The government increased the budget by 55 billion yen (US$480 million), or 23 percent, to 298 billion yen for the year ending March 31, the Finance Ministry said in a statement. Funding was 203 billion yen last fiscal year.

Wheat prices have gained 58 percent this year as adverse weather cut output in Australia and other producing countries, pushing global stockpiles toward a 32-year low. Japan relies on imports for 85 percent of its food wheat needs and 71 percent of its food barley. Rising costs are forcing companies such as Kirin Holdings Co., Japan's biggest brewer, and Yamazaki Baking Co. to increase prices.

"We ran out of money for wheat and barley imports by the end of October,'' said Youichirou Tomiyoshi at the Ministry of Agriculture, Forestry and Fisheries Grain Trade Division. "We may have to add more money by the end of the current fiscal year if costs to import the grains stay high," he said.

Japan's food wheat imports are expected to decline to 4.86 million metric tons for the year to March 31 from 4.96 million tons a year earlier, according to the ministry. The U.S. is the largest wheat supplier to Japan, followed by Canada and Australia.

Japan's food barley imports are forecast to fall to 270,000 tons from 380,000 tons, according to the ministry. Australia is the largest barley supplier to Japan, followed by Canada.

Barley is used mainly for beer and tea production in Japan. Kirin Holdings will raise beer prices in February for the first time in 17 years to cover the higher cost of brewing malt and aluminum cans, it said Oct. 31.

Yamazaki Baking, Japan's largest bread and pastry maker, will increase prices in December because of higher wheat costs. Instant-noodle makers Nissin Food Products Co., Sanyo Foods Co. and House Foods Corp. also announced price increases.

"We have no other options but to buy wheat, even if it is very expensive, because there are no alternative food grains to it," said Nobuyuki Chino, president of Tokyo-based trading company Unipac Grain Ltd. "Consumers will have to pay more."

Freight increases have also increased costs in Japan. The Baltic Dry Index, a measure of transporting commodities by sea, reached a record close of 11,033 on Oct. 29.

The cost of importing wheat and barley exceeded Japan's initial budget allocation for the first time since the year ended March 31, 1980, Tomiyoshi said.

Japan's total food wheat demand is forecast at 5.74 million tons this fiscal year, with 820,000 tons to be supplied from wheat grown in Japan, the ministry said.

Total demand for food barley is forecast at 380,000 tons, with supply of domestically grown barley estimated at 110,000 tons, the ministry said.

Japan also plans to import up to 200,000 tons of wheat and 1.41 million tons of barley for animal feed.