Soaring international soybean prices are putting pressure on the management of tofu makers. In the tofu industry, which has many small scales, business continuity was threatened due to difficulties in succession even before the spread of the new coronavirus infection, but in addition to the corona pandemic, soybean prices in the Chicago futures market are accelerating this trend. It may be an opportunity, and the tofu industry is once again on the verge of death. (The photo shows the rally of the National Tofu Federation held in Tokyo in 2013)
In the grain market, Chicago Board of Trade (CBOT) soybean futures (nearby month) are currently in the low $ 14 range per bushel. Although it has been in an adjustment phase since the mid- $ 16 level, which was set in mid-May, it is at a high level of 50-60% higher than a year ago when it turned to an upward trend.
The rise in soybean prices in the Chicago market is mainly due to rising sea freight rates against the backdrop of strong demand from China. In Japan, nearly 70% of imported soybeans are from the United States. For Japan, which imports non-genetically modified (Non GMO) soybeans, a premium will be added. In addition, although heavy oil is used as fuel cost, soaring crude oil prices have hit the management of domestic tofu makers directly.
According to the Ministry of Health, Labor and Welfare, the number of tofu manufacturing companies (calendar year basis) peaked at 51,596 in 1960 and has been declining year by year due to changes in the number of tofu manufacturing companies. In 1993, there were 19,394 houses, which was below the 20,000 level. It fell below 133,000 in 2006 and reached 11,839 in 2007. In 2010, the number of houses fell below 10,000, and in 2013, the number reached 8,017.
Regarding the reason why the decrease continues, the National Tofu Federation(Taito-ku, Tokyo), an organization of the tofu industry, analyzed that it was due to the progress of mechanization, the acceleration of sales through large stores such as supermarkets, and the need for a certain business scale. In addition to these, multiple factors have been pointed out, such as rising prices of Chicago soybeans and heavy oil, a weaker yen and a stronger dollar, rampant dumping, and an aging business.
This is not the first time a tofu maker has revealed a sense of crisis. It is a new memory that the tofu shops that fell into a business crisis became conspicuous and became a social problem in response to the soybean market soaring in 2008. At that time, there were even voices saying that at this pace, nearly half of the 1,200 tofu shops in Tokyo would be in jeopardy, with 10 shops closing in Tokyo every month.
It wasn't just privately owned stores that had a serious deterioration in profits due to soaring raw materials. In August 2009, Kume Quality Products (Hitachiota City, Ibaraki Prefecture), a major natto manufacturer, applied for the application of the Civil Rehabilitation Law. In addition to the soybean price, which is the raw material, the price competition was lost due to the soaring price of packaging materials due to the high price of heavy oil.
Under these circumstances, it was true that there was a scenario among market participants that the price of tofu would reach “500 yen per piece”, but it contained a bigger problem. As recognized, The year 2008 was a time when all kinds of commodity prices, including grain, crude oil and mineral prices, soared.
For tofu makers, the price of soybeans, which is the raw material, was soaring, and the price of crude oil was high, and the makers were forced to raise prices in order to survive, but the selling price was declining. The purchase price of tofu per household in June of the same year was 86 yen per household, which was 4% lower than a year ago.
On the other hand, the soybean procurement price is 95,000 yen per ton, which is 60% higher than January 2007, which means that the selling price is cheaper even though the procurement price is rising. In other words, if the high prices of soybeans and other grains continue to be constant, it is assumed that most tofu shops will collapse before the tofu costs an exceptional price of 500 yen per tofu.
The soybean price hike since last year may once again be a nightmare for tofu makers. In order to overcome this situation, the Japan Tofu Association (Chiyoda-ku, Tokyo) and the National Tofu Federation have recently issued documents complaining about the plight of the industry due to soybean and cooking oil prices soaring. It was issued jointly for a group of people.
According to a questionnaire survey conducted by the Japan Tofu Association in June this year, the average price increase of soybeans was less than 15% compared to two years ago, and all 24 member companies answered that the price had increased. The two associations sought an understanding of the current state of the tofu industry, saying in a document that "it is no longer possible to maintain business with corporate efforts alone."
It seems inevitable that a series of manufacturers will announce a price increase for tofu after this fall, but the business environment is still severe. Aside from the big financial strength, can small tofu makers endure just the price increase? Will it be the return of the 2008 soybean crisis?
A tofu maker in Tokyo points out the following: "We need to create an industry that attracts young people to tofu making. Structural reforms are required."
Jiro Arihara
Journalist based in Tokyo. In addition to approaching trends in international politics and the world economy from the perspective of resources such as energy, minerals, food & grain etc.
