June 12 (Bloomberg) -- Japan, the world's biggest corn importer, will increase floor prices for domestic meat for a second time this year and boost subsidies for livestock farmers after prices of the grain soared to a record.

The floor price for locally produced pork will rise 5.3 percent to a 20-year high of 400 yen ($3.74) a kilogram in July from 380 yen. The base price for beef will climb 3.2 percent to a 12-year high of 815 yen from 790 yen, the Ministry of Agriculture, Forestry and Fisheries said today in a statement. Subsidies would rise 73.8 billion yen, it said.

The ministry, which normally reviews the prices once a year, raised the floor levels in April for the first time in about three decades. Corn rose to an all-time high $7.2175 a bushel today as rain in the U.S. Midwest cut forecast output. Japan's farmers depend on imports for almost all their feed grains and soaring costs have forced some producers out of business.

``The emergency measures may not be sufficient to rescue farmers,'' Nobuyuki Chino, president of Tokyo-based grain trading company Unipac Grain Ltd. ``More farms may go bankrupt, leading to a slump in feed demand, as corn prices may top $8 by the end of the year.''

Corn has gained 81 percent in the past year as demand surged for feed and biofuels. The July-delivery contract gained 1.2 percent to $7.1175 a bushel in after-hours trading on the Chicago Board of Trade at 5:43 p.m. in Tokyo. The U.S. Department of Agriculture on June 10 cut its crop estimate to 11.735 billion bushels, compared with 12.125 billion bushels forecast on May 9.

Freight Costs

Feed costs also increased as freight rates for grain cargoes surged on rising demand, a shortage of ships and surging fuel prices, Unipac's Chino said. The cost to import U.S. corn to Japan exceeded $10 a bushel for July-September shipments from the Gulf of Mexico, he added.

``Without additional support from the government, supply of domestically produced milk and other livestock products will eventually become unavailable to consumers,'' Nobuhiro Suzuki, the chairman of the ministry's livestock panel, told reporters today after approving the package.

Japan imported 12.1 million tons of corn for feed last year, according to data from the Ministry of Finance. Shipments from the U.S., the world's largest producer and exporter, represented 93 percent of the total imports.

Wholesale Market

The increase in Japan's floor prices in April was the first for pork in 31 years and the first for beef in 27 years. The government can buy meat from the wholesale market if prices fall below the support level, providing protection for farmers. The prices are also used as the benchmark in the meat trade outside the wholesale market, according to the ministry.

Corn is the biggest ingredient in Japanese compound feed used for livestock, and soybean meal is the second-largest. Japan is Asia's second-biggest soybean importer after China.

Compound feed prices in Japan rose to an average 62,800 yen per metric ton this quarter, up 18 percent from a year earlier, according to the agriculture ministry.

The government has subsidized part of the increase in feed costs to support farmers. Still, costs to farmers rose 17 percent from a year earlier to 52,300 yen per ton on average in the quarter, according to the ministry.

``An increasing number of livestock farmers are abandoning their business because feed and other costs have exceeded their incomes,'' said Masataka Ishiguro, vice secretary general at National Confederation of Farmers Movements, representing over 40,000 farmers in Japan.

Compound feed output in Japan totaled 2.1 million tons in March, down 4.4 percent from a year earlier, according to the Web site of the Feed Supply Stabilization Organization. In the fiscal year ended March 31, 2007, feed production reached 24.4 million tons, rising 1.1 percent from a year earlier.

To contact the reporter on this story: Aya Takada in Tokyo atakada2@bloomberg.net

Last Updated: June 12, 2008 05:03 EDT