Japan: Government boosts barley import budget after record prices caused the first funding shortfall for the purchases in almost three decades

Japan boosted its barley and wheat import budget after record grain prices exhausted this year's allocation, causing the first funding shortfall for the purchases in almost three decades, Bloomberg reported November 6.

The government increased the budget by 55 billion yen ($480 million), or 23 percent, to 298 billion yen for the year ending March 31, the Finance Ministry said in a statement. Funding was 203 billion yen last fiscal year.

Japan relies on imports for 71 percent of its food barley. Rising costs are forcing companies such as Kirin Holdings Co., Japan's biggest brewer, and Yamazaki Baking Co. to increase prices.

``We ran out of money for wheat and barley imports by the end of October,'' said Youichirou Tomiyoshi at the Ministry of Agriculture, Forestry and Fisheries Grain Trade Division. ``We may have to add more money by the end of the current fiscal year if costs to import the grains stay high,'' he said by phone today.

Barley for March delivery closed at C$198.10 a ton on the Winnipeg Commodities Exchange, gaining 34 percent this year.

Japan's food barley imports are forecast to fall to 270,000 tons from 380,000 tons, according to the ministry. Australia is the largest barley supplier to Japan, followed by Canada.

Barley is used mainly for beer and tea production in Japan. Kirin Holdings will raise beer prices in February for the first time in 17 years to cover the higher cost of brewing malt and aluminum cans, it said Oct. 31.

Freight Increases

Freight increases have also increased costs in Japan. The Baltic Dry Index, a measure of transporting commodities by sea, reached a record close of 11,033 on Oct. 29.

The cost of importing barley exceeded Japan's initial budget allocation for the first time since the year ended March 31, 1980, Tomiyoshi said.

Total demand for food barley is forecast at 380,000 tons, with supply of domestically grown barley estimated at 110,000 tons, the ministry said.

Japan also plans to import up to 1.41 million tons of barley for animal feed.

07 November, 2007