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Meeting on Individual Quota System

November 11, 2008

The Fisheries Agency held the 5th TAC System meeting with industry experts in Tokyo on November 7, 2008.

First, "Summary of Individual Quota (IQ) and Individual Transferrable Quota (ITQ) and Japan's Standpoint of the Issue" was presented by the agency; performances as well as advantages and disadvantages of the two systems in other countries were further reported.

With respect to Japan's stance on the introduction of the system, the agency said: IQ would be "difficult to be implemented in Japan at this time, because there are a large number of fishing boats and landing ports; even though IQ enables strict and appropriate monitoring of fishing quotas and also improves freedom of each fisherman." Furthermore, the agency referred to the second option by saying: "ITQ will endanger fisheries' structure reform and improvement of productivity, however there is a concern that this system may negatively impact the long cultivated fishing operation custom, order as well as social structure of fishing villages. Another concern is a creation of vested-interest structure around quotas."

OECD Recognizes IQ System, but Points out Demerits

The agency exhibited evaluations by the OECD as one of the overseas cases: merits and demerits of the Olympic style fishing: 1) acceleration of fishing operation and resultant time reduction for low TAC; 2) increases of excessive investment and fishing costs for expedited fishing operations; 3) decreases of income and instability of employment, resulting from lowered fish prices as a consequence of concentrated fishing operations; 4) lessened interest in preservation of small fish species due to competition over optimization of fishing quotas; and 5) lower TAC management costs, compared to IQ management.

In contrast, according to the OECD, the IQ system entails the following merits: 1) a specific harvest amount granted to each fisherman (possible free transfer of quotas in the ITQ system); 2) minimized competition; 3) employment stability due to prolonged fishing operations; 4) avoidance of harvest value maximization and a glut, leading to price and quality improvement; and 5) cost reductions. Conversely, as demerits, the following two concerns were stated: 1) increases in management cost and 2) possibility of market monopolization, derived from disparities among fishermen.

As a case seen in Japan, the implementation of the IQ system for a resources recovery plan of red queen crab in the Sea of Japan was mentioned. Furthermore, another example of the introduction of the IQ system for international fisheries management of Southern bluefin tuna was given. In both cases, the IQ system enabled to limit a number of landing ports, resulting in easier management.

The agency referred to Japan's stance on the implementation of the system; "it will require an enormous amount of management costs. Concentrated fishing operations at the seasons of high fish prices will be expected, leading to market confusion. Especially, the ITQ system will involve readjustment and abolishment of various regulations, which may cause chaos in the operation order." The agency expressed a need of careful deliberations.

Experts Present Cautious Approaches

Council members expressed various opinions: "There is a difference in mentality between the West and Japan; the quota system will break the long cultivated order and institution," "It is not necessary to apply the system to all fisheries, just to appropriate ones," "Both IT and ITQ have some financial implication added to them. Japan shouldn't go any further than fisheries management policies. Both systems aren't suitable with the current circumstance," "Both IT and ITQ don't match the current fishing methods and institution, ending up causing some complications," "Fishermen are interested only in TAC, not in either IQ or ITQ," and "only part of intellectuals and media are advocating the systems."

The original article was published on November 11, 2008 and was translated by Kiyo Hayasaka.

Maruha Nichiro HD Reports Interim Results: Operation Earnings of \8.8 Billion

November 11, 2008

Maruha Nichiro HD announced the second quarter (interim) results of a fiscal term ending March 2009 as follows: sales proceeds of \453.6 billion, operating income of \8.792 billion, and ordinary profit of \7.123 billion. With the impairment loss of fixed assets and merchandise inventory-related losses, net profit for the second quarter resulted in \1.454 billion.

The merger between Maruha Group headquarters and Nichiro, which took place on October 1, 2007, makes it irrelevant to simply compare the just released figures with the last year's results; Maruha Group's second quarter numbers of the previous year were as follows: sales income of \363.5 billion, operating proceeds of \5.056 billion, ordinary profit of \4.659 billion, and net earnings of \774 million.

The forecast for this business fiscal term is sales earnings of \930 billion, operating profit of \19 billion, ordinary profit of \14 billion, and net proceeds of \2.5 billion.

Seafood Business Exhibits Favorable Results Except for Receiving Operation

The second quarter results of seafood business reported sales profit of \292.1 billion and operating earnings of \5.865 billion. The favorable market trend boosted its North American business. Fisheries and aquaculture, seafood trading, as well as strategic sales operations individually displayed satisfactory performance; however receiving operation was unable to follow suit due to the high auction prices and stagnant consumption.

Food business registered total sales of \147.3 billion and operating profit of \4.323 billion. Frozen foods operation suffered the soaring prices of raw materials and witnessed moribund sales of Chinese prepared frozen food and frozen vegetables due to adversities of Tenyo Shokuhin scandal as well as dairy products tainted by melamine. As for the processed foods division, shortages and higher prices of the main ingredients of canned seafood, salmon, mackerel, and sardine, fostered the challenging business environment; and yet, functional jelly with no calorie and special dietary food, DHA fish sausage "Resala," displayed a nice growth.

With the rising costs of surimi, a raw material of fish sausage and chikuwa products, the company resiliently handled the disadvantageous situation by revisions of prices and standard. Livestock business enjoyed smooth operation thanks to a steady market price growth of poultry and feed materials. Imputing the high costs by raising product prices resulted in improved profit for the chemical products division.

Storage/logistics business indicated sales proceeds of \7.482 billion and operating earnings of \514 million. Sales amounts by location are as follows: Japanese marked sales proceeds of \413 billion and operating earnings of \8.971 billion; North American, \21.5 billion and \2.332 billion; European, \3.057 billion and \75 million; and Asian, \14.7 billion and \47 million respectively.

Profit Loss in Madagascar Shrimp Business

Maruha-Nichiro HD announced an extraordinary loss of \660 million in operations in Madagascar, resulting from a downturn in shrimp business by Madagascar Suisan, with more than 40 years of capital tie-up, and Madagascar Yoshoku (Aquaculture), a subsidiary.

The original article was published on November 11, 2008 and was translated by Kiyo Hayasaka.

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