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Japan to Ease Fungicide Rule to Smooth Brazilian Coffee Imports

Rafael Facarolo sieves coffee beans at San Benedito's Farm in Espirito Santo do Pinhal, Brazil. Photographer: Paulo Fridman/Bloomberg
Rafael Facarolo sieves coffee beans at San Benedito's Farm in Espirito Santo do Pinhal, Brazil. Photographer: Paulo Fridman/Bloomberg

May 18 (Bloomberg) -- Japan, the world’s third-largest coffee buyer, is relaxing its rule on agrochemical residues in green coffee imports in a move that may boost shipments from Brazil, the biggest producer.

The government will raise its tolerance level for pyraclostrobin, a fungicide, to 0.3 parts per million from 0.01 ppm, Toshiaki Kudo, deputy manager at the standard and evaluation division of the Ministry of Health, Labour and Welfare, said in an interview in Tokyo.

The new rule is the same as the limit endorsed by the Codex Alimentarius Commission, a group that sets world food standards, he said yesterday. The government will complete procedures for the change as early as this month, he said. Brazil supplied 28 percent of Japan’s green coffee imports of 390,938 metric tons last year, Ministry of Finance data show.

“The standard of 0.01 ppm is absurdly low,” Eduardo Teixeira, head of the economic sector at the Brazilian Embassy in Tokyo, said in an e-mail. “This has caused immense loss for both exporters and importers. Brazil welcomes the initiative.”

The rule has slowed imports, leading to a drawdown in domestic inventories, said Toyohide Nishino, executive director at the All Japan Coffee Association, a roasters group. Coffee bean stockpiles dropped to 98,293 tons at the end of January, the lowest level since December 2004, according to the Ministry of Agriculture, Forestry and Fisheries.

Tougher Rules

Japan, which imports 60 percent of its food requirements, has regulations that are tougher than international standards on commodities including beef and cocoa as consumers become more sensitive to food safety. The rules have increased costs for importers and processors as demand from China boosts prices.

“Stricter controls may make exporters less willing to sell to Japan, and the nation may lose bargaining power as competition intensifies with China,” said Nishino. Japan needs to revise its safety requirements to bring them “in line with the reality of global trade,” he added.

The rosters’ group spends about 8 million yen ($86,460) a month checking for agrochemical residues in beans, as the health ministry requires every cargo from Brazil to be tested. The action started in June after the ministry discovered above-acceptable levels of pyraclostrobin in shipments. Contaminated beans must be destroyed or shipped back under the Japanese law.

Normalize Shipments

The new regulation will help normalize coffee shipments from Brazil as agrochemical residues in beans from the country are below the international standard, said Teixeira.

A large number of containers with Brazilian beans are stopped in Japanese ports, and the majority of these shipments contain 0.02 to 0.05 ppm of the chemical, he said.

Japan imported 110,214 tons from Brazil last year, Finance Ministry data show. Colombia was the second-largest supplier with 76,911 tons, and Vietnam was third with 57,865 tons.

Arabica-coffee futures for July delivery slipped 1.75 cents, or 1.3 percent, to $1.3255 a pound on ICE Futures U.S. in New York yesterday. The commodity touched $1.32, the lowest level for a most-active contract since May 7.

To contact the reporters for this story: Aya Takada in Tokyo at atakada2@bloomberg.net;

To contact the editor responsible for this story: James Poole at jpoole4@Bloomberg.net

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