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Japan's wagyu ranchers risk losing market to overseas competitors

Farmers could use intellectual property rules to limit access to cattle DNA

Australia already raises wagyu, "The Rolls-Royce of Beef," and Japanese ranchers want to make sure China does not also become a competitor. (Photo by Wataru Suzuki)

TOKYO -- Wagyu beef marked with a "made in China" sticker? Japanese farmers have narrowly escaped such a threat to their livelihoods, at least for now.

Japan's agriculture ministry is pressing criminal charges against a man who tried to take wagyu sperm and fertilized eggs to China. Authorities allege the man violated the Domestic Animal Infectious Diseases Control Act.

Japan exported 906.8 billion yen ($8.2 billion) in agricultural goods last year, a record high and close to the government's 1 trillion yen target. Beef accounted for 24.7 billion yen of the total, up 29% from the previous year.

If production of wagyu, which means Japanese beef, takes off in China, Japan could lose the Asian market. Japanese cattle raisers already face competition in South Korea and Hong Kong, which are importing Australian "wagyu."

Alarmed by China's attempt to follow Australia, the agricultural ministry on Feb. 15 convened an advisory panel to study how Japan can better protect its hold on the market for its native, high-fat-content marbled beef.

Controlling exports through legal means is difficult. Regulators can only charge someone taking wagyu resources out of the country if they fail to test for infections, a measure aimed at preventing the spread of disease.

Wagyu sperm and eggs cannot currently be exported only because of restrictions introduced after a foot-and-mouth disease outbreak in 2000. But shipments could start again as soon as Japan agrees on terms of sanitary inspections with other countries.

Other export controls restrict transactions "considered to undermine the maintenance of international peace and security," in compliance with rules laid out by the World Trade Organization.

There is an international system to block the commercial cultivation of newly developed plant varieties, particularly fruit-bearing kinds, that are illegally taken overseas. It counts both China and Japan among its signatories.

Despite this, Japanese farmers were unable to stop the growing production of Shin Muscat, a premium grape variety that spread to China. They lacked the strategic thinking to protect their intellectual property and failed to register the variety in China by a specified deadline.

Even if Japan's farmers have learned from this inaction, there are no international rules to protect intellectual property rights for animal varieties like wagyu. Establishing rights for cattle ranchers similar to those for fruit growers would be difficult, the farm ministry has said.

Izumi Hayashi, an attorney who took part in the panel discussion, said genetic resources include breeding information and that it is possible to protect this information by invoking the Patent Act and Unfair Competition Prevention Act.

A revised version of the law, to take effect in July, will make it possible to block malicious acquisition or use of "distribution-restricted data," even if the information is not considered a trade secret. As a result, farmers will be able to file for injunctions and damages, Hayashi said.

Distribution-restricted data refers to information that has been encrypted or otherwise handled to restrict its access to a limited group of intended recipients. The revision is aimed at enabling companies to start new ventures or boost added value.

And if wagyu genetic resources are regarded as high value-added data on breeding, and if the use of this information is restricted, the rightful owners will have a tool to prevent intellectual property leaks.

But once wagyu resources enter China, there is no way production of the melt-in-your-mouth beef can be stopped.

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