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Japanese raise their stake in America's burgeoning farm production

By Jonathan HarschStaff correspondent of The Christian Science Monitor / August 3, 1981



Chicago

Japan, the American farmer's best foreign customer by a wide margin, plans to remain that way. At a Chicago conference on US-Japanese agricultural trade July 31, US Agriculture Secretary John R. Block pointed out that America already devotes 1 out of every 24 acres -- or 15 million acres -- to growing food for Japan. This is 1 million more acres than Japan itself can farm in a mountainous country the size of California with 115 million people to feed.

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This year the Japanese are expected to increase their US agricultural purchases to $7 billion, up $1 billion over 1980 and about double the value for sales to the second- ranking customers, the Dutch. Japan's $7 billion in US farm products will take a major share of the credit if the US trade deficit with Japan is kept at $13 billion this year.

Projections of steadily increasing US agricultural sales to Japan are based on Japan's need to import half its food needs -- and on america's need to offset its purchases of Japanese automobiles, steel, televisions, and other manufactured goods.

Mutual needs and benefits result in a continuing US-Japanese dialogue on trade issues. Along with regularly scheduled government-to-government meetings, trade groups from both sides are in constant contact.

To help sell more farm products abroad, Mr. Block visited Japan in 1978 when he was Illinois director of agriculture. He plans another visit this fall in his new role as a Reagan administration Cabinet member who regularly bears the good economic news of expanding export earnings.

Block says that his own determination to expand US agricultural exports to Japan and other countries has full backing from Secretary of State Alexander M. Haig Jr. and Commerce Secretary Malcolm Baldridge. He welcomes recent Japanese purchases of American grain storage elevators as "proof that the Japanese are out to expand trade" with the United States.

Japanese purchases may be particularly welcome now, Block says, because this year's record wheat harvest may be followed by near-record corn and soybean harvests.

Japan's ambassador to the United States, Yoshio Okawara, agreed at the Chicago Trade Conference that US farm sales to Japan should continue to increase. And he expects Japanese firms to increase their investment in US grain exporting facilities, with his government's support, because "Japan is very much interested in a constant supply."

This Japanese investment in new US facilities is a sign of shifting policies. Over the past 10 years, Japan has underwritten projects in Australia, Brazil, and Thailand in its search for new grain suppliers. The search intensified after the temporary US embargo on soybean shipments to Japan in 1973. Japanese officials also say that the 1980 US embargo on grain sales to the Soviets revived their fears about relying too heavily on the United States.

Reagan administration reassurances and Mr. Reagan's ending of the Soviet embargo have eased Japanese worries. Japan has begun to dismantle some of its agribusiness operations elsewhere and is placing greater emphasis on the US market. So no change is expected in Japanese dependence on the US for supplying 50 percent of Japan's wheat needs, 80 percent of its corn needs, and 97 percent of its soybean needs. Despite Japan's plan to reduce a chronic rice surplus by turning some rice paddies into cornfields, increasing overall grain demand should guarantee US farmers a growing market in Japan, according to Japanese government projections.

Also at the Japan Economic Institute of America's conference, Clayton Yeutter , president of the Chicago, Mercantile Exchange, called for "policy changes within the Japanese government" to allow trade to expand freely. He advocated reduced Japanese restrictions on US beef, citrus, and processed food imports. He said that "we should do all that we can to get the price of beef down to $10" rather than $25 to $30 a pound. Greater consumption would follow, he said, benefiting both Japan and the United States.

Hisao Katagiri, Japanese agricultural attache in Washington, expects that Japanese- US trade and good relations will improve naturally because Japan today is "under the umbrella of US food supply, as well as the umbrella of US nuclear power."

Japanese grain importer Eishi Ueno, based in Memphis with Mitsui & Co., pointed out that Japan is far more than just the largest overseas market for US farmers -- and even the largest market for beef and citrus fruit despite apparent restrictions. As well, he explained, Japan is "a stable, reliable, and predictable market for US farm products."

Both for political reasons and because of its own large but erratic grain production, the Soviet Union frequently surprises, and disrupts the US market. In contrast, Mr. Ueno said, Japan's predictable year-to-year purchases mean that the US government "can better plan its export programs, and American farmers can accurately plan their produ ction levels."