Abstract
The influence of increase in beef import on the price-formation of Japanese beef with grade of quality has been investigated by using econometric model. When developing econometric model concerning Japanese beef economy, the author paid particular attention to formulating the technological characteristics of Japanese beef production and the decision-making processes by the farmer in beef cattle production. It became clear from the results estimating the structure equations that the price-formation mechanism of beef varied with grade of quality. These results indicated that increase in supply of lower quality beef such as imported beef and dairy cattle caused decrease in prices of low grade beef. On the contrary, it caused increase in prices of high grade beef. The result of final test indicated that this model is appropriate for analysis of the influence of beef import on Japanese beef economy.
The simulation results in case of 7% increase to the previous year in beef import indicated that Japanese beef economy was not damaged so much. This result suggests that potential beef demand is fairly large in Japan. However, in case of 14% increase of beef import, Japanese beef economy was largely confused. Especially with this simulation, prices of both low grade beef and calf largely declined, but the prices of high grade beef did not remarkably decline. The most important task of Japanese beef production in such difficult situation is to achieve drastical reduction of production cost. Furthermore, assuming that beef import increases over 20%, Japanese beef cattle production must be on the verge of annihilation.
