Stay domestic, Japan's Snow Brand told

Tokyo, Japan -- An official at Japan's Agriculture Ministry has urged scandal-hit Snow Brand Milk not to seek a tie-up with a foreign firm because of the impact that could have on the dairy industry, domestic media said Wednesday.

"I wonder if a foreign company is suitable for understanding Japanese dairy farming," Kikuhito Sugata, head of the Ministry of Agriculture, Forestry and Fisheries agricultural production bureau, was quoted by Kyodo news agency as saying.

He was talking to a meeting of ruling Liberal Democratic Party (LDP) lawmakers.

His comments came after Japan's largest dairy products maker said it was looking to sell a stake of between five and 10 percent to an outside investor to help weather a meat-packaging scandal at its subsidiary, Snow Brand Food.

Kyodo also reported Wednesday that Japanese police suspect a senior official at Snow Brand Food was behind the scandal, which involved the mislabeling of imported Australian beef as domestic beef to take advantage of a government buyback scheme.

The company, Japan's sixth largest meat packer, admitted to the deception on January 23.

Shares tumble again


Snow Brand Food president Shozo Yoshida resigned last week to take responsibility for the scandal

Shares in Snow Brand Milk closed down more than 10 percent or 12 yen to 105, after rising 2.63 percent in the previous session. A month ago the stock was at 224 yen, meaning it has lost more than 50 percent of its value in the past six weeks.

Snow Brand Food, its 65-percent held subsidiary, was down 13 percent to 26 yen, after touching another record low of 23 yen earlier in the day. Its one-year high is 216 yen.

Snow Brand Food has seen its share price savaged since it admitted to trying to get government aid. That money was being made available to help the domestic industry cope with the impact of the mad cow disease outbreak in Japan.

Its president, Shozo Yoshida, resigned last week to take responsibility for the scandal.

On Tuesday, Snow Brand Milk president Kohei Nishi said the company was in talks with other parties about a restructuring plan.

Japanese media reports said this plan centered on a possible capital injection from Nestle Japan Holdings Ltd, the wholly-owned Japan unit of Swiss food giant Nestle SA, and Japanese trading house Itochu Corp.

Snow Brand Milk had already been struggling to rebuild its reputation after a milk-poisoning scandal of its own that left 10,000 people sick in June 2000.