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Kyokuyo President Fukui Says "It Will be Year of Safety and Low Price Next Year"

December 22, 2008

Kyokuyo President Kiyokazu Fukui held the year-end press meeting at the company's headquarters in Tokyo on December 19, 2008 and spoke about 2008 business trends as well as business policies for 2009 and beyond.

"Misconducts by the industry, such as Chinese frozen potsticker scandal, happened one after the other this year, deepening consumers' concerns over food safety. For the first half of the year, purchasing competition at elevated prices forced us to deal with agonizing sales. With the ongoing increases in the costs, we struggled to continue negotiations of price raises, however things took on a new aspect in November."

The President voiced concerns apparent in this year's review: "A slump in domestic consumption caused by the worldwide financial meltdown and stronger pressure to lower prices as a result of the dearer-yen-giveback sales at the end market indicated extreme differences in business environment between the first and last half of this year. The favorable business results seen until the second quarter were halted in November and this adverse condition is continuing on, entering into the year-end sales competition. High-end products, such as crab, shrimp, and tuna in particular, are not moving well."

Concerning the remainder of the year, President Fukui said, "The key is how long we can save earnings from the first half year. Now, all depends on the December result. Today, we just had a board meeting and all agreed that how closely we could match the result of this December with that of last December, which exhibited favorable performance, would determine the fate of this fiscal term."

On the perspectives of the future of the business, the President commented: "As an individual company, Kyokuyo proceeded with anticipatory investment in bonito and tuna operations. Kyokuyo Suisan, a group company, commenced a construction of a fishing boat, the 7th Wakabamaru, as a replacement of the 8th Wakabamaru in November. The new ship will be a large one with the-state-of-the-art features and international competitive edge (1,200 tons); the construction is slated to complete next September" He continued, "Additionally, Jokki Co., a maker of delicacies, became a wholly owned subsidiary late September, as part of hard-hitting strategic measures for room-temperature foods operation. This investment was done to replace discontinued canned whale meat and we expect the synergy effect further from convenience store sales. Tuna ranched a year ago at Kyokuyo Marine Farm at the Sukumo Bay, Kochi Prefecture, has now grown to be 15 to 20 kg. The first shipment is scheduled for next November. We plan to produce 300 tons of tuna in 10 corves. We are also looking into business development in Nagasaki and Wakayama Prefectures."

Exhibition of Abilities As Seafood Professionals

The President touched on marine products operations: "In the first part of the previous year, seafood business suffered tremendously as a result of a plummet in prices of Argentina shrimp and Chilean salmon; however, the seafood operation managed to recover this year. The result of the stronger yen helped prevent "kaimake" (defeat at the auction) except for some fish kinds; however, when the end market prices are fixed and/or demand of lower prices is strong, the way we purchase fish decides the fate of any deal. In other words, this is the chance for us to display our abilities as seafood professionals."

"It is expected to be a "year of safety and lower prices" next year. Yet, we will continue our backbone policy of "purchasing the appropriate amounts at proper times," advancing our global business strategies and processing strategies," he stated on his viewpoint for the coming year.

The original articles was published on December 22, 2008 and was translated by Kiyo Hayasaka.

Mackerel Exports: Catch Decline and Stronger Yen Convert Mackerel into Domestic Fish Feed

December 22, 2008

Mackerel exports to South Korea and China shrank due to the dearer yen, resulting in a trend of distribution of the fish to domestic fish feed.

Exports of frozen and chilled mackerel fetched 156,266 tons in 2007 and 118,000 tons as of October 2008, showing signs of slowdown. The average price recorded \90 in 2007 and \113 in 2008.

Mackerel exports to Africa and China grew, beginning in 2007. Mackerel from Japan began being shipped at higher prices to countries with a custom of using the fish for human consumption, rather than animal feed. However, the low mackerel catch amount raised auction prices at ports of landing. Moreover, as a result of the appreciation of the yen from autumn, a stakeholder of a trading company said, "there are no phone calls for orders."

The sufficient yield amount of mackerel in smaller sizes is generating a trend of the fish becoming fish feed for tuna and yellowtail, possibly ending in "a drop in the fish feed prices, " pointed out by the stakeholder.

Some trading company dealing with South Korea and China said, "Leveling off at more than \70, exports to China stopped in December." As for transactions with South Korea, the said company stated: "The depreciation of the Korean won and the appreciation of the yen adversely affected the price negotiations."

Business transactions in 2009 with South Korea and China are expected to be "difficult, if the stronger yen and higher fish prices continue," said the company. In contrast, shipment to Africa has been increasing. Additionally, inquires from Ukraine are fostering a hopeful expansion of business clients.

The original article was published on December 22, 2008 and was translated by Kiyo Hayasaka.

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