Trade With Japan NEW ZEALAND SHOULD NOT LOSE OPPORTUNITY

Press, Volume XCVII, Issue 28616, 19 June 1958, Page 12

Trade With Japan NEW ZEALAND SHOULD NOT LOSE OPPORTUNITY

[Specially written for “The Press” by

R. E. BLAZEY.)

Efforts to right New Zealand’s export-import imbalance appear to have killed at least one goose that laid a golden egg. The golden egg was a £7,062,000 surplus. The goose was trade with Japan. Last year New Zealand did well in Japan. In April a new market for beef was found and by the end of the 1957 meat season, New Zealand’s Commercial Secretary in Tokyo, Mr J. S. Scott, could announce that New Zealand had sold 13,000 tons of beet to Japan. Shipments then were averaging around 2000 tons a month and the general manager of the New Zealand Meat Board, Mr J. D. De Gruchy, when he visited Japan earlier in July, found the market very promising. Wool, beef tallow, hides and scrap iron from New Zealand also sold well and the Japanese were entertaining high hopes for a trade agreement, to help redress the balance in the rapidly growing trade, with New Zealand. But the New* Zealand Government declined to reopen negotiations that had been broken off in 1954 and. when the Prime Minister (Mr Nash) made his recent tour of South-east Asia he left Japan off his itinerary. The reaction in Toyko was distinctly cool. When the Japanese Government fixed import quotas for the new financial year (April, 1958, to March, 1959) it restricted meat imports to no more than £2 million. This will mean a loss of something like £5 million to New Zealand and, perhaps, the premature end of a promising venture.

Since then the butter talks in London have failed and Mr Nash has called for diversification of primary produce for the expansion of new markets. Unofficially, he has said the question of trade with Japan, one of the most promising of these new markets, was “being considered.” The object of this article, from the point of view of a New Zealand correspondent who has followed trade developments during the last two years in Tokyo, is to assess the possibilities for a permanent market for New Zealand produce in Japan and interpret Japanese aims and ambitions. Market for Beef Beef is far and above New Zealand’s most promising export to Japan. Since the end of the Pacific war the Japanese have become meat, bread, butter and cheese eaters, and the demand for these foods, has been increasing at a phenomenal rate. The per capita consumption of meat, for example, has gone up by 50 per cent, annually during the last few years, according to Japanese Ministry of Agriculture figures. An average Japanese family of four now eats about one pound of meat a day. Steaks have become the most popular dish in Japanese restaurants. Sausage meats and canned beef are being widely used by housewives for quick lunches and snacks. The increasing shortage and rising price of fish, caused by the continuing Russian, Chinese and Korean closure of vast areas of fishing grounds off their coasts, is also a potent factor influencing the Japanese to eat more meat, Japanese farmers slaughtered 60.000 head of cattle in 1957, but could meet only a fraction of the. demand. This beef was mostly of very high quality and sold for 12s a pound retail. Small Japanese farms keep a steer or two and hand-feeding, massages, and hot steam baths produce a delicious, tender meat which neither New Zealand nor Australia can ever hope to equal or better by mass production methods.

The United States forces in Japan, the sausage and canning factories, and the ordinary family turned to the cheaper imported beef for their supplies. Ordinary A grade eating steak sells in Tokyo shops for about 4s a pound, while the cheaper New Zealand “boner” grades have been selling to the mahufacturers for around 2a a pound and retailing in the form of sausages and canned bully beef for about 3s a pound. Only a Beginning?

New Zealand’s 13.000 tons last year was only a beginning. New Zealand trade representatives in Tokyo have estimated Japan could take up to 30,000 tons of New Zealand beef a year. Mr Scott, when interviewed early last year, predicted beef would double the value of New Zealand’s sales to Japan within 12 months. As it happened, New Zealand’s sales trebled, and meat was mainly responsible. The Australians,’who have been regular suppliers to the United States forces and a number of Japanese concerns since the end of the war, have been selling 5000 to 6000 tons a year. The Australian Commercial Counsellor in Tokyo, Mr N. F. Stuart, told me he could sell 20.000 to 30,000 tons of beef a year to present customers alone if it was not for the quota system which restricts the amount of meat Australia may sell outside United Kingdom markets. He estimated that 50,000-tons,could be sold if the Japanese market was developed and sales pushed These “official” views were supported by the opinions and activities of private traders. A New Zealander, Mr D. M. Kenrick. was the first to realise that a huge potential market for cheap meat existed in Japan. Put a Canadian, Mr A. V. Shriro, was the first to overcome the complete lack iof a refrigerated shipping service by using small 800 to 900ton Japanese whale-catcher boats in their off season. These two men are confident that a potential market for 50.000 tons or more a year exists, but. they say, the actual market that can be realised at any given time depends on political considerations. •

Apart from limits to Japanese purchasing power the only other restriction on bulk exports of New Zealand meat to Japan is the woeful lack of proper refrigerated storage space at Japanese docks. Difficulty was experienced last July unloading 4200 tons of meat from the New Zealand Meat Board’s chartered ship, the 7930ton Timaru Star, at Kobe and Yokohama. The cool stores were soon filled and overflowing and several anxious day* of waiting for Japanese buyers to pick up their meat followed. July in Japan is the hottest, sultriest month of the year. 4 Such was the demand for meat in Japan then that no real diffi-

culty in selling the meat speedily was experienced. All the same, the lesson was learned and the newly formed Crusader Shipping Company plans to use a much smaller vessel, the 3410-ton Crusader, to carry meat to Japan. Japanese meat producers have been lobbying the Japanese Government to restrict beef import*, In their “Meat Newsletter” of April 29, 1957, they demanded a limit be fixed at 10,000 tons a year. Their argument was that if large quantities of cheap beet were brought into Japan the demand—and the price—for homeproduced beef might fall off and the Japanese farmer suffer. Possibility for Lamb

A current fad in Japan for lamb, cooked in expensive restaurants barbecue-style—known in Japan as the “Genghis Khan” style after the Mongolian way of roasting sheep—could easily develop into a steady demand for lamb. How much lamb Japan would take is a very open question, but if the demand should become anything like that for beef it would be considerable.

It is very unlikely that the Japanese will ever take to eating anything else but the best lamb, because of the widespread distaste jn Japan for the smell of mutton.

The New Zealand exporter of lamb would have the advantage, however, in that there are very few sheep in Japan. So rare are they in most parts of the country that the Ueno Zoo in Tokyo has a pen of Merinos. The Australians have been selling a few thousand tons of lamb and mutton a year in Japan but the “lamb” I have been served in Tokyo—whether it be home produced or Australian I do not know—certainly does not compare with the best New Zealand lamb. Prospects for Butter Dim Butter and cheese sells in Japan at 6s a pound. With an import duty of 2s a pound on butter, New Zealand could still sell butter in Japan. In fact New Zealand did sell 16 tons of butter in Japan in 1956 and about the same amount again in 1957, according to a report by the New Zealand Dairy Products Marketing Commission. This amount could undoubtedly be increased considerably in view of the rising demand in Japan for butter but it is not likely to grow to any large proportions because of the Japanese Government’s interest in domestic dairying. During the last five years.the Japanese Government hag built up a large-scale dairy industry in northern Japan. It bought stud Jersey cows and bulls from New Zealand and Holsteins from Australia at the rate of about 2000 head a year. The Jerseys went to State breeding farms to improve dairy herds; the Holsteins went to help improve town milk supplies. According to the latest Agriculture Ministry report, Japan had 3.200,000 cows at December 31, 1957. Japan has large tracts of grazing land in the north and west. The northern island of Hokkaido, where the dairy industry is concentrated, has grasslands and a climate similar to Southland’s, except that Hokkaido is covered with snow most of ths winter and cattle have to be sheltered. Beef cattle are concentrated on the grasslands near Kobe in south-western Japan. New Zealand could continue to export dairy stud and perhaps grasses and knowledge to help this new industry but that, in the long run, might have the effect of adding yet another competitor to the list the New Zealand dairy farmer has to contend with. Milk Powders

During .the immediate post-war years, New Zealand was developing a promising market in Japan for milk powders—but United States surplus disposals, ostensibly a philanthropic gesture to help the Japanese with a school milk scheme, put an end to New Zealand’s chances in this field. By 1956 milk and skim milk powder sales had dropped to nil and

only 30 tons of butter milk powder was sold to Japan for the year ended July 31, 1956. Australia tackled the surplus problem in wheat when the JapanAustralia trade agreement was negotiated last year. The Australian side insisted (Agreed Minutes, Part A, Para 4 b) that Japan buy, under the terms of “normal fair trade or commercial practice.” 200,000 tons of Australian soft wheat annually before taking surpluses. The majority of Japanese business and political leaders, including the Prime Minister’s group, favour less dependence on surpluses. Apart from considerations of national pride these Japanese contend that reliance on surpluses places the country too much at the mercy of political decisions in Washington.