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Bankruptcies of Seafood Firms Yet to Remain High

September 12, 2013

According to Teikoku Databank, Ltd., the number of bankruptcies filed by seafood related companies (fisheries, aquaculture, processors, wholesalers, and retailers), which had more than JPY 10 million (€76,000/ $100,000) in debt (limited to legal liquidations) in the first half year of 2013 added up to 82 cases. Even though the number is in decline from a record high of 95 cases in the latter half of 2012, this trend seems to be reluctant to subside, remaining as high as the time of the bankruptcy of Lehman Brothers.

Twenty-two companies in July and 13 in August filed for bankruptcy. The same upward trajectory is predicted for the rest of the year.

By sector, 26 seafood processors went under, the same as the highest past record. In terms of debts, eight out of 10 firms belonged to this particular sector. Reasonably priced goods imported from other countries backed by advanced freezing and processing technologies and ever increasing fish prices attributable to a worldwide hike in seafood consumption and decreased catches at home waters triggered by abnormal weathers are behind the trend. On the other hand, marine foods consumption in Japan has been dwindling and institutions that fail to pass higher raw material costs onto consumers are being cornered.

Hokkaido-based Kushiro Marusui Corp. that filed an application for court-led rehabilitation proceedings in July engaged in manufacturing and wholesaling of salted salmon, sashimi grade octopus, and salmon flakes using chum salmon and octopus landed at the Shiranuka Port. At its peak back in 1989, sales reached about JPY 12 billion (€91 million /$121 million). In recent years, in the midst of rising fish prices caused by weak catches, plummeting selling prices on account of lackluster consumption as well as deflation adversely affected the company sales. A significant deficit from inventory disposal led to insolvency.

The seafood industry encountered abruptly appreciated yen that generated skyrocketing fuel prices in spring, which led to halted operations of 1,000 squid fishing boats all at once. Even in Hokkaido, it is said that the rising seawater temperature is engendering poor saury catches. With contaminated water leaking from the crippled nuclear plant in addition to dicey catches, more expensive raw materials and fuel costs, and humdrum domestic consumption, the hardships the industry has faced are doomed to continue.

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