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Tohoku veterans, private firms spurn price-controlling cooperatives in bid to rebuild livelihoods

Fishermen look to revamp industry

by Ayako Mie

Staff Writer

Tohoku’s fishermen are beginning to challenge the traditional fisheries system by establishing their own companies so they can have more control over prices and other aspects of the business.

“Going back to the way it was before the 3/11 tsunami is not enough, because the amount of the debt and the size of the market is completely different,” said seaweed harvester Shota Abe, 27, who recently set up the fishing company Hamanto with 12 colleagues in the Jusanhama district. “We have to create a new system that allows us fishermen to take more control of our products.”

The current system is controlled by the Fisheries Cooperative Association, a local entity that has a vested interest in fishing rights. Historically, the cooperative holds a joint sale to set prices, which depend heavily on middlemen, among other factors. Since the fish go through several middlemen before reaching consumers, the prices climb, eating into their profit.

As a result, the system discourages people from inheriting their family’s fishing business because incomes are unstable and they have little power to negotiate prices for what they catch.

Japan’s increasingly meat-oriented diet and the influx of imported fish are also conspiring to make the industry less attractive. In fact, more than 800,000 people have abandoned fishing since the 1960s, with Miyagi Prefecture alone losing 15 percent of its fishing ranks from 2003 to 2008.

“The fishing industry needs to be re-created in a way in which people who are creating real value can all benefit,” said Hiroaki Hanada, a Tokyo-based consultant from Ishinomaki.

Hanada has been advising companies in Ishinomaki, including Hamanto, on generating marketing strategies and finding distribution channels.
The industry was in such a dire situation after the tsunami that Miyagi Gov. Yoshihiro Murai announced plans to set up a special economic zone two months after the disaster where fishing rights would be granted to private companies — even those without experience.

With the help of private funds, Murai wants to speed up the rebuilding of Miyagi’s fisheries, which suffered a ¥700 billion loss. In the long run, the special economic zone may make it more attractive by harnessing the distribution channels and brand power of private companies.

But the idea is facing resistance from fishing cooperatives nationwide. Most are concerned that private companies will undercut them and abandon the business if profits elude.

“Deregulation could complicate the vested interests of the fishermen, which the cooperative has been managing. If a company breaks the rules of the industry in order to maximize profit, it will create (turmoil),” said Takeshi Hamada, an associate professor at Tokyo University of Marine Science and Technology.

It is customary to pay the cooperatives fees for holding joint sales and handling administrative matters. So the co-ops fear they will run short of operating funds if more fishermen withdraw. They also think it will create disadvantages for fishermen who depend on them to provide distribution channels.

Miyagi’s fishermen still have bitter memories of the time when a private firm withdrew money from salmon fishermen after salmon prices plunged following an influx of imported fish.

Despite the criticism, 15 oystermen in Ishinomaki’s Momonoura district set up a company last October with Sendai-bases wholesaler Sendai Suisan.

“We almost gave up on our jobs,” said Katsuyuki Oyama, who heads the firm. “But that meant our community would disappear, and I wanted to prevent that by creating the company.”

The tsunami wiped out 62 of the 65 houses in Momonoura, knocking out processing factories and boats. Oyama said the relaunch wouldn’t have happened without the ¥200 million in aid from Sendai Suisan and the ¥490 million in government subsidies that allowed it to bring in the state-of-the-art equipment and factories that allow it to process oysters year-round.

While Sendai Suisan boasts plans to recoup its multimillion-yen investment, it’s unclear how it will benefit from the fishing rights. It already has contracts with such chains as Seven & I Holdings Co., York Benimaru Co. and restaurant Nihonkai Shoya for five years.

“After the disaster, we realized that our company cannot rebuild without revitalizing the fishing industry,” said Sendai Suisan CEO Fumiyoshi Shimanuki. “This is going to be a test case for whether the Japanese fishing industry can resuscitate itself.”

Hamanto’s Abe, meanwhile, took a slightly different approach to independence: He chose not to take advantage of the newly deregulated system. While he still belongs to the cooperative, rather than depending on it to find the market, Abe decided to cultivate his own customers so he can control the pricing system and raise average incomes.

It took almost a year for Abe to get the blessing of the local co-op and those fishermen who were skeptical of handling sales on their own.

“We are worried about inventories, because they cannot be stored,” said Hamanto President Tsuyoshi Saijo, 59. “But listening to the consumers, which we have never done before, makes for better products.”

Abe has scored partnerships with restaurant chain Hamayaki Taro, co-ops in Niigata and a fish processer in Chiba. But radiation fears stemming from the sea contamination around the crippled Fukushima No. 1 nuclear plant still plague Miyagi’s food industry.

Abe sounded confident his firm will be able to pay back its almost ¥60 million in debt.

“In 10 years, we will pay back all the debt. In 20 years, I will revive the fishing industry by rebranding Sanriku’s products globally,” he said, referring to the northeastern part of Tohoku. “Sanriku, after all, is one of the three best fishing areas in the world.”