The government's efforts to protect the agriculture sector is affecting ailing Snow Brand Milk Products Co. and its plans to restructure.

An LDP lawmaker on Wednesday said the farm ministry has told Snow Brand that it does not want the nation's largest dairy to restructure by forming a capital alliance with a foreign company.

The lawmaker, who was not identified, quoted Kikuhito Sugata, director general of the Agriculture Production Bureau of the Agriculture, Forestry and Fisheries Ministry, as saying, "I doubt that a foreign company will understand . . . why and how Japan's dairy farming should be protected."

Sugata made the comment in response to a Liberal Democratic Party lawmaker who said, "There is a possibility our country's dairy farming will be thrown into an uproar if a foreign company takes a controlling stake in Snow Brand Milk Products," the unidentified lawmaker said.

The LDP has long relied on the farm sector for votes.

Sugata was also quoted as saying he told Snow Brand to consider choosing a Japanese partner or take other measures.

Another lawmaker requested the ministry tell Snow Brand to tie up with a food manufacturer or milk-based drink producer to bolster its dwindling capital base, the lawmaker said.

"We cannot predict what a trading company will do if it holds a controlling stake in the firm," the lawmaker said, suggesting a nonagricultural company may sell agricultural products at "unreasonably low" prices.

On Tuesday, Kohei Nishi, president of Snow Brand Milk, said the company was talking with candidate firms, including foreign interests, about capital infusions, but that specific equity stakes had not been discussed.

Snow Brand already has a business tieup with Nestle Japan Ltd., and the Nestle group is among the names being floated in a capital tieup. Another possible suitor is major trading firm Itochu Corp.

The Snow Brand group has been seriously damaged by a meat-labeling scandal involving subsidiary Snow Brand Foods Co. that hit as the group had not fully recovered from a food-poisoning incident in June 2000.

Snow's ratings cut

Standard & Poor's Corp. said Wednesday it has lowered its rating on Snow Brand Milk Products Co. from B+pi to B-pi, saying it remains "highly uncertain" whether the dairy firm can attract a strategic investor.

The U.S. credit-rating agency also said the downgrade reflects its concern over Snow Brand Milk's ability to avoid further deterioration in its operating performance and financial profile.

"It is highly uncertain whether the company's restructuring plan announced (Tuesday) will fully materialize, and lead to a recovery in its operating performance and financial strength," the agency said.

S&P said it believes Snow Brand Milk's stated objective of attracting a new strategic investor will be difficult to achieve and, even if successful, will not necessarily serve to restore confidence in the company.