Policies and the management response in the livestock sector under the WTO

The livestock sector developed dramatically because of price support and import restriction policies under the Agricultural Basic Law, and also because of strong demand for livestock products. The sector, however, has been affected by the deregulation of trade and price support policies and stagnant demand. The production of most livestock products started to decline in the 1990s mainly due to a rapid decrease in the number of livestock farms. Meanwhile, the import of livestock products has continued to increase and the self-sufficiency rates have dropped greatly; for example, beef self sufficiency fell from 50 to 35 percent between 1990 and 1998. This paper analyzes responses by the livestock farmers under these depressed circumstance, and examines the effects of policies that focus on beef-cattle farming. Firstly, after market liberalization and the GATT Uruguay Round outcome, domestic wholesale prices for beef and pork were no longer controlled by the price stabilization scheme for beef and pork established in 1965. This is because this system could work only through the government using its monopoly position in the market to manipulate the import of these commodities. Secondly, the paper examines schemes designed to provide income support that were launched after liberalization. The deficiency payment scheme for feeder steers has effectively worked to support the producers of dairy feeder steers, while dairy farmers could not benefit from the scheme. Partly due to this, most dairy farmers introduced Wagyu semen into their herds to produce a more valuable hybrid dairy steer. This may harm milk production in the near future. It should also be pointed out that the scheme would not provide sufficient support for the income of Wagyu steer producers if the market price drops below the guaranteed price. This is simply because the support level is too low