Japan will introduce a new Simultaneous Buy-and-Sell (SBS) import category in October of this year covering all wheat classes.
Article continues below
Japan’s Ministry of Agriculture, Forestry and Fisheries’ (MAFF’s) intent is reportedly to expand flexibilities for Japanese flour millers to purchase diversified classes and specifications of wheat at competitive prices.
Up to 200,000 MT per year of wheat can be imported in either bulk or containerized shipments under the new Category III (but imports under Category III are not obligatory if the general import system or another SBS category can be utilized).
MAFF currently purchases major classes of food wheat, such as Western White (WW), Dark Northern Spring (DNS) and Hard Red Winter (HRW), from the United States, as well as Canadian Western Red Spring (1CW), and Australia Standard White (ASW), and channels their imports to select importers through a tendering system.
On the 20th of each month, Japanese flour millers submit purchase applications for a specific quantity, by class, four months ahead of the preferred arrival date in Japan.
MAFF then determines the quantity-by-class and origin of the wheat for purchase each month, and sets a
planned purchase price by origin, grade, class, quantity and type of import (bulk or container), taking
into account international prices, freight, and the exchange rate.
Any wheat classes, excluding Durum and Prime Hard, can be imported under this system (but only if a purchase application reaches a level to fulfill the bulk shipment).
MAFF, in turn, sells purchased wheat to domestic flour millers with a mark-up plus port charges. The mark-up is currently 170 yen/kg (452 yen/kg is the ceiling), which is used to subsidize domestic wheat production.
To ensure domestic prices better reflect international prices, MAFF revises the re-sale price of imported
wheat twice a year (issuing a price for the period April – September and a price for the period October –
Prior to the arrival of a shipment in Japan, MAFF and a flour miller jointly conclude a buyand-sell contract. Therefore, after the arrival and inspection of a shipment, the flour miller immediately purchases the contracted volume.
Following the establishment of its Agricultural Competitiveness Enhancement Program, the GOJ intends to strengthen competitiveness of flour millers, and has decided to improve SBS operations by establishing a Category III (bulk and container shipments, up to 200,000 MT annually) subjecting all wheat classes in order to allow flour millers to exert their capabilities in ingredient procurement.
The first tender for Category III is scheduled to be held in October 2017. ■