January 10, 2016 1:00 pm JST
TPP reaction

Japan's rice exporters shift into high gear in Southeast Asia

People eat sushi at a conveyor-belt sushi bar in Singapore. The shop is operated by Genki Sushi, a unit of Shinmei Holding.

TOKYO -- Japanese rice exporters are scrambling to expand their businesses, focusing on Southeast Asia.

     Their bullish attitude is backed by expectations that the Trans-Pacific Partnership trade deal will boost the appetite for Japanese rice exports, if the agreement comes into force. Rice farmers will likely need to raise efficiency if they are to survive in the age of freer trade, which will allow the country to import cheaper rice. Plus, the Japanese-food boom is still ongoing worldwide.

     Kubota, Japan's leading manufacturer of farm equipment, and Shinmei Holding, the country's largest rice wholesaler, are already expanding their rice exports.

     In Singapore, Shinmei will open a new sales base by the end of the year, while Kubota will raise the capacity-utilization rate at its rice-milling plant in that country to strengthen its sales capability. The two companies, both headquartered in western Japan, will ramp up their sales efforts.

     Since 2012, Kubota has been exporting rice produced by customers of the company's farm equipment. In addition to labeling origins and rice brands, starting this year Kubota has set its own criteria on what variety of rice goes well with specific dishes, such as curry, Chinese food and bowl dishes. This fresh attempt is to effectively meet the needs of businesses abroad, as the best-suited variety of rice varies depending on the amount of amylose, protein and other constituents of the rice.

     Kubota exports grown-in-Japan brown rice and mills it at its overseas plants, allowing the Japanese company sell fresh rice in foreign countries. To expand its rice exports, Kubota will double the operating hours per day to 16 hours at its rice-milling plant in Singapore. The company will also increase the number of its sales representatives accordingly.

     When it comes to its purchases of domestic rice for shipping abroad, Kubota will strengthen its partnerships not only with farmers buying its products, but also with the National Federation of Agricultural Cooperative Associations, known as Zen-Noh.

     In 2016, Kubota plans to export 3,200 tons of rice, double the number from a year earlier, aiming to achieve 10,000 tons as soon as possible.

     Shinmei will make use of a new export office, soon to be up and running in Singapore, and its existing base in Hong Kong, to enhance its sales activities targeting restaurants, serving curry and bowl dishes, and other potential customers in China and Southeast Asian countries.

     The company will also increase its supply to overseas restaurants run by Genki Sushi, a major conveyor-belt sushi bar chain operator which has become a consolidated subsidiary of Shinmei in 2015. Shinmei has been a supplier to 15 shops in Hong Kong and Singapore and will start providing rice grown in Japan to 60 shops in Indonesia, Thailand and elsewhere.

     In Southeast Asia, Shinmei also aims to sell more polished rice at Japanese-affiliated department stores and supermarkets, while handling more packages of cooked rice for convenience stores.

     Shinmei expects its rice exports to jump 50% on the year to 3,000 tons for the year ending March 2017. To achieve its target of 20,000 tons of rice exports, Shinmei wants to have export destinations of 50 countries and regions by the end of fiscal 2021, up more than 60% from the current number.

     Kitoku Shinryo, a major rice wholesaler, also plans to export 1,100 tons of rice grown in 2015, up 20% from the previous year, when it exported rice grown in 2014. The company has so far focused on Singapore and Taiwan, but will broaden its sales channels in Vietnam and elsewhere. For example, the Tokyo-based rice wholesaler plans to supply rice for local stores, including a rice ball shop that the company will open later this month in Ho Chi Minh City.

     Japan's rice exports have been on the rise currently totaling about 6,600 tons to log a year-on-year rise for the January-November period. The uptrend is mainly driven by declines in domestic rice prices and the yen's depreciation.

     That said, the scale is a tiny fraction of the nation's roughly 7.5 million-ton annual output of rice, which is a staple food source in Japan.

     And yet, prices of domestically grown rice are still higher than rice produced in Southeast Asia. Kubota is aware of the need to push down domestic prices by 30% or so, on a production cost basis. The company intends to help achieve this target by cutting costs with the use of information technology, among other efforts.

(Nikkei)

Kubota Corp.

Japan

Market(Ticker): TKS(6326)
Sector:
Industry:
Producer Manufacturing
Trucks/Construction/Farm Machinery
Market cap(USD): 22,555.34M
Shares: 1,241.15M

Kitoku Shinryo Co., Ltd.

Japan

Market(Ticker): JAS(2700)
Sector:
Industry:
Distribution Services
Food Distributors
Market cap(USD): 52.50M
Shares: 8.53M

Genki Sushi Co., Ltd.

Japan

Market(Ticker): TKS(9828)
Sector:
Industry:
Consumer Services
Restaurants
Market cap(USD): 199.20M
Shares: 8.88M

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