TOTAL IMPORTS AND IMPORT PATTERNS OF BARLEY INTO JAPAN: Implications of the 1988 Japanese Beef Market Access Agreement

A two-stage budgeting procedure was employed to analyze (1) the Japanese import demand for barley and (2) allocation of Japanese barley imports between North America (Canada and the United States) and Australia. It was found that the import demand for barley was price inelastic and corn was a substitute for barley. Japanese barley imports were also influenced by size of the cattle herd and the number of cattle slaughtered. Price competition played a significant role in import allocation and budget shares of the two suppliers were proportional to total import expenditure. Starting in April 1991, import quotas and the involvement of the Livestock Industry Promotion Corporation (a quasi-government agency) in the Japanese beef trade will be replaced with higher tariffs and direct negotiations between traders. These changes promise easier access to the Japanese beef market and have been predicted to exert adverse impacts on the Japanese cattle industry. Different responses of the Japanese cattle industry under trade liberalization were assumed and were combined with the estimated econometric models to forecast Japanese barley imports in total and by country of origin. The effect of a reduced price for North American barley was also investigated as reduced total imports under trade liberalization may intensify price competition.