BSE costs Japanese food industry billions

Japan's outbreak of mad cow disease has cost at least 365 billion yen (€3.15billion) since the crisis struck last year, the Farm Ministry said on Friday.

Revenues at Japanese farms have slumped an estimated 131 billion yen ($990 million) year-on-year since the brain-wasting disease was first discovered in September, while meat sales have fallen 160 billion yen ($1.2 billion), a ministry official said.

In addition, sales at Korean-style barbecue beef restaurants have fallen by between 74 billion yen and 90 billion yen, he said.

Japan confirmed its first case of bovine spongiform encephalopathy (BSE), or mad cow disease, last September. Since then two other dairy cows have tested positive.

As a result, consumers have shunned beef, particularly home-bred meat, ignoring government assurances it is safe and shaking the farm and food industry.

A government-commissioned investigating panel excoriated the Farm Ministry this week for ignoring warnings from both the World Health Organisation and the European Commission that could have prevented the crisis.

It also blasted a political climate of vested interest that it called a relic of past days when food was scarce, in which food safety concerns played second-fiddle to the priorities of the powerful farm lobby.

Farm Minister Tsutomu Takebe has resisted calls for his resignation over his handling of the outbreak.

A censure motion against him on Friday is expected to be defeated.

But the political fallout could continue for some time as Prime Minister Junichiro Koizumi struggles to regain flagging public support amid doubts over his leadership.

The Japanese government has already spent about 100 billion yen compensating farmers for their losses. Unfortunately some of that money went astray. Japan's former number six meat packer Snow Brand Food is in liquidation after it admitted disguising imported Australian beef as domestic beef to claim a government subsidy.

The Farm Ministry plans 206.4 billion yen in BSE-related spending in the current fiscal year to next March. Of the total, 178.5 billion yen will be earmarked to compensate farmers and the food industry and 23 billion yen will be used for incinerating meat-and-bone meal, thought to be the cause of the disease.