Weather may chill economy in Japan

By Tim Kelly
Bloomberg News

TOKYO — Japan's coolest summer in more than a decade may cause one of the worst rice crops in half a century, reduce sales at companies such as Toshiba Inc. and Asahi Breweries Ltd., and hinder any economic recovery.

"It's already fall in the north," said Kiyoharu Takano an official at Japan's Meteorological Agency in Tokyo, referring to the three northern prefectures on Japan's main Honshu island. "This could be a blow for the rice harvest."

While a heat wave in Europe killed as many as 5,000 people in France alone, temperatures in Tokyo averaged 73 degrees Fahrenheit in July, about 10 degrees below normal, with a third of the usual sunshine. Toshiba says air conditioner sales probably slumped by a third last month from the previous year. Asahi has cut its profit forecasts for the year.

"The poor weather could knock down one of the pillars of the economy — consumer spending — just when it looks like there are positive signs," said Akira Yamashita, an economist at Dai-Ichi Life Research Institute.

Although cool weather was a boon for Tokyo Electric Power Co., the city's main electricity supplier, which is struggling to get nuclear power plants back on line, many other companies are hurting.

Toshiba is betting it's too late for a revival in sales this year and has cut production, said spokesman Akinori Nakashima in Tokyo. He declined to elaborate.

The cool weather helped Japan avoid the sort of rolling blackouts that gripped Italy in June.

Japan's Ministry of Agriculture says it won't release its latest forecast for the size of the rice crop until next week. It said last month the lack of sunshine and low temperatures would reduce output.

Private researchers, including Rice Databank Co., say the harvest may be the worst since 1993, according to the company's Web site. The country's 1.6 million tons of stockpiled rice, or eight times more than it had in 1993, means it's unlikely there'll be any general shortages, said Yosuke Kawamoto, an official in the ministry's rice bureau.

Beer is one product that's oversupplied. Japan's five major breweries slashed deliveries by 12 percent last month from a year earlier because of the weather and an increase in beer taxes.