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Reorganization of Production System Sequentially Put into Practice Nationwide

May 11, 2009

It has been a year since the kick-off of a new enterprise. For Maruha Nichiro Group, it is a decisive year, marking the second year of the mid-term business plan "Double Wave 21." Not only will success and failure of the merger be questioned, but also the acceleration of the synergetic effect will be demanded. Toshio Kushiro, who became the Vice President of Maruha Nichiro Holdings as of April 1, shared his outlooks on the new fiscal year.

"The fighting fields of Seafood and Foods operations have expanded more, compared with the former single entities of Maruha and Nichiro. Seafood business overwhelmingly deals with the majority of fish varieties, and Food business added Maruha's fish ham/sausage, jelly, and chikuwa to product line-ups of the former Nichiro. We also possess the top shares of the majority of canned seafood products, except for tuna cans. As a result, we are becoming a company, which potentially owns price forming power."

"Appropriate training of human resources has been completed; however, plant reorganization is forthcoming. Waste is, in other words, a mountain of fortune. We just should believe that fortune convertible to profit is hiding. From now on, we are facing a stage of emphasizing this mountain of fortune."

"In the Storage/Logistics segment, Maruha logistics network (currently, Maruha-Nichiro Logistics), which consolidated scattered cold storage companies, has expanded its operations, enabling large scale investment. Also in Seafood and Foods operations, we have arrived at the phase of the future business partnerships, capital participation, and plant acquisitions."

"For the previous fiscal year ended March 2009, as a result of foreign currency transaction losses and accounting for the impairment of investment securities, we ended up posting net loss of \6 billion. However, we registered an operating profit of \16 billion. In this fiscal year, we are hoping to turn the final profit and loss results positive. Operating earnings of \20 billion is never beyond our reach. First off, we will bring this deficit-ridden company to the surface. For the first half of the previous term, the wholesaling segment, mainly tuna, performed poorly. In this term, combining the projected numbers of each operation gives a quite good outlook. Avoiding setbacks is important."

"We cannot expect the financial recovery right away. High-priced processed foods are not selling well; instead, consumers are concentrating on inexpensive products. In this circumstance, all we can do is to strengthen our core abilities to generate profit."

"Reorganization of production systems will start in the Hokkaido and Tohoku areas as a first shot, then sequentially it will be put into practice nationwide. Strengthening product development and quality management, we aim for cost reductions through the streamlining of production and distribution. Cheap and/or unpalatable food won't be accepted. We will provide tasteful and high quality products."

"It is imperative to create a work environment which evokes joy of labor at production sites. Building a company where employees come to work everyday out of desire, not obligation, will result in the excellent company we seek to maintain."

The original article was published on May 11, 2009 and was translated by Kiyo Hayasaka.

Uoichi's June Market Forecast: High-Priced Chilean Coho Salmon Stays Bullish

May 11, 2009

<Farmed Coho Salmon> Shipment from Sanriku (Ishimaki, Onagawa, and Shizukawa). The estimated production amount is roughly 120 percent (weight comparison) over last year's yield based on a whole fish calculation. In spite of this yield increase, the amount of the fish used for frozen and processing is on the rise, and therefore arrivals of the fresh fish will remain about the same as the last year. In recent years, sales of processed products for raw consumption are growing.

<Fresh Tuna> The arrival amount of bluefin tuna depends on the domestic catch; shipping from Sakaiminato (Tottori Pref.) is expected. Imported bluefin tuna will be Australian Southern bluefin. Yellowfin tuna will mainly come from Indonesia and Taiwan; less fish is predicted to arrive than the last year.

<Frozen Tuna> Quality of the fatty part of bluefin and Southern bluefin, as in the previous year, is believed to be low and arrival of the goods cannot be expected, either. Yellowfin and big-eyed tunas for their red meat products will also be low in quality and shipment amount.

<Frozen Shrimp> The cultured shrimp harvest season is gradually starting; Indian Black Tiger shrimp will begin to arrive after the Golden Week Holiday at the earliest. Shrimp from Vietnam and other countries will start arriving in June. Its market rate will show a bullish move as a result of low domestic inventories. Especially, sizes smaller than 21/25 in Black Tiger shrimp are becoming short and new arrivals are long awaited. As for wild shrimp, it is forecasted that shipment to Japan will increase due to the worsening world market.

<Salmon/Trout> Farmed Chilean coho salmon exhibited such slow freight market situation due to a sudden hike in product prices. However, it is estimated that the shipping quantities to Japan will be about 10,000 tons less than the previous year, and that its going rate will, for the time being, remain high, going sideways. With regard to farmed Chilean trout, its market price will also stay high bullishly as a result of inflated offer prices from local producers and fewer offers from the Japanese side. Alaskan wild sockeye salmon will commence its harvest season from May and the fish will be shipped out to Japan sometime in July. Its going market price will continue to move horizontally.

<Frozen Snow Crab> Alaskan snow crab started to arrive in Japan in April; as a consequence of the US economic recession, contract prices were 20 percent lower than the last year. Resultantly, its market price in Japan will be bearish. It is slated that Russian snow crab will arrive from May to June, and that the Canadian variety will be shipped in July and August; prices of snow crabs from these countries will head downward, affected by the market price of Alaskan snow crab.

The original article was published on May 11, 2009 and was translated by Kiyo Hayasaka.

March Household Expenditure: Marine Foods Decrease 4.5%

May 8, 2009

According to March 09's household expenditure results summarized by the Ministry of Internal Affairs and Communications, monthly consumption expenditures for households of more than two persons displayed a 0.6 percent decline to \310,680. Money expended on food amounted to \73,488, or a 1.9 percent fall; of which, consumption of seafood products came to \7,080, marking a 4.5 percent decline.

A total of \4,285 was spent on fresh marine products, registering a 4.3 percent drop. The following items showed considerable declines: Japanese horse mackerel (18.3 percent); squid (13.1 percent); tuna (8.1 percent) and sardine (8.1 percent). Additionally, amberjack, sea bream, bonito, and salmon tumbled all across the board. In contrast, crab performed very well, indicating an increase of 23.6 percentage points. Consumption of saury and octopus also showed increases.

In the category of sea shells, there was an increase of 0.5 percent, amounting to \438; both oyster and Manila clam showed increases of 19.1 and 0.8 percent respectively. Fresh water clam (9.1 percent) and scallop (0.3 percent) exhibited declines.

Money spent on salted/dried marine foods slumped 9.9 percent to \1,256. Especially, dried sardine (22.5 percent), boiled-dried fish (15.8 percent), and cod (15 percent) indicated large declines. Salted salmon, dried whitebait, and dried horse mackerel all displayed decreases.

Kneaded fish products earned a 3.5 percentage point increase, totaling \735. Fried kamaboko performed well, recording an 8.7 percent rise. Chikuwa also increased 3.9 percent. Kamaboko, on the other hand, fell 3.6 percent.

Other processed seafood products plummeted 3.2 percent, coming to \805. Broiled seafood and shaved bonito both indicated declines of 18.6 and 6 percent respectively. Dried products and dried seaweed increased 0.6 percent to \796. Wakame (undaria pinnatifida) enjoyed an increase of 9.5 percentage points. Prepared/cooked products exhibited a total of \7,811, or a 7.2 percent fall. BBQ eel (10.1 percent) and take-out sushi (7.2 percent) tumbled. Consumers spent \13,285 (a 6.5 percent decrease) dining out. Consumption at sushi restaurants plummeted 18.4 percent.

The original article was published on May 8, 2009 and was translated by Kiyo Hayasaka.

May Metropolitan Market Trend: Frozen Tuna Predicted to Decline

May 8, 2009

The aggregate arrival amount (a total of fresh, frozen, and processed marine foods) at the Tokyo Metropolitan Central Wholesale Market in April exhibited a slight increase, in comparison to the previous month, and the average wholesale price (an average price per kg of overall seafood products) moved horizontally.

[Spotlined Sardine (fresh)] Its arrival quantity is predicted to show a moderate growth in comparison with the prior month, and its wholesale price will somewhat display a bearish move.

[Salmon and Trout (salted/frozen)] More chum salmon will begin to arrive as the harvest season for wild salmon commences; however, other salmon varieties are believed to decline overall, contrasted with quantities available a month earlier. The wholesale price will shift sideways.

[Mackerel (fresh)] Though the catch for the fresh mackerel market was declining, the peak of its harvest season will bring a slightly increased amount of mackerel to the market over last months; it is forecasted that its wholesale price will go bearishly.

[Sagittated Calamari (fresh/frozen)] More calamari is expected to arrive than the previous mouth due to its high harvest season; the wholesale price will move somewhat weakly.

[Tuna (frozen)] The passing of the demand season will cause arrivals of tuna to slightly drop; however, its wholesale price will move bullishly.

[Bonito (fresh)] More bonito is projected to come to the market than the prior month, however its wholesale price will go soft.

The original article was published on May 8, 2009 and was translated by Kiyo Hayasaka.

April Tsukiji Market: Transaction Quantities Decline, Except for Sogo Shokuhin

May 8, 2009

Total transaction quantities for seven wholesalers at Tsukiji Market for the month of April were tallied in at 45,467 tons, an 8.4 percent decline in comparison to the same month last year. The average unit price per kg was \763, down 3.2 percent. The transaction value marked an 11.4 percent fall to \34.6 billion, exhibiting a struggling start for the new fiscal year.

The following wholesalers showed noticeable drops in quantities: Chuo Gyorui (19.4 percent on a year-over-year basis); Daito Gyorui (8.5 percent); and Thoto Suisan (8.6 percent). In terms of unit price, both Tohto Suisan and Daiichi Suisan experienced substantial decreases, 7.6 and 7.4 percent respectively. Only Sogo Shokuhin managed to exceed last year's results in both quantities and value.

Ota and Funabashi Recorded Double-Digit Decline

The following is the results of other markets (in the order of quantity, unit price, and value with a year-to-year comparison)

[Adachi] 2,274 tons (↓6.5%), \746 (↓8.1%), \1.697 billion (↓14.1%)
[Ota] 1,510 tons (↓12.3%), \825 (↓1.7%), \1.246 billion (↓13.8%)
[Chiba] 1,976 tons (↓7.2%), \746 (↓7.1%), \1.51 billion (↓13.9%)
[Funabashi] 1,874 tons (↓16.3%), \731 (↓2.7%), \1.37 billion (↓18.6%)
[Kashiwa Uoichi] 1,927 tons (↓3.5%), \868 (↓4.1%), \1.673 billion (↓7.4%)

The original article was published on May 8, 2009 and was translated by Kiyo Hayasaka.

March Seafood Exports: Salmon and Trout Increase 62%

May 7, 2009

According to statistics of March seafood exports (preliminary) by the Japan Fish Traders Association, the total amount of marine food exports came to 34,775 tons (101 percent compared with the same month last year); the total value amounted to \13.3 billion (73 percent). These results can be attributed to the fact that more salmon, trout, saury and cod were exported than the previous year.

Salmon and trout, for which export amounts declined by half in February on a year-to-year comparison, grew to 3,959 tons, or by 163 percent, in March; their unit price per kg also rose to \213 (114 percent). As for saury, its export amount was 3,462 tons (154 percent) and its unit price recorded \52 (57 percent). Cod totaled 3,822 tons (104 percent) and the unit price was \147 (74 percent).

Bonito, on the other hand, marked 1,380 tons (43 percent), displaying a plunge in its export quantity two months in a row.

The original article was published on May 7, 2009 and was translated by Kiyo Hayasaka.

March Seafood Imports: Plummet in Unit Prices Causes 20% Decline in Value

May 7, 2009

According to trade statistics released by the Ministry of Finance, the sum total of seafood imports in March came to 205,479 tons, a six percent increase in comparison to the last corresponding period. In contrast, considerable decreases in the unit prices of yellowfin, bonito, and octopus were recorded, ending in an aggregate import value of \98.1 billion, a 20 percent decline.

The following items exhibited substantial increases in quantities: yellowfin (36 percent rise); shrimp (38 percent); squid (78 percent); horse mackerel (30 percent); and sardine (109 percent). In contrast, declines in cod roe (90 percent decrease) and pollack surimi (82 percent) were remarkable.

The average unit price came to \478, or a 25 percent fall. The following items marked striking drops: yellowfin (\325 /kg, 41 percent drop); bonito (\88, 39 percent); octopus (\511, 41 percent); squid (\354, 26 percent); and prepared eel products (BBQ: \1,114, 26 percent).

The original article was published on May 7, 2009 and was translated by Kiyo Hayasaka.

Japan Skipjack and Tuna Fisheries Cooperatives "Desperately Defend 200 Boat-System After Boat Reduction"

May 7, 2009

Chairman Ishikawa of the Japan Skipjack and Tuna Fisheries Cooperatives made the following comments on far seas tuna fisheries after a boat reduction and measures for volatile tuna prices:

"After a reduction of boats, there will be 200 remaining tuna fishing boats; we are determined to not lose any more. If the number of boats goes below 200, it will mean an accelerated decline. If that became the case, not only would it be impossible to secure fishing grounds, but also we would not be able to fulfill our responsibility to the market as a tuna supplier. Additionally, it would end up tremendously affecting the related industries; local economies of not only shipyards, but also tuna processors will be negatively affected. We are strongly determined not to let go any more of our tuna fishing vessels. "

Producers Themselves Tackling Selling System

"Due majorly to an added element of investment, tuna prices became volatile a great deal.
At one point, fishermen enjoyed the benefit of increased fish prices; however, as a consequence, the tuna distribution industry generated huge losses, being deprived of motivation to keep running the industry. Furthermore, the fish price became so low that it was next to impossible to maintain production, creating a distressed situation for fishermen. In the face of the distribution structure, which disregards fishermen's welfare, fishermen themselves must tackle selling system. "

"As a first step forward, a tuna direct selling shop is slated to open in Tokyo in June. If this turns out to be successful, then we will proceed with similar projects with the help of local fishermen. In addition, direct business transactions with mass retailers, which understand the value of domestic tuna supply, will be one of the new paths to take."

The original article was published on May 7, 2009 and was translated by Kiyo Hayasaka.

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