Business Analysis of Aquaculture--those of yellowtail and red sea bream

The Report of the Statistical Survey on Fishery Management, published by the Ministry of Agriculture, Forestry and Fisheries, was used to analyze the business performance of the fish aquaculture industry, specifically the yellowtail and red sea bream aquaculture industries, from 2005 to 2011. Focusing on corporate businesses, the core economic entities of the industry, profitability analysis, break-even point analysis (the ultimate index), and solvency analysis were performed. In addition, productivity analysis, not performed in depth until now, was conducted in detail, providing for much deeper business analysis. In terms of business management, both the yellowtail and red sea bream aquaculture industries were able to make a profit in only three of the seven years analyzed, and even in their best year, their return on assets (ROA) did not exceed 5%. In terms of labor\u27s share of income, the most important indicator in productivity analysis, the figure consistently remained above 50%, with the exception of the yellowtail aquaculture industry in 2011. While capital investment is important, investment efficiency plays a similar or even larger role in increasing productivity, and is greatly influenced by business management capability. With respect to household fisheries in the yellowtail and red sea bream aquaculture industries, of the combined 14 years analyzed, only four years showed aquaculture income in the black. Even after income from fishing business was added to aquaculture income, the two industries were in the black for only six years combined; and when, in addition, the balance from other sources of income was added to these to obtain overall business income, this figure remained unchanged. As regional comparisons can be made in the case of household businesses, regional differences between Shikoku and Kyushu for yellowtail aquaculture, and Tokai, Shikoku and Kyushu for red sea bream aquaculture, were identified, and respective trends examined. Differences in business costs were also studied, by comparing the principal expenses of corporate and household fisheries, respectively. While the cost of feed was about the same for both types of business, the cost of seedlings was lower for corporations, while the cost of labor was lower for fishery households. Since the cost of seedlings was higher than the fishery households\u27 labor costs, even after the estimated family labor cost (an advantage of fishery households) was excluded the corporate advantage remained. An application requesting that the amberjack and specifically yellowtail (not all yellowtail type) aquaculture industries be included in the concentrated fishery reform promotion project was submitted to the Fisheries Agency by Kagoshima Prefecture and approved. Kagoshima Prefecture\u27s project has the following two core objectives: (A) development of a new business model involving reductions in production costs and improved distribution through the introduction of artificial seedlings and extruded pellets (EP), and (B) reductions in and/or strict control of production to achieve optimal aquacultural production volume. Based on data submitted for the application, the business situations of the yellowtail and amberjack aquaculture industries are discussed, with emphasis on their production costs, as well as the concept of renovation. Until now, analysis focused especially on the amberjack aquaculture industry has been almost non-existent, but wide regional differences exist in its business make-up and costs. Business analysis of the yellowtail and amberjack aquaculture industries indicates that notonly the restructuring of individual businesses, but also structural reform of the entire industry, is indispensable. The Kagoshima Project targets primarily individual businesses in Objective A above, and the entire industry in Objective B; but its price setting in Objective A (￥838 /kg for yellowtail and ￥883 /kg for amberjack) is highly questionable. Price competition from imported cultured salmon is strong, and it must be acknowledged that it is no longerpossible to maintain the traditional higher price range (as quality products) for yellowtail, amberjack and red sea bream. Although some impact was felt due to increased production of wild yellowtail, the average price of cultured yellowtail for 2012 (until November 2012) in the Tokyo Metropolitan Central Wholesale Market was ￥649 /kg; a fact that makes the above price setting seem unrealistic. The move by the yellowtail aquaculture industry to shortenthe period of aquaculture by culturing two-year fish, along with the effort of the amberj ack aquaculture industry to establish a rearing cycle essential for complete aquaculture, as well as the shift to a low density aquaculture business model by decreasing production, will together contribute to a significant reduction in costs by enlarging the business scale through business cooperation and other measures, so that both industries can survive in the mid-range price region. For successful business restructuring, production must be increased, And for this, business management capability must be further developed, so that investment efficiency can also be improved. The fishery aquaculture industry has been very successful in innovatingaquaculture technology, but this innovation has not been integrated with marketing strategies. And in addition, the overall business management capability, including financial and labor management, lags far behind that of other industries. The Kagoshima Project targets not only the transformation of the business models of individual businesses, but also reductions in and/or strict control of production to achieve optimal aquacultural production volume, mainly through the agency or leadership of five fishery cooperatives to which the participating business entities belong. Although manydifficulties and obstacles are expected to arise on the path to success, the project deserves praise as an ambitious effort on behalf of the fishery cooperatives. It involves a representative management model based on fishery cooperatives, and included within its scope is the eventual aim of controlling supply and demand through reductions in production, with a trigger in Kagoshima JF Sales, a joint effort of the local Azuma-cho FisheryCooperative (the number one producer of yellowtail in Japan) and the four major fishery cooperatives in Kagoshima Bay (which together account for approximately 60% of all amberjack production in Japan), and supported by Kagoshima Prefecture, the Prefectural Federations of Fishery Cooperatives (Gyoren), the Prefectural Banking Federations of Fishery Cooperatives (Shingyoren), etc. Proud to be the largest producers of both yellowtailand amberjack in Japan, the government and private sectors of Kagoshima Prefecture are determined to lead the way as pioneers in this area