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Interview with Chuo Gyorui President

February 24, 2010

At an interview by the Suisan Times, Hiroyasu Ito, President of Chuo Gyorui, spoke of the performance trend for the third quarter, the forecast of the entire fiscal year, issues that the industry is facing, as well as the outlook on the coming business year:

Circumstances Surrounding Industry

The industry has been saying that this is a tunnel without an exit in sight; however, this tunnel isn't the kind that you can get through in time. It became apparent that there was no other way out other than finding an exit on our own. Therefore, now is the time for reform. Thinking of the finalization of the "Study on Seafood Distribution Design Centering in Wholesale Market" scheduled for late March, we will start formulating the new midterm business plan based on the review of the fundamental design of wholesale market. There, our aim is to plainly include policies that will lead us to the end of the tunnel.

Issues Facing

Since the reform of the Wholesale Market Act, in our company too, marginal gains from fees and purchasing/distribution by consignment selling were reversed; now, purchasing accounts for over 60 percent of all. Though a traditional style of "commissioned trader" is changing to "trading for marginal gain from purchasing," the consignment structure basically remains intact. Once the structure of marginal gains becomes the base, we will have to alter the way we manage business. We will embrace consignment selling as our real business, but as the purchasing ratio is becoming larger, notions of inventory have been drastically shifting.

Forecast of This Fiscal Year

The general market doctrine is that as volume declines price goes up; however, at present we are facing double whammy of declines in volume and unit price. Although this tough condition is still going on, a profitability rate is getting better because of business structure improvements like inventory adjustment. We are moving in a right direction; and yet, the question is where we will land late March.

Subject of Tsukiji Market Relocation to Toyosu

It hasn't even reached the stage of "prospect," yet. Budget discussions, including land acquisition in Toyosu, will commence at the metropolitan assembly on the 24th of Feb. I understand the sentiment of reconstructing Tsukiji; however, in actuality, it is quite impossible to carry that out while roughly 10,000 people are working. Either way, it is regrettable that this issue becomes a part of political discussion. I am hoping for positive conversations and the final decision made as quickly as possible.

The original article was published on February 24, 2010 and was translated by Kiyo Hayasaka.

Aeon Markets MSC Certified Tosakatsuo

February 22, 2010

Aeon kicked off sales of seared bonito of "Tosakatsuo Suisan Group," the world's first MSC certified pole and line skipjack tuna fishery, at its 487 group stores nationwide on Feb 19. Aeon Senior Managing Director Yasuhide Chikazawa and Tosakatsuo Suisan President Hiroyuki Myojin shared explanatory information at the Jusco-Shinagawa Seaside Store.

Mr. Chikazawa said, "We are launching initial sales of the world's first MSC certified bonito product at our 400 stores throughout Japan. Marketing Tosakatsuo Suisan's products means the promotion of sustainability. Japan is lagging behind in this field. European countries, like England, are eating more fish, leading to overexploitation. In order to protect our Japanese food culture, we are willing to proactively sell MSC certified products."

Also, President Myojin commented: "Japan's pole and line skipjack tuna fishery received a certification because it met the MSC's principles. Our product coincided with Aeon's product strategies and we could obtain an opportunity to market it through Japan's leading chain network. We want to continue our efforts to encourage people to deepen the understanding of the importance of protecting fisheries resources."

The original article was published on February 22, 2010 and was translated by Kiyo Hayasaka.

2009 Household Expenditure Indicates 3% Decline in Marine Foods

February 19, 2010

According to the Ministry of Internal Affairs and Communications, the yearly average for monthly consumption expenditures per household of more than two persons for the year of 2009 dropped 1.7 percent to \3.50848 million, of which expenditure on food was \896,128, down 1 percentage pints. Spending on marine products was down 3 percent to \85,917.

Expenditure on fresh seafood went down by 3.3 percent to \50,337. The following declines were seen: Japanese horse mackerel 10.7 percent; bonito 8.6 percent; squid 8.2 percent; amberjack 6.7 percent; and flounder 5.8 percent. Tuna, salmon, mackerel, saury, sea bream, and shrimp also tumbled. On the other hand, octopus, crab, and sardine rose 7.7, 6.3, and 3.4 percent respectively.

\4,661 was expended on shellfish with a decrease of 1 percent. While Manila clam slumped 3.5 percent, fresh water clam and oyster grew 5.6 and 1.5 percent respectively.

Consumers spent \15,835 on salted/dried marine foods, which was down 5 percent. Dried Japanese horse mackerel (8 percent), dried whitebait (7.6 percent), and dried sardine (6.6 percent) tumbled. Cod roe and salted salmon fell, as well.

Kneaded fish products were down 1 percent to \9,305; kamaboko and fried kamaboko declined 4.4 and 1.5 percent respectively. Chikuwa conversely marked a 3.3 percent increase.

Other processed marine foods were \10,440, down 0.1 percent. Cooked seafood fell 5.6 percent. Dried-shredded bonito, pickled seafood, and canned marine foods increased. Dried goods and seaweed registered a decline of 1.1 percent to \9,319; dried laver seaweed reported a 5.2 percent drop. Prepared foods were \98,470, down 0.1 percent. BBQ eel rose 2.1 percent. Frozen prepared food products also increased 9.3 percent. Money spent eating out declined 2.2 percent to \161,314; sushi dropped 2.7 percent.

The original article was published on February 19, 2010 and was translated by Kiyo Hayasaka.

Can They Make Cheap Fish Feed With Taurine?

February 19, 2010

"Taurine" is a feed additive indispensible to the production of fish feed using a lower amount of fishmeal, in the midst of skyrocketing fishmeal prices. Is it ever possible to manufacture cheap feed for aquaculture with taurine? We interviewed, a raw material distribution source, DSM Nutrition Japan Product Manager Taro Saito:

Essential Component for Cultured Fish

Taurine can be found in a lot of marine species; this component wasn't given much attention because farmed fish was naturally taking it in through raw feed or synthetic fish feed with fishmeal.

In the 1990's a slew of studies were conducted to discover an alternative protein in an attempt to end dependency on fishmeal. During this process, an inferior growth rate, increased fatalities, and a green liver syndrome were detected, when amberjack and red sea bream were given feed without fishmeal. In studies thereafter it was revealed that these conditions occurred due to lack of taurine. At that point, it finally understood that for producing cultured fish like amberjack with inferior taurine synthesizing capacity taurine was a vital component.

Green Light to Use of Cheap Synthesized Taurine

Fishmeal prices that began to gradually rise in 2006 more than doubled in a short while and fish feed manufacturers were forced to raise feed prices. Demand on feed made from less fishmeal and more raw materials of vegetable origin, which were reasonable at the time, increased.

When an amount of fishmeal in feed for amberjack and sea bream was reduced, adding taurine became imperative. Taurine extracted from natural sources was too expensive to be used; nevertheless, using reasonable synthetic taurine in fish feed was yet to be legalized.

With increasing momentum toward the use of taurine and support from the Japan Association of Aquaculture Feed, DSM Nutrition Japan with the sufficient knowledge of the application procedure resultantly submitted an application to the Ministry of Agriculture, Forestry, and Fisheries in 2007. Preparing necessary documents on overseas licensing status, effect, residue, and safety of taurine, we discussed with the Animal Products Safety Division of the Food Safety and Consumer Affairs Bureau. After investigations, the final decision was made at the Agricultural Material Council.

Synthetic taurine got acknowledged as a legalized feed additive on June 23, 2009. However, around the time when it was legalized, fishmeal prices were going down and consequently there were no manufacturers selling taurine formula feed with low fishmeal. Shortly thereafter, China aggressively procured the feed, contributing to a fishmeal price hike again, which exceeded the level of 2006.

Other Essential Elements Other Than Taurine

It doesn't mean that you can manufacture reasonable feed just by reducing fishmeal and adding taurine. Upon making low-fishmeal feed, mainly soymeal as a substitute material is used. However, its prices jumped due in part to influx of speculative money in the futures market, it's not considered reasonable any longer.

Taurine now attracts attention; however, nutritionally speaking, supplementing such essential amino acids as lysine and methionine is necessary. Therefore, it will be difficult to maintain feed prices.

Feed manufacturers certainly understand that aquaculture businesses expect cheap feed. It's not impossible to create such feed by manipulating the content of elements. However, it will require certain caution, because there is a possibility that that kind of feed may lead to an inferior growth rate to existing feed.

The original article was published on February 19, 2010 and was translated by Kiyo Hayasaka.

Japan-S. Korea Fisheries Committee Agrees on Reduction of 15 Korean Longliners

February 17, 2010

The 12th Japan-South Korea Joint Committee on Fisheries and the 3rd Subcommittee meetings were held in Seoul, S. Korea from Feb 8-12; both of the countries were given recommendations on fishing conditions in each country's exclusive economic zone for the period of March 1 through late Feb of next year. The total number of permitted vessels was 900, a decrease of 40 ships; S. Korean longliners were reduced by 15 vessels.

The total fishing quota for both countries remains the same as last year, 60,000 tons. Compared to the previous year, S. Korean vessels' entries to Japan's exclusive economic zone will be lessened as follows: squid fishing vessels from 378 to 353 and longliners from 237 to 222. Saury sticknet, purse seine, and other fisheries will maintain the last year's level.

On the other hand, Japan's fishing vessels' entering the S. Korean waters will be changed as follows: squid fishing boats from 140 to 133; longliners from 103 to 95; and trawlers from 410 to 385.

Resources management of the provisional waters of the Japan Sea was decided as follows: 1) both countries will maintain and extend the cleaning of the seafloor of the said waters and the S. Korean government will give it a top priority to reduce net and gill net fishing boats; and 2) both countries will support ongoing talks on the private sector level for the purpose of the resources management and operational order of the said waters.

The following agreements were reached as to the management of S. Korean fishing vessels within Japan's exclusive economic zone: 1) the S. Korean government will reinforce preventative measures for illegal fishing by S. Korean boats; 2) an opportunity for bilateral talks on the cost burden for disposing abandoned fishing gears by S. Korean fishing vessels will need to be set up; and 3) it will become mandatory to keep GPS tacking records against S. Korean boats (from March).

The original article was published on February 17, 2010 and was translated by Kiyo Hayasaka.

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