""

Required Report - public distribution

**Date:** 9/5/2003

**GAIN Report Number:** JA3063

JA3063

**Japan**

**Livestock and Products**

**Annual**

**2003**

**Approved by:**

![](media/image1.wmf)Richard Battaglia

#### U. S. Embassy

**Prepared by:**

Kakuyu Obara

**Report Highlights:**

Japan's beef consumption is expected to rise by 3% in 2004, although
higher expected domestic and international prices will likely slow the
recovery in demand. Imports are forecast to grow by 9%, however Japan's
safeguard for chilled beef is unlikely to be triggered again in 2004.
Beef consumption is projected to grow by 2% in 2003, while imports are
forecast to rebound by 15% from record low levels in 2002. Japan's pork
consumption is forecast to rise by 1% in 2004, following a projected 3%
decline in 2003. Pork imports will ease by 3% in 2004, following an
expected 7% drop in 2003, reflecting weak demand and large stocks.

Includes PSD Changes: Yes

Includes Trade Matrix: No

Annual Report

Tokyo \[JA1\]

\[JA\]

[Beef Section 3](#beef-section)

[Japanese Beef Market Outlook for 2004
3](#japanese-beef-market-outlook-for-2004)

[Overall Consumption in 2004 Projected 3% Higher
3](#overall-consumption-in-2004-projected-3-higher)

[Japan's Domestic Beef Supply in 2004 Projected down by 1%
3](#japans-domestic-beef-supply-in-2004-projected-down-by-1)

[2004 Import Demand Expected to Rise by 9%, Below Expectations
3](#import-demand-expected-to-rise-by-9-below-expectations)

[2003 Market Situation Update and Forecasts
4](#market-situation-update-and-forecasts)

[Following the Detection of BSE in Canada, U.S. and Japan Agree to a
Certification Plan to Keep Trade Flowing
4](#following-the-detection-of-bse-in-canada-u.s.-and-japan-agree-to-a-certification-plan-to-keep-trade-flowing)

[Prevailing Market Situation and Beef Safeguard Pose Difficulties for
Japan's Beef Industry
5](#prevailing-market-situation-and-beef-safeguard-pose-difficulties-for-japans-beef-industry)

[Pork Section 11](#pork-section)

[2004 Market Outlook 11](#market-outlook)

[Japan's Overall Pork Consumption is Projected Up by 1% in 2004
11](#japans-overall-pork-consumption-is-projected-up-by-1-in-2004)

[Domestic Pork Supply Projected Slightly Lower in 2004
11](#domestic-pork-supply-projected-slightly-lower-in-2004)

[Import Demand Projected Down 3% at 950,000 MT
11](#import-demand-projected-down-3-at-950000-mt)

[2003 Pork Market Situation Update and Forecast
12](#pork-market-situation-update-and-forecast)

[Japanese Live Cattle PS&D Table 15](#japanese-live-cattle-psd-table)

[Japanese Beef PS&D Table 16](#japanese-beef-psd-table)

[Japanese Live Swine PS&D Table 17](#japanese-live-swine-psd-table)

[Japanese Pork PS&D Table 18](#japanese-pork-psd-table)

# Beef Section

## Japanese Beef Market Outlook for 2004

High domestic and international beef prices forecast for 2004, will
likely slow the recovery in consumption, which will slow import growth.
Prices at the retail level are expected to increase in 2004. Japan's
safeguard on chilled beef is not expected to be triggered again in 2004
(see explanation of safeguard below).

### Overall Consumption in 2004 Projected 3% Higher

Japan's annual beef consumption in 2004 is projected to rise by 3% to
1.37 million MT (carcass weight equivalent). Although Japan's beef
market will continue to rebound from BSE in 2004, high international and
domestic prices will slow the recovery. Japan's wholesale, retail and
food service sectors are expected to pass on increased costs to
consumers.

\[Note: tonnage figures in this report are based on carcass equivalent
(CWE) unless otherwise stated. Import volume data are on a customs
clearance basis, which is the product weight (mostly boneless meat). In
converting import data into CWE, post used the factor 1/0.7, which is
used in Japan\]

### Japan's Domestic Beef Supply in 2004 Projected down by 1%

Beef cattle coming to slaughter age in 2004 are projected slightly below
the previous year, down by 1% this year at 1.15 million head, resulting
in a 1% decline in beef production to 535,000 MT. The smaller slaughter
reflects the impact of the BSE crisis and the smaller number of beef and
dairy calves born in 2001 -- 2002. Domestic beef prices are expected to
remain high due to the reduced production.

Japan's cattle inventory data show that the more expensive Wagyu beef
cattle herds are recovering at a faster pace compared to dairy cattle
herds (see Table 2). The Wagyu cattle inventory rose by 1% in 2002 and
by 3% in 2003. However, because Wagyu require a longer feeding period
(29 - 30 months), Wagyu beef production will not begin to trend higher
until 2005 - 2006. Japan's dairy beef supply (along with beef from F1
cross breed) requires a shorter feeding period (22 months), and will
likely trend higher in 2005 - 2006 as the number of dairy cows recover.
Japan's safeguard on chilled beef is reportedly supporting prices for
live beef and dairy cattle. One additional factor that could lead to
higher prices in 2004 is the implementation of Japan's mandatory beef
traceability system, which is scheduled to be fully implemented in
December 2004. Trade sources expect the traceability system to add to
domestic wholesale beef prices. (See JA3040 for more information on
Japan's traceability system)

### 2004 Import Demand Expected to Rise by 9%, Below Expectations

Normally, a demand recovery coupled with a limited domestic beef supply
would be expected to substantially boost imports. However, higher
international beef prices expected in 2004 will likely cap prospective
import growth in Japan's beef market. Although imports are expected to
rise by 9% in 2004 to 870,000 MT, this level is lower than originally
expected and is still below import levels prior to the detection of BSE
in Japan in 2001. The U.S. share is projected at about 47%. Relatively
high-priced U.S. beef will be at a competitive disadvantage to
lower-priced Australian beef. In addition, higher U.S. prices in 2004
could hurt the large market for frozen beef in Japan's food service
sector, which is very sensitive to price increases. Trade sources report
that growing demand for beef in other Asian markets will add to higher
international prices expected in 2004, and that Japanese importers will
have to compete with other Asian countries for limited supplies.

Higher prices and lower imports make it less likely that Japan's
safeguard for chilled beef will be triggered again in 2004. Whether or
not the safeguard triggers in 2004 depends on the magnitude of the
import surge once the current safeguard ends on April 1, 2004. The
safeguard trigger levels for the first quarter of Japan's 2004 fiscal
year (April -- June) are estimated at 85,114 MT for chilled beef and
71,260 MT for frozen beef on a customs clearance basis measured by
product weight.

Trade sources report that the 2004 trigger level for chilled beef will
not be at an "extremely uncomfortable" level. The frozen beef safeguard
did not trigger in 2003 because Japanese importers made advance
purchases. The 2004 trigger level for frozen beef will therefore be at a
relatively low level, due to the low volume of the imports that took
place during April -- June in 2003. Traders are concerned about the low
monthly frozen beef inventories that prevailed through last year (see
Table 5). Importers may decide to rebuild frozen stocks during January
-- March 2004 to avoid triggering the safeguard in JFY 2004.

## 2003 Market Situation Update and Forecasts

Summary: A modest beef consumption recovery is forecast in 2003. High
market prices (domestic and imported) and implementation of Japan's
safeguard on imports of chilled beef will cap the recovery in demand,
hampering import growth (see Table 3).

Post's revision of the 2003 PS&D forecast reflects two major market
developments: 1) detection of BSE in Canada in May 2003, which lead to a
ban on Canadian beef and, 2) imposition of Japan's safeguard on chilled
beef, which boosted the import tariff to 50% starting August 1, 2003.
Higher prices, lower production and cool summer weather, have also been
limiting beef demand.

\[Note: Because beef imports dropped considerably during the first
quarter of Japan's 2002 fiscal year to the detection of BSE in Japan,
the 2003 trigger level for the safeguard was calculated at a very low
level since it is based on 117% of the previous year's imports. As
imports recovered to "normal" levels this year, the trigger level for
chilled beef was exceeded and the tariff jumped to 50%, where it will
remain until the end of the current fiscal year in March 2004.\]

Japan's total beef consumption in 2003 is projected to grow a modest 2%
(to 1.33 million MT), while import demand is projected to grow by 15% to
800,000 MT, supported by the recovery of demand in the retail (household
consumption) and food service sectors (see Table 1). Despite the
increase, 2003 import demand is weaker than expected given the plunge in
imports following the BSE crisis. In 2002, beef imports fell to the
lowest level since 1991, when Japan's beef market was liberalized under
the Beef/Citrus Agreement. Domestic beef production is projected down by
6% due to reduced cattle slaughter numbers, reflecting the continued
impact of the BSE crisis. 2003 monthly ending frozen stock levels are
expected to remain tight at around 104,000 MT, down 19% from the
previous year.

### Following the Detection of BSE in Canada, U.S. and Japan Agree to a Certification Plan to Keep Trade Flowing 

The detection of BSE in Canada in May 2003 will minimally impact Japan's
overall beef supply situation in 2003 because imports from Canada only
represent 1-2% of Japanese annual beef distribution. To address Japan's
concerns about the possibility of Canadian beef being exported to Japan
through the United States, the U.S. and Japan agreed on a program to
certify exports to Japan called the Beef Export Verification (BEV)
program. (See [www.ams.usda.gov](http://www.ams.usda.gov/) for more
information)

### Prevailing Market Situation and Beef Safeguard Pose Difficulties for Japan's Beef Industry 

Higher import prices in 2003 stymied the recovery in consumption.
Between January and June 2003, CIF prices for brisket and short plates
(one tariff line) rose by 19% for chilled product and 20% for frozen
cuts. Traders report that CIF prices for other cuts such as chucks and
loins have also risen this summer, reflecting higher U.S. and Australian
beef prices. Consequently, wholesale prices for imported beef for end
users such as BBQ and beef bowl restaurants increased considerably (see
Table 4-A&B).

On August 1, 2003, Japan invoked its beef safeguard for chilled beef,
hiking the tariff by 11.5% to 50%, despite strong opposition from the
domestic restaurant industry and protests from beef exporting countries.
The chilled beef safeguard will remain in effect through the end of
Japan's fiscal year on March 31, 2004. The extra 11.5% duty on
relatively high value chilled beef has created a real hardship for
Japanese retail and food service companies, which have only recently
recovered from the BSE crisis. Given Japan's prevailing deflationary
economy, it will be very difficult for Japanese retail and food service
companies to pass on the safeguard tariff to consumers. Further, frozen
beef is becoming a less attractive option since frozen prices have also
started to rise.

Table 1. Japanese Monthly Household Consumption of Beef, Pork and
Chicken

Unit: Grams/Yens

  ------------------- ------------- --------- ------------- --------- ------------- ---------
                      **Beef**      **%       **Pork**      **%       **Chicken**   **%
                                    Chg.**                  Chg.**                  Chg.**

  2002                                                                              

  July                640           -17%      1,368         9%        888           14%

  Aug.                673           -19%      1,397         10%       869           8%

  Sept.               631           1%        1,382         2%        969           0%

  Oct.                618           76%       1,482         -4%       1,035         -4%

  Nov.                667           58%       1,456         -4%       1,060         -2%

  Dec                 852           46%       1,505         -8%       1,295         -5%

  2003                                                                              

  Jan.                611           20%       1,309         -6%       917           -7%

  Feb.                626           24%       1,305         -7%       918           -8%

  Mar.                676           9%        1,388         -7%       956           -6%

  Apr.                626           -3%       1,330         -4%       961           -3%

  May                 719           8%        1,384         -2%       978           -3%

  Jun.                628           -6%       1,351         1%        900           -4%

  First Half Quantity **3,886**     **7%**    **8,067**     **-4%**   **5,630**     **-5%**

  First Half          **¥10,191**   **13%**   **¥10,836**   **-6%**   **¥5,231**    **-7%**
  Expenditure                                                                       
  ------------------- ------------- --------- ------------- --------- ------------- ---------

Source: Daily Meat and Livestock, August Issues

Table 2. Japanese Beef and Dairy Cattle Inventory

Unit: 1,000 heads/1,000 farms

  --------------------------------- ------------------- ------------------- ------------------- ------------------- -------------------
                                    **2001**            **2002**            **%Chg**            **2003**            **%Chg**

  **Number of Beef Cattle Farms**   **110.1**           **104.2**           **-5%**             **98.1**            **-6%**

  **Number of Dairy Cattle Farms    **32.2**            **31.0**            **-4%**             **29.8**            **-4%**
  (Female)**                                                                                                        

  Beef Cattle (Wagyu and Other)     1,679               1,711               2%                  1,705               -0%

  Dairy Cattle for Beef             444                 483                 9%                  470                 -3%

  [F-1 Cross Bred                   [682]{.underline}   [644]{.underline}   [-6%]{.underline}   [630]{.underline}   [-2%]{.underline}
  Cattle]{.underline}                                                                                               

  Sub Total Dairy & F-1 Cattle for  1,126               1,127               0%                  1,100               -2%
  Beef                                                                                                              

  **Total Beef Cattle Raised**      **2,806**           **2,838**           **1%**              **2,804**           **-1%**

  **Total Dairy Female Raised**     **1,725**           **1,726**           **0%**              **1,719**           **-0%**

  Total Cattle Raised               4,531               4,564               1%                  4,523               -2%
  --------------------------------- ------------------- ------------------- ------------------- ------------------- -------------------

Table 3. Quarterly Domestic Beef Average Wholesale Carcass Price Data in
Tokyo

(Category by Popular Breeds of Medium Grade)

Unit: Yens per Kg.

  ---------------- ----------- ----------- ----------- ----------- -----------
  WAGYU STEER A-3                                                  
  GRADE                                                            

  **Year/Month**   **1st       **2nd       **3rd       **4th       **Yearly
                   Qtr.**      Qtr.**      Qtr.**      Qtr.**      Ave.**

  2,000            1,492       1,451       1,479       1,550       1,493

  2,001            1,502       1,472       1,450       1,074       1,374

  \% Chg           1%          1%          -2%         -31%        -8%

  2,002            887         1,208       1,505       1,724       1,331

  \% Chg           -41%        -18%        4%          60%         -3%

  2,003            1,664       1,669       n.a.        n.a.        n.a.

  \% Chg           88%         38%         n.a.        n.a.        n.a.

                                                                   

  HOLSTEIN STEER                                                   
  B-2 GRADE                                                        

  **Year/Month**   **1st       **2nd       **3rd       **4th       **Yearly
                   Qtr.**      Qtr.**      Qtr.**      Qtr.**      Ave.**

  2,000            793         805         750         779         767

  2,001            782         759         642         289         630

  \% Chg           -1%         -6%         -14%        -63%        -18%

  2,002            277         325         515         671         420

  \% Chg           -65%        -57%        -20%        132%        -33%

  2,003            505         513         n.a.        n.a.        n.a.

  \% Chg           83%         58%         n.a.        n.a.        n.a.

                                                                   

  F1 Cross Breed                                                   
  Steer B-3 GRADE                                                  

  **Year/Month**   **1st       **2nd       **3rd       **4th       **Yearly
                   Qtr.**      Qtr.**      Qtr.**      Qtr.**      Ave.**

  2,000            1,212       1,174       1,219       1,294       1,225

  2,001            1,228       1,237       1,229       742         1,114

  \% Chg           1%          5%          1%          -43%        -9%

  2,002            632         737         1,148       1,330       917

  \% Chg           -49%        -40%        -7%         79%         -18%

  2,003            1,237       1,237       n.a.        n.a.        n.a.

  \% Chg           96%         68%         n.a.        n.a.        n.a.
  ---------------- ----------- ----------- ----------- ----------- -----------

Source: ALIC Monthly (Compiled by Ag. Affairs based on monthly data)

Table 4-A. Quarterly Average Wholesale Prices of Popular Imported Cuts

(Popular Cuts: Frozen Category)

Unit: Yen per Kg.

  ------------ ----------- ----------- ----------- ----------- -----------
  U.S. Short                                                   
  Plate (Slice                                                 
  Ready):                                                      
  Frozen                                                       

  Year/Month   **1st       **2nd       **3rd       **4th       **Yearly
               Qtr.**      Qtr.**      Qtr.**      Qtr.**      Ave.**

  2000         309         311         294         280         298

  2001         314         371         451         370         377

  %Chg         2%          20%         53%         32%         26%

  2002         333         338         299         320         323

  %Chg         6%          -9%         -34%        -14%        -14%

  2003         422         454         n.a.        n.a.        n.a.

  %Chg         27%         35%         n.a.        n.a.        n.a.

                                                               

  U.S. Chuck                                                   
  Rib: Frozen                                                  

  Year/Month   **1st       **2nd       **3rd       **4th       **Yearly
               Qtr.**      Qtr.**      Qtr.**      Qtr.**      Ave.**

  2000         746         715         623         589         668

  2001         586         599         564         558         577

  %Chg         -21%        -16%        -10%        -5%         -14%

  2002         525         555         711         824         654

  %Chg         -10%        -7%         26%         48%         13%

  2003         1,021       1,084       n.a.        n.a.        n.a.

  %Chg         94%         95%         n.a.        n.a.        n.a.

                                                               

  Australian                                                   
  Chuck and                                                    
  Blade:                                                       
  Frozen                                                       

  Year/Month   **1st       **2nd       **3rd       **4th       **Yearly
               Qtr.**      Qtr.**      Qtr.**      Qtr.**      Ave.**

  2000         348         348         337         327         340

  2001         353         387         402         362         376

  %Chg         2%          11%         19%         11%         11%

  2002         416         411         370         412         402

  %Chg         18%         6%          -8%         14%         7%

  2003         419         405         n.a.        n.a.        n.a.

  %Chg         1%          -1%         n.a.        n.a.        n.a.
  ------------ ----------- ----------- ----------- ----------- -----------

Source: ALIC Monthly (Compiled by Ag. Affairs based on monthly data)

Table 4-B. Quarterly Average Wholesale Prices of Popular Imported Cuts

(Popular Cuts: Frozen Category)

Unit: Yens per Kg.

  ------------ ----------- ----------- ----------- ----------- -----------
  U.S. Chuck                                                   
  Rib: Chilled                                                 

  Year/Month   **1st       **2nd       **3^rd^     **4th       **Yearly
               Qtr.**      Qtr.**      Qtr.**      Qtr.**      Ave.**

  2000         951         1,005       911         852         930

  2001         950         995         957         808         928

  %Chg         -0%         -1%         5%          -5%         -0%

  2002         874         934         878         908         899

  %Chg         -8%         -6%         -8%         12%         -3%

  2003         1,058       1,215       n.a.        n.a.        n.a.

  %Chg         21%         30%         n.a.        n.a.        n.a.

                                                               

  Australian                                                   
  Full-set                                                     
  (Short Grain                                                 
  Fed):                                                        
  Chilled                                                      

  Year/Month   **1st       **2nd       **3^rd^     **4th       **Yearly
               Qtr.**      Qtr.**      Qtr.**      Qtr.**      Ave.**

  2000         522         538         490         506         514

  2001         586         582         593         578         585

  %Chg         12%         8%          21%         14%         14%

  2002         601         597         589         658         611

  %Chg         3%          2%          -1%         14%         5%

  2003         669         700         n.a.        n.a.        n.a.

  %Chg         11%         17%         n.a.        n.a.        n.a.

                                                               

  Australian                                                   
  Full-set                                                     
  (Grass Fed):                                                 
  Chilled                                                      

  Year/Month   **1st       **2nd       **3^rd^     **4th       **Yearly
               Qtr.**      Qtr.**      Qtr.**      Qtr.**      Ave.**

  2000         469         436         406         426         434

  2001         520         503         526         514         516

  %Chg         11%         15%         30%         21%         19%

  2002         563         510         489         602         541

  %Chg         8%          1%          -7%         17%         5%

  2003         631         615         n.a.        n.a.        n.a.

  %Chg         12%         21%         n.a.        n.a.        n.a.
  ------------ ----------- ----------- ----------- ----------- -----------

Source: ALIC Monthly (Compiled by Ag. Affairs based on monthly data)

Table 5. Japanese Monthly Ending Beef Stock Estimates

Unit: Metric Ton (Carcass Equivalent)

  -------- ---------- ---------- -------- ---------- -------- ---------- --------
           **2000**   **2001**   **%      **2002**   **%      **2003**   **%
                                 Chg.**              Chg.**              Chg.**

  Jan.     142,370    148,747    4%       193,831    30%      133,924    -31%

  Feb.     138,434    146,500    6%       192,626    31%      133,984    -30%

  Mar.     133,244    155,190    16%      188,636    22%      138,349    -27%

  Apr.     153,246    144,791    -6%      177,647    23%      126,871    -29%

  May      160,314    147,774    -8%      172,891    17%      122,140    -29%

  Jun.     158,283    154,961    -2%      171,276    11%      115,050    -33%

  Jul.     166,086    145,696    -12%     161,564    11%      0          -100%

  Aug.     158,117    132,889    -16%     158,119    19%      0          -100%

  Sept.    165,931    140,647    -15%     160,770    14%      0          -100%

  Oct.     167,336    181,937    9%       146,539    -19%     0          -100%

  Nov.     170,689    195,589    15%      144,354    -26%     0          -100%

  Dec.     157,953    198,961    26%      128,636    -35%     0          -100%
  -------- ---------- ---------- -------- ---------- -------- ---------- --------

Source: ALIC Monthly

# 

# Pork Section

## 2004 Market Outlook

Summary: Low market prices, ample domestic supplies, and large beginning
frozen stocks suggest lower pork imports in 2004. Japan's pork safeguard
appears unlikely due to these factors, in addition to a trigger level
that will be higher due to this year's higher imports. Some in the trade
are hopeful that WTO negotiations will lead to changes in Japan's
complex import regime.

### Japan's Overall Pork Consumption is Projected Up by 1% in 2004 

Japan's overall pork consumption is expected to rise by 1% in 2004 as
ample supplies keep market prices relatively low. This follows a
projected 3% drop in consumption in 2003 due to slack BSE-related demand
(See 2003 market situation update below). Low priced domestic table pork
will compete with imported chilled pork in 2004. Processing demand will
be largely met by relatively large carry over stocks of frozen pork,
which will reduce the need for imported frozen pork for processing.
Beginning frozen pork stocks in 2004 are estimated to be 16% higher than
last January, at 221,000 MT (Boneless equivalent of 155,000 MT -- 90%
are imported).

### Domestic Pork Supply Projected Slightly Lower in 2004 

Japanese producers are expected to liquidate sows in 2004 due to low
price prospects. As a result, pork production in 2004 is projected down
slightly at 16.4 million head and 1.255 million MT. The slight reduction
in pork production will not be enough to offset the ample supply
situation.

Japanese sow numbers at the beginning of 2003 were up 1% from last year
at 929,000 head, leading to a 2% increase in domestic hog slaughter and
pork supplies in 2003. (See 2003 market situation update)

### Import Demand Projected Down 3% at 950,000 MT

Japan's 2004 pork imports are expected to fall by 3% due to abundant
supplies of pork for both table and processing. The U.S. import share is
expected to remain at 33%, although the volume will be down since total
imports will be lower. U.S. chilled pork will have to compete with
relatively low priced domestic table pork. Entries of frozen pork for
processing, primarily from Denmark and other European Union (EU)
suppliers, are also expected to slow in 2004 due to large beginning
stocks. Trade sources predict that EU pork supplies will remain tight,
which will keep prices relatively high.

Based on these factors, industry sources think there is little chance
that Japan's pork safeguard will again trigger in 2004. They believe the
first quarter trigger level (preliminarily calculated at 268,188 MT)
will be high enough to avoid the safeguard. Note: Japan's pork safeguard
trigger level includes both chilled and frozen pork, and is calculated
based on the average of the previous three years multiplied by 1.19.

Some in Japan's pork industry are hopeful that the ongoing WTO
negotiations will lead to changes in Japan's complex pork import regime.
Early this summer, the Ham and Sausage Manufacturers Association
requested that MAFF change the current import regime and the safeguard
mechanism (see 2003 situation update).

## 2003 Pork Market Situation Update and Forecast 

Summary: Total pork consumption is projected to decrease by 3% (to 2.26
million MT), while import demand is expected to drop 8% to 1.03 million
MT. Surplus pork supplies are expected to prevail throughout the year.
As a result, market prices have been low and stocks are accumulating.
Japan's pork safeguard was triggered in August for the third year in a
row, due to speculative purchases made during the first quarter of JFY
2003.

Post's revisions for Japan's 2003 pork PS&D figures reflect several
major factors: 1) Pork demand has weakened as beef consumption has
recovered; 2) Domestic pork production has increased and; 3) Japan's
pork safeguard was implemented in August. Japan's pork surplus situation
is expected to prevail through 2003. Low domestic pork prices, an
abnormally long rainy season and cold summer, and large frozen stocks,
are further adding to the relatively tepid outlook for Japan's pork
market in 2003 (see Table 6 & 7).

Total pork consumption in 2003 is projected to decrease by 3% (to 2.26
million MT) due to slack demand for table pork. However, Japan's
domestic hog slaughter and pork production are projected up 2% to 16.45
million heads and 1.26 million MT respectively, reflecting bigger sow
numbers at the beginning of the year. A long rainy season and cool
summer weather has also slowed pork consumption in 2003, since they have
kept people from barbequing.

Import demand is projected drop 7% (to 1.03 million MT) due in part to
the glut of low-priced domestic pork and large stocks of frozen pork for
processing. August ending stocks are estimated at 300,000 MT level
(boneless equivalent of 210,000 MT) due to particularly large frozen
entries (up 15%) in July before the safeguard went into effect on
August 1. Speculative buying of frozen pork for processing is thought to
have caused the safeguard to trigger. Imports surged during April --
June, despite relatively stable demand for processed products and
adequate frozen stocks.

Frustrated with extreme fluctuations in imports and the uncertain pork
procurement situation year after year, Japan's ham and sausage
manufacturers requested that MAFF change the current differential pork
import duty system to either an ad valorem tariff or of a specific duty
by weight.

Table 6. Quarterly Average Wholesale Pork Carcass Prices in Tokyo

(Category by Meat Grade)

Unit: Yens per Kg.

  ---------------------- ----------- ----------- ----------- ----------- -----------
  **[Excellent                                                           
  Grade]{.underline}**                                                   

  Year/Month             **1st       **2nd       **3rd       **4th       **Yearly
                         Qtr.**      Qtr.**      Qtr.**      Qtr.**      Ave.**

  2000                   414         447         510         373         436

  2001                   434         484         506         506         482

  %Chg                   5%          8%          -1%         35%         11%

  2002                   498         559         510         396         491

  \% Chg                 15%         16%         1%          -22%        2%

  2003                   413         460         n.a.        n.a.        n.a.

  \% Chg                 -17%        -18%        n.a.        n.a.        n.a.

                                                                         

  **[Medium                                                              
  Grade]{.underline}**                                                   

  Year/Month             **1st       **2nd       **3rd       **4th       **Yearly
                         Qtr.**      Qtr.**      Qtr.**      Qtr.**      Ave.**

  2000                   367         406         455         321         387

  2001                   395         448         469         476         447

  %Chg                   8%          10%         3%          48%         15%

  2002                   459         525         469         355         452

  \% Chg                 16%         17%         0%          -25%        1%

  2003                   362         408         n.a.        n.a.        n.a.

  \% Chg                 -21%        -22%        n.a.        n.a.        n.a.
  ---------------------- ----------- ----------- ----------- ----------- -----------

Source: ALIC Monthly (Compiled by Ag. Affairs based on monthly data)

Table 7. Japanese Monthly Ending Pork Stock Estimates

Unit: Metric Ton (Carcass Equivalent)

  ---------------- ---------- ---------- -------- ---------- -------- ---------- --------
  **Month/Year**   **2000**   **2001**   **%      **2002**   **%      **2003**   **%
                                         Chg.**              Chg.**              Chg.**

  Jan.             113,990    142,479    25%      187,276    31%      210,374    12%

  Feb.             139,017    157,700    13%      196,929    25%      209,909    7%

  Mar.             157,403    177,584    13%      205,100    15%      202,273    -1%

  Apr.             135,407    190,736    41%      220,861    16%      239,071    8%

  May              137,523    220,564    60%      226,903    3%       257,789    14%

  Jun.             138,590    226,827    64%      216,370    -5%      252,813    17%

  Jul.             136,606    267,300    96%      251,339    -6%      0          -100%

  Aug.             141,170    229,423    63%      225,249    -2%      0          -100%

  Sept..           133,736    200,433    50%      209,839    5%       0          -100%

  Oct.             130,064    182,911    41%      196,200    7%       0          -100%

  Nov.             130,061    173,560    33%      197,524    14%      0          -100%

  Dec.             126,021    169,479    34%      190,570    12%      0          -100%
  ---------------- ---------- ---------- -------- ---------- -------- ---------- --------

Source: ALIC Monthly

# Japanese Live Cattle PS&D Table

Unit: 1000 Head

  -------------- ---------- ---------- ---------- ---------- ---------- ---------- ---- ----- ----- ----- -----
                 2002       Revised    2003       Estimate   2004       Forecast                          

                 USDA       Post       USDA       Post       USDA       Post                              
                 Official   Estimate   Official   Estimate   Official   Estimate                          
                 \[Old\]    \[New\]    \[Old\]    \[New\]    \[Old\]    \[New\]                           

  **Market Year             01/2002               01/2003               01/2004                           
  Begin**                                                                                                 

  Total Cattle   4564       4564       4430       4523       4320       4537                              
  Beg. Stks                                                                                               

  Dairy Cows     966        966        955        964        0          960                               
  Beg. Stocks                                                                                             

  Beef Cows Beg. 637        637        630        643        0          640                               
  Stocks                                                                                                  

  Production     1430       1435       1430       1430       0          1400                              
  (Calf Crop)                                                                                             

  Intra EC       0          0          0          0          0          0                                 
  Imports                                                                                                 

  Other Imports  20         15         20         19         0          19                                

  TOTAL Imports  20         15         20         19         0          19                                

  TOTAL SUPPLY   6014       6014       5880       5972       4320       5956                              

  Intra EC       0          0          0          0          0          0                                 
  Exports                                                                                                 

  Other Exports  0          0          0          0          0          0                                 

  TOTAL Exports  0          0          0          0          0          0                                 

  Cow Slaughter  580        547        570        540        0          535                               

  Calf Slaughter 10         5          10         5          0          5                                 

  Other          700        668        685        615        0          610                               
  Slaughter                                                                                               

  Total          1290       1220       1265       1160       0          1150                              
  Slaughter                                                                                               

  Loss           294        271        295        275        0          275                               

  Ending         4430       4523       4320       4537       0          4531                              
  Inventories                                                                                             

  TOTAL          6014       6014       5880       5972       0          5956                              
  DISTRIBUTION                                                                                            

  Calendar Yr.   300        129        300        130        0          130                               
  Imp. from U.S.                                                                                          

  Calendar Yr.   0          0          0          0          0          0                                 
  Exp. to U.S.                                                                                            
  -------------- ---------- ---------- ---------- ---------- ---------- ---------- ---- ----- ----- ----- -----

Note: Unit for Calendar Yr. Imp. from U.S. indicated as (Head), instead
of 1000 Head

# Japanese Beef PS&D Table

Unit: 1000 MT (CWE)/1000 Head

  --------------- ---------- ---------- ---------- ---------- ---------- ---------- ------ ------
                  2002       Revised    2003       Estimate   2004       Forecast          

                  USDA       Post       USDA       Post       USDA       Post              
                  Official   Estimate   Official   Estimate   Official   Estimate          
                  \[Old\]    \[New\]    \[Old\]    \[New\]    \[Old\]    \[New\]           

  **Market Year              01/2002               01/2003               01/2004           
  Begin**                                                                                  

  Slaughter       1290       1220       1265       1160       0          1150              
  (Reference)                                                                              

  Beginning       199        199        130        129        155        104               
  Stocks                                                                                   

  Production      550        535        525        505        0          500               

  Intra EC        0          0          0          0          0          0                 
  Imports                                                                                  

  Other Imports   678        696        850        800        0          870               

  TOTAL Imports   678        696        850        800        0          870               

  TOTAL SUPPLY    1427       1430       1505       1434       155        1474              

  Intra EC        0          0          0          0          0          0                 
  Exports                                                                                  

  Other Exports   0          0          0          0          0          0                 

  TOTAL Exports   0          0          0          0          0          0                 

  Human Dom.      1297       1301       1350       1330       0          1370              
  Consumption                                                                              

  Other Use,      0          0          0          0          0          0                 
  Losses                                                                                   

  TOTAL Dom.      1297       1301       1350       1330       0          1370              
  Consumption                                                                              

  Ending Stocks   130        129        155        104        0          104               

  TOTAL           1427       1430       1505       1434       0          1474              
  DISTRIBUTION                                                                             

  Calendar Yr.    324        324        443        379        0          407               
  Imp. from U.S.                                                                           

  Calendar Yr.    0          0          0          0          0          0                 
  Exp. to U.S.                                                                             
  --------------- ---------- ---------- ---------- ---------- ---------- ---------- ------ ------

#  Japanese Live Swine PS&D Table

Unit: 1000 Head

  -------------- ---------- ---------- ---------- ---------- ---------- ---------- ----- ----- ----- ----- -----
                 2002       Revised    2003       Estimate   2004       Forecast                           

                 USDA       Post       USDA       Post       USDA       Post                               
                 Official   Estimate   Official   Estimate   Official   Estimate                           
                 \[Old\]    \[New\]    \[Old\]    \[New\]    \[Old\]    \[New\]                            

  **Market Year             01/2002               01/2003               01/2004                            
  Begin**                                                                                                  

  TOTAL          9612       9612       9550       9725       9460       9700                               
  Beginning                                                                                                
  Stocks                                                                                                   

  Sow Beginning  916        916        910        929        0          925                                
  Stocks                                                                                                   

  Production     17100      17000      17000      17250      0          17200                              
  (Pig Crop)                                                                                               

  Intra EC       0          0          0          0          0          0                                  
  Imports                                                                                                  

  Other Imports  0          0          0          0          0          0                                  

  TOTAL Imports  0          0          0          0          0          0                                  

  TOTAL SUPPLY   26712      26612      26550      26975      9460       26900                              

  Intra EC       0          0          0          0          0          0                                  
  Exports                                                                                                  

  Other Exports  0          0          0          0          0          0                                  

  TOTAL Exports  0          0          0          0          0          0                                  

  Sow Slaughter  0          0          0          0          0          0                                  

  OTHER          16100      16183      16000      16450      0          16400                              
  SLAUGHTER                                                                                                

  Total          16100      16183      16000      16450      0          16400                              
  Slaughter                                                                                                

  Loss           1062       704        1090       825        0          800                                

  Ending         9550       9725       9460       9700       0          9700                               
  Inventories                                                                                              

  TOTAL          26712      26612      26550      26975      0          26900                              
  DISTRIBUTION                                                                                             

  Calendar Yr.   120        188        120        70         0          100                                
  Imp. from U.S.                                                                                           

  Calendar Yr.   0          0          0          0          0          0                                  
  Exp. to U.S.                                                                                             
  -------------- ---------- ---------- ---------- ---------- ---------- ---------- ----- ----- ----- ----- -----

Note: Unit for Calendar Yr. Imp. from U.S. indicated as (Head), instead
of 1000 Head

# Japanese Pork PS&D Table

Unit: 1000 MT (CWE)/1000 Head

  -------------- ---------- ---------- ---------- ---------- ---------- ---------- ----- ----- ----- ----- -----
                 2002       Revised    2003       Estimate   2004       Forecast                           

                 USDA       Post       USDA       Post       USDA       Post                               
                 Official   Estimate   Official   Estimate   Official   Estimate                           
                 \[Old\]    \[New\]    \[Old\]    \[New\]    \[Old\]    \[New\]                            

  **Market Year             01/2002               01/2003               01/2004                            
  Begin**                                                                                                  

  Slaughter      16100      16183      16000      16450      0          16400                              
  (Reference)                                                                                              

  Beginning      170        170        198        191        163        221                                
  Stocks                                                                                                   

  Production     1228       1236       1210       1260       0          1255                               

  Intra EC       0          0          0          0          0          0                                  
  Imports                                                                                                  

  Other Imports  1162       1112       1175       1030       0          995                                

  TOTAL Imports  1162       1112       1175       1030       0          995                                

  TOTAL SUPPLY   2560       2518       2583       2481       163        2471                               

  Intra EC       0          0          0          0          0          0                                  
  Exports                                                                                                  

  Other Exports  0          0          0          0          0          0                                  

  TOTAL Exports  0          0          0          0          0          0                                  

  Human Dom.     2362       2327       2420       2260       0          2280                               
  Consumption                                                                                              

  Other Use,     0          0          0          0          0          0                                  
  Losses                                                                                                   

  TOTAL Dom.     2362       2327       2420       2260       0          2280                               
  Consumption                                                                                              

  Ending Stocks  198        191        163        221        0          191                                

  TOTAL          2560       2518       2583       2481       0          2471                               
  DISTRIBUTION                                                                                             

  Calendar Yr.   346        356        300        336        0          329                                
  Imp. from U.S.                                                                                           

  Calendar Yr.   0          0          0          0          0          0                                  
  Exp. to U.S.                                                                                             
  -------------- ---------- ---------- ---------- ---------- ---------- ---------- ----- ----- ----- ----- -----

Japanese Beef PS&D Talbe

Unit: 1000 MT (CWE)/1000 Head

#