Corn costs in Japan, the biggest importer, are rising after shipping fees increased because of concern over nuclear radiation, boosting expenses at animal-feed makers and potentially helping meat sales by Tyson Foods Inc. (TSN) Importers need to pay about 5 percent more to ship corn from the U.S. Gulf to ports in eastern Japan compared with the west on concern vessels may be tainted by radiation leaking from the Fukushima Dai-Ichi power station, said Nobuyuki Chino, the president of Tokyo-based grain company Continental Rice Corp. Corn more than doubled in Chicago in the past year and climbed to the highest since 2008 as global supplies failed to keep pace with demand. That helped drive up world food costs by 36 percent to near a record in April, according to the United Nations, prompting central banks from Beijing to New Delhi to increase interest rates. For feed makers in Japan, the higher shipping fees make ingredients more expensive. “Freight operators are still showing an aversion for eastern Japan,” said Hideo Harada, director for livestock- policy planning at the Ministry of Agriculture, Forestry and Fisheries, in an interview in Tokyo. “It’s very costly to deliver grains to eastern regions after unloading them at ports in other areas.” Higher feed prices may add to expenses at domestic meat producers, helping exports by Springdale, Arkansas-based Tyson Foods, the largest U.S. meat processor. U.S. meat may be a cheaper option, said Susumu Harada, senior director at the Tokyo office of the U.S. Meat Export Federation. Pork, Beef Pork orders from Japan advanced 20 percent in April from March and gained more than 20 percent for beef, said Takamichi Tawara, head of Tyson’s Tokyo office. Its meat exports to Japan reached $400 million last year, comprising 60 percent pork, 20 percent beef and the rest chicken and processed food, he said. “The export demand out of Japan has remained very strong,” said James V. Lochner, Tyson’s chief operating officer, on a conference call May 9. “We’ve certainly seen no pullback, and if anything we continue to see strong interest up front,” Japan used 11.9 million metric tons of corn to help produce 24.8 million tons of feed in the year ended March 31, 2010, data from the agriculture ministry show. Japan also buys 4 million tons of the grain a year for sweetener and snacks. “The difficulty in arranging corn shipments may prompt end-users to switch from imported grains to domestic supplies as the government is promoting local rice as an alternative to corn in feed,” said Takaki Shigemoto, commodity analyst at research company JSC Corp. in Tokyo. Tightened Checks Tokyo Electric Power Co., operator of the nuclear station crippled by the March 11 quake and tsunami, said May 12 one reactor core is more seriously damaged than thought, setting back its plan to resolve the crisis. It detected this month that radiation-tainted water leaked into the ocean through a crack. The Netherlands found traces of radiation on 19 containers originating from Japan, the Food and Consumer Product Safety Authority said May 10. Ports worldwide have tightened checks on ships that left Japan after the temblor. Kashima in Ibaraki prefecture, south of Fukushima, is the largest port for the unloading of imported corn from vessels. Because of its proximity to the stricken plant, site of the worst nuclear disaster since Chernobyl, importers are finding it hard to arrange deliveries, said Chino, who has traded grains for more than three decades, in an interview in Tokyo. Feed production in Kashima reached 4 million tons in the year ended March 31, 2010, representing 16 percent of total Japanese output, government data show. As plants in the area avoided serious damage, they can be used to boost output for supplies to quake-stricken regions. Costs Increase The “disruption in Kashima’s operations boosts costs for feed makers, which will eventually be passed on to livestock farmers and consumers of eggs and meat,” Chino said. In the northern prefectures of Iwate and Miyagi, 11 feed plants are closed without restoration of water and electricity supplies after the quake. Output in the facilities amounted to 1.8 million tons, or 7.4 percent of total production in the year through March last year. Six plants in Hachinohe city in Aomori prefecture, north of Iwate, have resumed operation. Output is returning to the pre- quake level of 1.82 million tons a year, said Harada at the agriculture ministry. Feed supplies to farmers in northern Japan have recovered to about 8,800 tons a day from the pre-quake level of 10,000 tons, Harada said. Of the total, 5,300 tons are supplied by restored plants in the region and the rest are shipped from facilities outside, he said. The price of corn on the Chicago Board of Trade advanced 0.9 percent to $7.565 a bushel today, the sixth day of gains, and has climbed 20 percent this year. To contact the reporter on this story: Aya Takada in Tokyo at atakada2@bloomberg.net Yasumasa Song in Tokyo at ysong9@bloomberg.net To contact the editor responsible for this story: James Poole in Singapore at jpoole4@bloomberg.net

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