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Business

Nippon Ham plans to invest $250 million overseas

Cattle at the farm of an NH Foods subsidiary in Australia.

OSAKA -- NH Foods looks to quintuple its investment overseas through March 2018, fattening operations in Turkey, Australia and elsewhere to feed growing meat demand in emerging nations.

     The meat producer also known as Nippon Ham plans to invest 30.9 billion yen ($250 million) in facilities abroad from fiscal 2015 to fiscal 2017 -- roughly five times the amount spent in the three years through this past March. Investment at home and overseas will total 147 billion yen, for a roughly 50% increase.

     The overseas expansion will primarily target upstream operations, including the raising of livestock and meat processing, to beef up NH's supply base. The company hopes to bring in 15% of its sales from abroad in fiscal 2017, up from around 10% currently.

     Australia is the core of NH's overseas business at present. The company will spend nearly 2 billion yen to build freezer facilities at its beef processing plant in Wingham, in the country's east, by spring 2016. Sorting lines at the facility will also be automated to up production efficiency. The improvements will help ensure that meat processed at Wingham is fresher, broadening sales opportunities. Beef from the site is currently shipped throughout Australia, as well as to the U.S. and Asian nations including Japan.

     Operations in Turkey are also set to grow. Around 2 billion yen will go toward a new chicken-feed factory and a breeding-stock farm. A major poultry producer NH acquired in spring 2015 will build the facilities as early as 2016, tapping the group's technological expertise to ensure high-quality birds. NH will concentrate on growing sales within Turkey for now, given the political instability of the surrounding region.

     New sales centers in three U.S. cities are also slated for construction, bringing the total in that country up to five by March 2017. The sites will handle beef produced in the U.S., Japan and Australia, and will sell seafood sourced from South America and Asia to Japanese restaurants and other customers.

     NH's sales hit 1.21 trillion yen for the year ended March, making it Japan's largest meat producer. Yet the company is only in fifth place worldwide. The global leaders include such companies as Brazil's JBS, with the equivalent of around 5.4 trillion yen in sales, and U.S. producer Tyson Foods, with 4.1 trillion yen. "We hope to grow our own presence while teaming with industry leaders on product development, sales and other tasks," NH President Juichi Suezawa said.

     NH's overseas operations have so far been geared toward supplying meat and other products to Japan. Yet a declining population and other factors have left the outlook for the domestic market dim. The company therefore looks to stake out a share of rising meat demand in China, Russia, Southeast Asia and elsewhere. Efforts will also be made to grow three-way trade among Japan, Australia and the U.S. ahead of enactment of the Trans-Pacific Partnership free trade pact.

(Nikkei) 

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