Okamura Foods: Healthy and Responsible Seafood

For eleven consecutive years, we’ve seen Japanese food-related exports increase. If we look at up to 2023, they reached JPY 1.45 trillion. Central to this success are Japanese restaurants, tripling over the past decade. How do you account for this substantial rise in Japanese food exports? Why is now the time for washoku to shine internationally?

Japanese cuisine has seen a surge in global popularity recently, a trend significantly bolstered by the depreciation of the yen. This currency shift has made it easier for Japanese companies to export their products, increasing their reach in international markets. Additionally, the rise in inbound tourism has played a crucial role. Visitors to Japan get to experience authentic Japanese cuisine firsthand, and when they return home, they often seek to recreate that experience. This dynamic creates a virtuous cycle, driving greater demand for genuine Japanese food worldwide and solidifying its global appeal.

You mentioned there that tourists are looking to continue their Japanese food experience back home, but Japanese food is renowned for being based on freshness and raw ingredients. Your business has a specialized warehousing system where you can maintain ultra-low temperatures for your seafood-based products. Can you explain to our readers some technologies you use to ensure or guarantee that authentic Japanese taste internationally?

When we launched our Singapore operations in 2015, we faced significant supply chain challenges, even in a developed market like Singapore. Timely deliveries were inconsistent, and, in some cases, products arrived melted. To address these issues, we implemented a Japanese-style logistics and distribution system rooted in our rigorous standards. Alongside this, we introduced cutting-edge ultra-low-freezing technology, which enabled us to deliver fresh tuna to restaurants in Singapore. At the time, bluefin tuna was largely unavailable in the local market, so we were able to enhance the quality of ingredients available. Our clients valued the affordability and reliability of our supply chain, as well as the consistency of our product supply, helping us elevate the dining experience in Singapore.

Superlow temperature freezer at Singapore

Aomori salmon trout

One of Japan's most significant challenges is its demographic decline. While it is one of the oldest countries in the world, it also faces a declining population due to a persistently low birth rate. This is putting a lot of pressure on the country, including the looming threat of a shrinking market and a labor crisis. How is your company reacting to these challenges, and to what extent do you think Japanese companies need to look overseas to secure long-term success?

Our business, in essence, deals with nature, so in a way, this population decline is acting in our favor. With a smaller population here in Japan, there will be less pressure on existing ocean resources. The downside is processing, which requires manpower, so to get around this issue, we are introducing more foreign workers to our processing procedures.

Do you have a strategy to deal with the shrinking domestic market? If you are looking to expand internationally, which countries are of interest?

Speaking of the domestic market, it is inevitable that the market will shrink because of population decline. But our farmed salmon trout is increasing despite of decreasing by wild catch. Moreover salmon trout  have become more favorable fish among Japanese. Therefore, we will be able to increase our domestic market share and don’t foresee a decline in sales within the domestic market.  

As for overseas, we see it as a growing market and our current focus is Southeast Asia. There is a huge population and market growth in that region. In terms of further growth, the US and China are big markets, but we want to focus on increasing our scale in the Asian market.

Can you explain this inevitable transition to aquaculture? Is this evolution coming from consumer demand, government policies or global sustainability initiatives?

The biggest driving force is the increasing global demand for salmon trout for raw food like Sashimi, i.e., growing consumer needs. Norway and the US have been successful in limiting the number of fish caught, but Japan has yet to reach that state. Currently, on an annual basis globally, around 80 million tonnes fish are caught, but that number will inevitably decline. Therefore, it is important that aquaculture fish step in to replace those numbers for sustainability purposes.

Protein from seafood is essential for health, thus reducing overall medical expenses. Globally, there will surely be a push towards continued consumption of seafood. In order to balance our supply and demand, aquaculture will be necessary.

Sea-farm by our subsidiary Japan Salmon Farm Inc. Imabetsu, Aomori

You are actively involved in salmon trout farming in two countries: Japan and Denmark. In Denmark, your subsidiary Musholm produces 3,500 tonnes of salmon trout annually, and building upon the expertise of your Danish subsidiary, you established Japan’s first large-scale salmon trout farm in Aomori Prefecture in 2017, which features an integrated farming system. What value does Musholm bring to your operations?

Denmark has one of the world’s longest history in terms of salmon trout aquaculture and to this day. Norway has adapted this technology to mass scale, and this is followed by Chile as well. However, with the global population growth and popularity of salmon trout, there is an increased demand for seafood, causing problems as the ideal locations seem to have already been established.

In Asia, there isn’t any aquaculture business that has been prevalent since it isn’t considered an appropriate location about salmon trout. The other issue is the technology for mass production, which hasn’t been here. Western Japan is known for aquaculture, but this is mainly for yellowtail and sea bream, which are popular fish among Japanese consumers. We intended to establish mass-scale salmon trout aquaculture locations in Northern Japan where no such businesses exist. Globally, Northern Japan, our home base, is now one of the leading locations providing aquaculture salmon trout.

How do you incorporate some of the lessons you’ve learned from your Danish subsidiary into your operations here domestically?

First and foremost, with leading Danish technology, we have been able to learn salmon trout aquaculture at a mass scale. We now possess the know-how of every stage of salmon trout growing, from eggs to full-grown salmon trout. By being flexible, we have taken on the replication of salmon trout aquaculture, adapting this knowledge from Denmark to establish salmon trout aquaculture in Japan.

In terms of challenges, in Denmark, access to plain water is easy because of their abundant resources, but in Japan, it is not. All of the rivers in Japan are managed by either the national government or the local prefectural government. This makes it difficult to acquire the rights to access the use of the water, particularly for land farming. The only option is to negotiate with local municipalities for the use of general rivers. However, these general rivers are narrow, so we chose a technology that uses ground water and cycles it, meaning that among the limited plain water called RAS(Recirculating Aquaculture System), we are able to mass produce smolt

Agriculture is prioritized in terms of water, especially this has been for rice production  as a staple food in Japan. The farmers in the rice fields use the plain water from the rivers. In order to get approval for the use of plain water, we need to receive a large amount of approval from rights holders, which is almost impossible.

One of the key advantages of your aquaculture program is the fact that it alleviates pressure on wild fish populations; however, there are concerns about the pollution from waste as well as the resources required. Okamura Foods addresses these issues through initiatives such as your sludge management system and sustainable farming practices, minimizing your environmental impact. Can you tell us how you minimize the negative environmental impact of fish farming and the benefits of your farming process?

However, our technology for freshwater treatment is based on Danish regulations, which are much more stringent for environmental considerations. We treat the sludge and monitor the conditions for the fish, particularly monitoring the feed amount. As a result, we have received Aquaculture Stewardship Council (ASC) certification in 2019, the global standard for sustainable aquaculture. This was first ASC certification for salmon trout in Japan.

Your domestic processing business involves the processing and sale of fish-related products, including salmon trout roe and herring roe, and this part of your company has been in operation since your founding in 1971. You primarily sell to domestic businesses,s including supermarkets and restaurants, but in recent years, you have increased exports across Asia. Please tell us about the opportunities you see in this specific area of your business. What are your strengths in processing fish roe?

The biggest markets for fish roe are in Russia and Japan, and in fact, Japanese processors learned the techniques for salmon roe processing from Russia. Interestingly, the word for salmon roe comes from the Russian word; ikra lososya is Russian, and ikura is Japanese. Recently, however, with the penetration of sushi, salmon roe has gained significant popularity in Southeast Asia, the US, and Europe. In Asia, we have established our own distribution network for salmon roe, and in Europe, we have established a salmon roe processing factory in Denmark. We took the aquaculture technology from Denmark but have returned with salmon roe processing technology.

Ikura has a very close relation with caviar, and Russians not only eat a lot of caviar, but also pink salmon roe in the Far East stretches of their country. The system for pink salmon roe is the same for caviar and therefore, there is a big market there. Traditionally, Japan didn’t have this kind of product, but in the North there are many Japanese that communicate with Russians.

Your overseas processing business supplies processed marine products such as sushi pieces, baked fish, and boiled fish to both domestic and international customers. Raw materials are sourced from your aquaculture operations as well as your procurement team. Processing facilities are located in Myanmar, and you have business lines with a factory in Vietnam. Can you tell us the most in-demand products among your international customers? What value do the factories in Myanmar and Vietnam bring to your business?

Sushi has now grown to the point where it is considered a staple among Asian cuisine, and among that sector, salmon has the highest demand. Salmon actually makes up about 30% of all sushi ingredients, exceeding even tuna. We provide cut raw salmon trout, which is processed in Vietnam and Myanmar. This is due to the low workforce numbers in Japan.

Our target is the mass market, not the type that is air freighted from Japan. Ideally, we are looking at achieving supermarket-level sushi, basically providing high-quality salmon at an affordable price. I think this sector speaks to our strengths as a company.

We looked at your sales numbers, and over the past few years, you’ve had consistent growth. You jumped from about JPY 20 billion in 2021 to about JPY 30 billion in 2024. What have been the main driving factors for this consistent growth and what does your company need to do in order to continue this growth?

Since the establishment of our company, our sales have been growing steadily, and honestly, they have never dropped. The biggest turning point was in 2013 when the Bank of Japan (BoJ) alleviated financial policies, leading the JPY into depreciation. This has pushed our overseas exports. The global inflation levels and the depreciation of the JPY have led to increased sales of 10% annually. Although we’ve maintained the same amount of sales, inflation has led to an increased JPY number in terms of those sales.

Our company has four main businesses: Salmon trout aquaculture, Domestic processing, Overseas processing, and Overseas wholesale. With the increased amount of salmon trout aquaculture, we are able to increase our sales in sushi and roe processing.

Announced last year, the BoJ plans to reverse the negative interest rate process. Do you expect this to have a large effect on your business model?

In the upcoming years, we don’t expect to see much impact since there is still a 4% gap between US and Japanese interest rates. Even if the JPY begins to appreciate, I don’t believe it will go that far, considering the USD is so strong.

Imagine that we come back on the very last day of your presidency and have this interview again. By that date, what do you expect salmon trout aquaculture to look like? What contribution do you wish your company had given towards global change?

Seafood is a vital protein in maintaining human health. Therefore, it is important to have a stable supply. We believe that aquaculture is the solution to this supply challenge, and therefore, it is our mission to provide a stable supply of fish that meets the demands of consumers.

In terms of achieving this mission, we are constantly looking for new partners in every field. This could be transportation, cold storage, aquaculture, and other areas. We also have our location in Denmark, so partners for distribution within Europe are also within our scope.

For more information, please visit their website at: https://www.okamurashokuhin.co.jp/en/

To read more about Okamura Foods, check out this article about them