Japan's tofu makers battling to survive

Japan's tofu makers battling to survive

JAPAN - A growing number of tofu makers are shutting down part or all of their business due to the rising cost of imported soybeans and demands for wholesale price cuts from supermarket chains and other buyers.

Tough conditions have forced about 5,000 tofu makers out of business in the past 10 years nationwide.

"We couldn't make a profit even though we worked 365 days a year," said Eiichi Oikawa, the 37-year-old owner of Sendaiya Honten, a tofu maker in Mitaka, western Tokyo, that declared bankruptcy in August.

Sendaiya Honten was established in 1957 by Oikawa's grandfather. Oikawa began managing the company with his father three years after graduating from university. At its peak, Sendaiya Honten employed up to 20 people and produced 2,000 blocks of tofu a day for sale to supermarkets.

Ten years ago, it opened three directly managed retail stores, including one near JR Asagaya Station in Suginami Ward, Tokyo. It also made processed tofu products, and its annual sales reached as high as 400 million yen (US$4 million).

However, the price of imported soybeans began surging five years ago. Sendaiya Honten made cost-cutting efforts, such as buying some tofu from other producers at low prices, but all three directly managed stores were closed three years ago.

Due to deflationary trends in Japan's economy, supermarket chains asked Oikawa's company to lower its wholesale prices. When Oikawa responded by asking the chains to raise their sales prices because his business was struggling, the chains terminated their business deals.

Some supermarket chains demanded Oikawa's company hand over 7 per cent of its sales as "cooperation money," or refused to pay for unsold tofu, forcing Oikawa to shoulder all the costs.

The price of foreign soybeans has risen even further this year. The average price from January to the end of September was 84.2 yen per kilogram, the highest in the past 10 years. The price of domestic soybeans also rose, making conditions even harder for Oikawa's company.

Employees' paychecks were delayed, and the number of employees fell to five in June.

Finally, Oikawa told his employees: "I can't make a profit anymore, even if we work 365 days a year. It's difficult to continue this business."

The employees pleaded with Oikawa to keep running the company, saying they would work every day. But with business conditions unlikely to improve, Oikawa applied for bankruptcy in August.

"Price-cutting competition on tofu has been increasingly fierce, and all tofu makers are struggling. Unless sales prices are reviewed by, for example, making it possible to sell to supermarket stores at proper wholesale prices, tofu makers will disappear sometime in the future," he said.

According to data from the Health, Labour and Welfare Ministry, there were 9,059 tofu makers across the nation in fiscal 2012. This is down 4,957 from fiscal 2003, when the number was 14,016.

Zenkoku Tofu Rengokai, a Tokyo-based association of tofu makers, has asked companies in the retail industry to allow makers to reflect the increase in the consumption tax next April in retail prices.

An official of the association said: "Tofu makers are closing their doors at a rate of 500 companies a year. We want people to know that tofu makers are doing everything they can so the safety of food can be maintained."

Businesses surveyed

The Fair Trade Commission and the Small and Medium Enterprise Agency have sent out questionnaires to 150,000 business operators to ask whether retailers have refused to reflect the scheduled consumption tax hike in their sales prices.

The consumption tax rate is scheduled to be raised to 8 per cent in April. The government has assigned about 600 inspectors to check if the tax hike is properly reflected in prices.

If retailers are found to have refused to do so, the government will issue warnings and instructions under a law for special measures on reflecting the consumption tax hike in prices.

Meanwhile, the FTC also said it has received five applications since October for forming special cartels for reflecting the tax hike in prices. The law allows companies to form cartels for that purpose so that all members of manufacturers' business associations can reflect the tax hike in their prices.

The business associations that have made applications include the Japan Natto Cooperative Society Federation and the Japan Meat Processors Association.

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