Japan increases feed cost support for livestock and poultry producers
MAFF announced compensation payments of 7,050 Yen ($50)/MT
15 September 2023
2 minute read
By: In April 2023, Japan's Ministry of Agriculture, Forestry, and Fisheries (MAFF) implemented a special measure under the Compound Feed Price Stabilisation System to augment feed compensation payments to livestock, poultry, and swine producers, according to a recent US Department of Agriculture (USDA) Global Agricultural Information Network (GAIN) report. This measure changed a formula which was minimising feed support payments when feed costs remained high beyond a one-year period.
MAFF and industry jointly run a two-part Compound Feed Price Stabilisation System which consists of a “regular compensation program,” and a “supplemental compensation program.” When the average import price of raw materials - corn, sorghum, soybean meal, barley, and wheat - in a particular quarter exceeds the average import price of raw materials of the previous one year, the regular compensation fund pays livestock, poultry, and swine producers who participate in the system the difference up to 115% of the standard price.
Producers and feed mills contribute 600 Yen ($4.3)/MT1 and 1,200 Yen ($8.6)/MT respectively to fund the regular compensation program. When the average import price of ingredients in a particular quarter exceeds 115% of the standard price, a secondary fund, the “supplemental compensation” fund, makes up the difference to producers. Compound feed mills and MAFF each contribute 50% to the supplementary compensation fund.
When imported feed ingredient prices remain high beyond a one-year period, the difference between current and “standard” prices diminishes and the support payments decline proportionally. This in turn raised compound feed costs for producers. To help minimise that impact, beginning in April 2023 MAFF extended the look back period for calculating “standard price” of imported raw materials from one year to two and a half years.
MAFF announced compensation payments of 7,050 Yen ($50)/MT under the special measure were made in the first quarter of Japan Fiscal Year (April 1-March 31). By extending the look back period even raw material prices which have been high for as much as two-and-one-half years still qualify for some measure of support under the special measure.
(USD $1 = 140 Yen)
