Archive for the ‘Japanese farming’ Category

EU – Japan trade deal ups the ante

July 13, 2017

The FTA announced just before the G20 meeting in Hamburg is touted to bring substantial benefits to EU agricultural producers. It will put EU exporters on a level playing field with countries like Australia which already have an agreement, but notably it will put New Zealand at an even greater disadvantage until our trade negotiators can achieve a similar outcome. (more…)

Trump encourages trade winds to blow cold

February 9, 2017

It hasn’t taken long for the hawkish new US President to throw several cats among the trade pigeons or doves if you prefer. He has wasted no time in signing an executive order to withdraw from the TPP over which 12 countries had slaved for seven years, but now the participant that probably caused the most delay has acted to ensure it won’t happen at all. (more…)

ANZCO’s profit disclosed in Itoham’s statement

March 5, 2015

Japanese food company Itoham Foods announced last week an increase in its shareholding in New Zealand meat processor and exporter ANZCO Foods from 48.28% to 65%. As a result of the transaction it will be able to consolidate ANZCO’s revenues and earnings into its annual accounts.

 

$40 million worth of shares are being bought from three entities: another leading Japanese food manufacturer Nippon Suisan Kaisha, chairman Graeme Harrison, and JANZ Investments, owned by Graeme Harrison and ANZCO staff members. The sale will see the minority shareholders reducing their shareholdings on a pro rata basis with Harrison’s effective holding falling from approximately 20% to 14%.

 

A side effect of the announcement to the Tokyo Stock Exchange was the disclosure of ANZCO’s annual result for the 2014 year which would not normally be announced to the Companies Office until late March. This demonstrates a small drop of $25.6 million (1.92%) in sales, but a two thirds reduction in operating income and a $6.2 million or 50.8% fall in net profit. This fell from $12.22 million to just over $6 million.

 

The figures do not give any details of the reasons for the profit reduction, although a 9.4% increase in total assets suggest an increase in inventories may be a factor. The profit represents a 0.48% return on sales and 2.7% on net assets which is less than ideal, albeit a continuation of ANZCO’s track record of posting a profit, apart from 2012 when the whole meat industry lost money.

 

The main question is why Itoham has decided to increase its ownership percentage in a New Zealand meat exporter now when it has been content to remain a fairly passive shareholder since 1995 when Harrison put together a consortium of investors to buy ANZCO from the Meat Board and Huttons Kiwi.

 

The answer appears to be a combination of factors, notably Harrison’s stated intention to retire at an appropriate time presumably in the relatively near term. In 2009 Mitsubishi Corporation became Itoham’s largest shareholder which can now access 28,000 staff in Mitsubishi’s Living Essentials Group involved in all stages of the distribution chain throughout the world with a focus on emerging markets.

 

Itoham’s announcement to the Tokyo Stock Exchange signals its intention to grow its business outside Japan by becoming “the most trusted manufacturer of processed meat in Asia”. Itoham’s investment with ANZCO is seen as an integral step to achieving this goal. ANZCO is seen as an ideal platform for expanding red meat sales to the world’s growth markets which contrasts with Itoham’s previous focus on the Japanese domestic market for sausage and processed meats.

 

Correspondingly the main business focus of Nissui which also bought its shares in 1995 is on marine products including a 50% shareholding in Sealord, processed foods and chemicals. Therefore its holding in ANZCO is less aligned with its core businesses.

 

At this point there will be no change to ANZCO’s board of directors or management with Graeme Harrison and Mark Clarkson remaining as Chairman and Managing Director respectively. In time it seems inevitable that consolidation of ownership and retirements will result in further changes.

Changes afoot in Japanese rice farming

November 6, 2014

I picked up quite by accident an article in today’s (20 October) The Star, a Malaysian English language newspaper, which described significant changes in Japan’s rice farming habits. Under the headline ‘Japan rice farmers rotting from inside’, the AFP article describes how many rice farmers are retiring with few interested in replacing them.

 

There is a photo of Shuichi Yokota, aged 38, checking growth conditions with a smartphone in his rice field 70 km from Tokyo. The article describes how he, at half the age of the average grower, flies on cutting edge technology to cultivate vast Padi fields which are many times larger than most of the country’s rice plots.

 

His farm in Ryugasaki is 112 ha, having expanded five fold in 15 years, simply, he says, because retiring farmers have asked him to cultivate their farms on their behalf, not wanting to sell the land, but having nobody who wants to buy it. While most rice farmers get along on centuries old methods, Yokota and his colleagues share information and data such as temperature and water levels, monitored by sensors installed in each paddy, on their smartphones.

 

People are now betting that farmers like Yokota are the best hope of fixing the inefficient Japanese farming system, cosseted by decades of protectionism. Prices for rice have tumbled by half in 50 years and there are fears the sector is rotting from the inside. It also appears Yokota and his like are relaxed about the prospect of opening the market up to foreign competition.

 

For years central government has stabilised prices by controlling supply and penalising over-production, as a means of protecting farmers, a key voter base, from the impact of world market volatility. This policy of small scale cultivation, known as  ‘gentian’, has effectively made rice farming a part-time job for the older generation while the younger family members get on with higher paid jobs in other sectors.

 

Unfortunately the age of farmers is 66 on average and many are retiring with few looking to replace them. There is now an area of 400,000 ha, almost twice the size of Tokyo, of unused farmland across Japan. Another complication is the entry of the country’s largest supermarket chain Aeon into the rice business which presumably means more competition and a drive for cheaper prices, not to mention production methods.

 

It occurs to me that, while Japan continues to obstruct the efforts of TPP signatories to eliminate agricultural tariffs, it may be faced with an inevitable drive from within to do away with historical levels of tariff protection. It may not happen this year or next, but change is afoot.