from earthquakes.
“They are very resolute society and we just have a lot of faith and confidence that they’ll be back on the road to recovery,” he said.
Tom Neher, vice president of agribusiness with AgStar Financial Services, said he expected Japan’s ports to be back in full operation within the next month or so and, once that happens, for the U.S. to see an increase in demand both for food and products needed for rebuilding, such as wood.
“Once they do get all of those channels open, there’s going to be a lot of pent up demand within that country to refill those channels and begin rebuilding,“ Neher said. ”Once they get it open, things could move pretty quickly.“
But Chris Hurt, an agricultural economist at Purdue University, said that until Japan repairs its infrastructure, he expects to see more orders for finished agricultural products, such as wheat flour instead of unmilled wheat, and ready-to-eat items such as corn flakes and cereals.
“If their own processing and distribution systems have been disrupted, they just need more food to get to people right way, rather than processing it themselves,“ he said
While Japan imports all of its corn, Nelson said he expected to see shipments drop off with limited power available to process grains into livestock feed. He also expected that some animals would die.
About 17 percent of Japan’s feed mills, which store grain and process corn and soybeans into feed, were in the hard-hit northeast region, and reports from Japan indicate some were damaged, Nelson said. Significant damage could disrupt the delivery of feed to farms, and a lack of food combined with power outages could result in some livestock starving or succumbing to the cold, he said.
The tsunami that swept the northeast region also may have contaminated some paddies with saltwater, making it impossible to grow rice there, DeJong said. But he said the amount of contaminated land was an “insignificant” portion of the total amount of land given to growing rice and Japan has more land available that can be converted to rice fields if needed.
But even with its big rice fields, Japan buys about 350,000 metric tons of short and medium-grain rice from California each year — a quarter of the state’s total annual production. Tim Johnson, the president and chief executive of the California Rice Commission, said it’s too soon to know whether Japan will need more this year.
“Just like everybody else, we’re just waiting to see what some of the longer term impact to the infrastructure might be in Japan and what their needs might be,” he said.
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