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Japan’s Mitsui Invests in Technology to Advance Land-Based Fish Farming

May 16, 2017

Japanese trader Mitsui & Co. has agreed to invest 900 million yen (US$8 million) in exchange for an 80 percent stake in FDR Japan Co. (FDR) – a startup that is pioneering a recirculating system that will enable land-based fish farming in Japan.

Demand for salmon across Japan continues to rise with wild caught fish struggling to keep pace with the trend. However, salmon farming in Japan has historically been difficult. Successful operations must maintain water temperatures at 15 degrees Celsius year round, but increases in water temperature throughout the summer in Japan have posed a challenge to the industry. As a result, 80 percent of all farmed salmon sold in Japan is imported from colder climates such as Norway or Chile, reports The Asahi Shimbun.

Fresh salmon accounted for 95 percent of Japan’s total salmon and trout imports in 2016, totaling 172,600 tons, according to Undercurrent News. These volumes reflect a 10 percent decline year-on-year however, due to natural disasters and fish diseases striking major suppliers including Chile and Norway, indicating a need for alternative and more reliable sources of supply.

The Technology

FRD has developed a recirculating aquaculture system that uses no natural seawater, but instead uses advanced bacteria-based filtration technology to cycle artificial seawater through a closed production system. This system negates the need for constant adjustments being made to the water intake temperature – a major cost sink to traditional fish farming systems, and also significantly reduces the rate of fish disease contamination while allowing for operations to be established at any chosen geographic location.

“By establishing plants in close proximity to consumption areas, it will be possible to distribute extremely fresh products while keeping transportation costs low,” stated the company in a recent release.

Through FRD, Mitsui also has long-term plans to build a large-scale land-based trout farming operation in the country through a two-phase project. The first phase will see a pilot plant go online in 2018, and then, based on the success of phase 1, Mitsui will undertake additional investments in 2020 with the aim of expanding production at the site to 1,500 tons of trout per year.

Karugamo Works

Mitsui said that this project was launched from activities conducted under the company’s “Karugamo Works” program – an initiative that ran from August 2014 to August 2015, and was designed to encourage open innovation within the company. Under the program employees were allowed to allocate 20 percent of their working hours to activities outside of their assigned responsibilities with the goal of fostering collaborative innovation. Employees could then develop and pitch their new business ideas through an intra-company innovation laboratory. The first year brought together 44 individuals – 30 percent of whom were Mitsui employees, 70 percent volunteers, that formed 10 teams with a range of themes ranging from agriculture to fisheries, to traffic systems. The first year resulted in two investments by Mitsui in a food science company and a satellite manufacturer.

Repeat Investment

This investment by Mitsui in FRD is not the group’s first investment in salmon farming. In October 2015 the group invested US$100.7 million in Chile-based Salmex.

Salmex itself is also a subsidiary of Chile’s Multiexport Foods, a producer and processor of salmon products which are sold on the Brazilian, Japanese, and U.S. markets. Mitsui has been selling Multiexport products on the Japanese market for the past 20 years.

In a statement regarding the acquisition, Mitsui said, “Through our investment in Salmex we will utilize its group network to expand sales channels to the global market, which is expected to see increased demand…”

-Lynda Kiernan

Lynda Kiernan is Editor with GAI Media and daily contributor to GAI News. If you would like to submit a contribution for consideration, please contact Ms. Kiernan at lkiernan@globalaginvesting.com.

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