SOY CANADA OUTGOING MISSION TO JAPAN
JAPAN IS ONE of Canada’s top five soybean export markets. According to Statistics Canada data, Canada exported approximately 370,457 metric tonnes (mt) to Japan in 2014 — accounting for 12 per cent of all soybean exports. The majority, approximately 284,350 mt, were high-value food type soybeans (including non-GM and identity preserved (IP) soybeans) used by various Japanese end users for the manufacture of tofu, miso, natto, and soymilk.
The importance of this market is why Soy Canada, the new national voice for Canada’s soybean industry, completed its first outgoing mission to Japan at the end of February.
“It also speaks to the relationship-building that has happened in the past with Japan,” says Mark Huston, chair of Soy Canada and director of Grain Farmers of Ontario District 2. “Canadian soybeans are at the point where they are viewed favourably, and in order to maintain that, it was very evident the Japanese market was one we had to visit right away.”
“The Japanese really appreciate the close relationship and the opportunity for consultation,” adds Jim Everson, executive director of Soy Canada. “I think it’s really important to have engagement with them on a regular basis so we are able to talk about the quality of our product, any changes to our regulatory or certification process, any issues around logistics or supply, or any concerns they have at all.”
The mission was an opportunity to introduce Soy Canada, provide an update on Canadian production and supply capabilities, and promote our investment in research to develop new soybean varieties to meet their needs.
“We gave the Japanese a clear signal that our industry is united,” says Sue Robert, a Soy Canada industry director and soybean export trader for Thompsons Limited. “There was a good mixture of people on the mission — including exporters, government representatives, and researchers.”
The week-long mission was also an opportunity to learn about new trends within the Japanese market — such as declining soy consumption across all food uses (with the exception of soymilk), increased retail competition, and the consolidation of manufacturers.
Meetings were held with staff at the Canadian Embassy in Tokyo, the Japan Tofu Association, the Japan Federation of Miso Manufacturers Cooperatives, the National Federation of Tofu Commerce and Industry Trade Association, the grain division of the Ministry of Agriculture, Food and Fisheries, and the Federation of Japan Natto Manufacturers Cooperative Society.
Several concerns were brought up during these discussions which ranged from transportation logistics, to health claims, to the development of new soybean varieties. One common concern raised by the different associations is increasing price competition at the retail level, particularly for tofu, and their need to take advantage of lower input costs whenever possible.
THE PRICE FACTOR
One example of the price factor was during the meeting with the Japan Tofu Association, whose members represent approximately 32 per cent of all tofu production in the country and use 160,000 mt of imported soybeans annually. Canada and the U.S. are the primary sources for these soybeans; however, Canadian exporters saw a drop in their food-grade market share in 2014 due to a difference in price. One food processor described a significant shift in his usage — in the past, he used 70 per cent Canadian soybeans but last year he only used 10 per cent.
“We saw a run-up on price in order to maintain the acreage of non-GM, IP soybeans in Canada to try and keep the supply consistent,” explains Huston. “But at that price, some people started looking elsewhere for their supply.”
Everson says Canadian exporters try to be as competitive as they can but it is a challenge to strike a balance on price. “We want to be sure we are providing good compensation for a producer going the extra mile to produce the quality and to respect the certifications of a food grade business. But, at the same time, our exporters have to be very careful not to be pricing themselves out of the market relative to competitors. I think the important thing is that we have a stable premium that allows supply to remain at an adequate level and keeps us competitive against other jurisdictions.”
Robert agrees that a stable premium for IP soybeans needs to be established so that growers are adequately paid for the extra work. She says the 2015 crop price with a $2.50 premium for the average IP white hilum soybean grown from certified seed could be that happy medium.
“If we could stabilize in that area, I know we can be competitive,” says Robert, “and we did stress to the Japanese representatives that we want to see stability in our premiums.”
A GOOD REPUTATION
Despite the price concerns expressed by the Japanese processors, Canada’s reputation for consistent, high-quality soybeans has helped us to maintain a strong presence in the market.
“The Japanese are very loyal customers and will continue to buy Canadian soybeans,” says Robert, “however, we need to be mindful that we do have competition and if we lose this high-value market we will have to buy our way back in by being cheaper than everyone else — and that’s not a road we want to go down.”
Robert also noted that the Japanese concern over maximum residue limits in food products needs to be taken seriously by growers. The strict monitoring process the entire Canadian value chain participates in for food grade soybeans provides reassurance to buyers and they recognize that starts at the farm level.
“It’s nice to see that the work our growers are doing is appreciated,” says Huston. “The time it takes to clean out your combine, the time it takes to maintain segregation and the quality of the product all the way through can sometimes seem like a lot; but when growers get the appreciation from the other side it seems a little more worth it.”
Soy Canada is continuing to develop its market development strategy. Everson says that will include future outgoing missions to build additional export markets and could potentially include incoming missions with importers being brought to Canada to see our production and research capabilities first hand.
“The goal for us when we launched the new organization was to be seen as a single commodity chain representative that could respond to end users needs quickly. We really wanted to let them know we have a new way of approaching issues, and they have a single point of contact that is able to touch base with everyone,” says Everson. “The Japanese representatives responded to this very positively.”
Members of the Soy Canada delegation included: Jim Everson, executive director; Mark Huston, chair; Sue Robert, director; and Andrew McVittie, director.
The Soy Canada delegation was joined by several Canadian export companies with interests in the Japanese market: DG Global, Huron Commodities Inc, London Agricultural Commodities Inc., Semences Prograin Inc, Sevita International, ST-Lawrence Beans, and Thompsons Limited.
Soy Canada thanks its partners in the federal government for their participation in and support of the mission: Dr. Lorna Woodrow, research scientist, Agriculture and Agri-Food Canada; Melonie Stoughton, technical advisor, Canadian Grain Commission; Ken Hester, sector specialist, Grains & Oilseeds, Agriculture and Agri-Food Canada. •