A Major Japanese Trading Company to Buy Non-GM Soybeans from Ukraine

Sojitz Corp. is the former Nissho Iwai and Nichimen merged, both of which were major trading companies. In search of non-GM soybeans, the company has decided on Ukraine, of all places. The company plans to import 5,000 tons within 3 years (which is about 0.66% of total soybean import in Japan) offer 10% discount to entice the Japanese buyers.

From Bloomberg News (3/7/2013):

Sojitz to Buy Soybeans From Ukraine as Japan Seeks Non-GM Crops

Japan’s Sojitz Corp. (2768) said it will import Ukrainian soybeans for the first time as Asia’s second- largest buyer looks outside North America for non-genetically modified produce.

Sojitz will deliver a trial “few hundred” metric tons this year and expand that to 5,000 tons within three years, Fukutaro Kobayashi, deputy chief of one of the food departments at the Tokyo-based trader, said in an interview yesterday.

U.S. and Canadian farmers are increasingly raising genetically modified crops, with GM soybeans accounting for 93 percent of the U.S. total last year, according the U.S. Department of Agriculture. Supply from the U.S. and Canada made up 92 percent of Japan’s imports in 2011, according to Finance Ministry data.

“If we ask ourselves: Will be we able to secure supply of non-GM soybeans in North America year-in year-out? The answer’s no,” Kobayashi said. “We need to diversify our geography of supply.”

While Japan doesn’t ban GM oilseeds, consumer preferences mean that these are only used in cooking oil and sweeteners, which aren’t required by law to notify buyers about their use.

Japan used more than 950,000 tons of soybeans last year for foods such as tofu, miso soup paste and natto, stringy beans eaten for breakfast. Of that, about 80 percent of demand was met with imports, according to the agriculture ministry.
Longer Wait

Sojitz may sell Ukrainian soybeans at a 10 percent discount to the North American equivalent as a way to attract buyers in Japan, Kobayashi said. The transport of soybeans from Ukraine’s Odessa port to Japan takes about three weeks, compared with a week from the U.S., he said.

Ukraine was forecast to produce as much as 2.33 million tons of soybeans last year, according to Kiev-based ProAgro. The U.S. and Brazil, the world’s largest producers, are forecast by the USDA to produce 83.5 million and 82.1 million tons in the marketing year that began Oct. 1.

In 2010, Sojitz joined with Soyko International Inc. and Grain Alliance, a Ukrainian farm operator and grain elevator, to secure local supplies, Kobayashi said. The Ukrainian firm owns 40,000 hectares of land, most of which is cultivated, and drying and storage facilities with a capacity of 80,000 tons, according to its website.

The venture with Grain Alliance in Ukraine, a newcomer to soybean cultivation, will produce about 3,000 tons of the oilseed for use in food this year, Kobayashi said.

“We’ve been sending trial samples to food producers and the reception has been favorable,” Kobayashi said. While producers prefer North American soybeans, cheaper supplies from Ukraine will win market share in Japan, he said.

Grain Alliance's website says "Restoring the Bread Basket of Europe". My cursory look didn't find any reference to Chernobyl on their site nor the information about the location of the farms.

(Photo from Grain Alliance's site)

Japanese trading companies were apparently one of the first to see the huge business potential in importing lumber from Europe right after the Chernobyl accident, as Professor Satoshi Mori of Tokyo University related back in 2011.

Historically, large Japanese trading companies have worked very closely with the national government. I wouldn't be surprised if both the lumber import in the 1990s and this soybean import are under the "administrative guidance" from the government.

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