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Export sales mission to Asia

Sarah Weigum travels to Japan to learn more about international ag sales

If it hadn’t been such a rainy harvest, I may not have found myself on a flight to Tokyo last November.

I can’t remember if I was waiting for a shower to dry up or the snow to melt, but one morning in early September I read an article in one of the farm papers that highlighted an upcoming trip for businesses wanting to export food and food ingredients to Japan and Korea. I have been co-ordinating our farm’s export business for a couple years, but in 2014 our major Korean buyer severely reduced demand. The trade mission seemed like an opportunity to pursue new opportunities to export clean, packaged grain, ready for food processing.

The trade mission was organized by Alberta Agriculture in conjunction with the British Columbia and Saskatchewan agriculture departments. Between harvest and mid-November I created promotional material, had it translated into Japanese and Korean, booked flights and hotels and collected clean grain samples to show prospective buyers. My boyfriend, Curtis, who is also a farmer, joined me for the adventure.

After touching down in Tokyo and taking a couple days to adjust to the time change, we met up with the other Canadian exporters at the Canadian embassy for a day of introduction to the Japanese market.

We learned from both trade commissioners and Japanese business people that food safety followed by cost are the two most important factors to Japanese consumers. Vegetable oils, beef and bottled water are products in high demand.

food warehouse in Japan

In Japan, Sarah Weigum visited a warehouse where home-delivery grocery orders are processed.
photo: Sarah Weigum

We visited a warehouse where home-delivery grocery orders are processed. An amazing bar code system stores individual food packages in crates and compiles them to match the customers’ order forms with an employee loading all the goods into one final crate for delivery to its destination. According to the warehouse managers, they make about 50 mistakes in one million orders. One of the trade officers from the Alberta-Japan office pointed out that that is the level of precision the Japanese expect when doing business.

The next day the embassy hosted a day-long trade show. Japanese buyers visited the show and a lunch reception gave us the opportunity to mingle with them. The staff from the embassy and the provincial offices are well-connected and made sure to introduce us to as many relevant buyers as possible.

That night we took the bullet train to Osaka and had a similar trade show and reception the following day.

The trade mission was billed as the Western Canada Food Expo and it happens every two years. Most of the Canadian companies in attendance were exporting ready-to-retail foods like potato chips, candy, camelina oil, pork, rolled oats and honey. Many of the buyers at the Tokyo and Osaka expos were from grocery stores, restaurants, and other retail outlets and they wanted to buy ready-to-eat and ready-to-prepare products.

Buyer feedback

We did have a couple of traders and food manufacturers express interest in importing Canadian grains. Fababeans sorted to particular sizes were of interest, as were green peas for snack foods. Several buyers asked about non-GMO soybeans for food processing. There were also a couple of companies interested in importing flax, but flax has two strikes against it in the Japanese market: cyanide and GMOs.

I had no idea before I traveled to Japan that there are naturally occurring cyanide compounds in flax. We all know cyanide is poisonous, but as the saying goes, “the dose makes the poison.” There is no evidence of the cyanide content in flax harming any humans, but the Japanese will reject a shipment if the cyanide content is more than 10 parts per million. This standard is based on research on the cassava plant, which also contains cyanide. Cassava is a staple food in some parts of Africa and when consumed exclusively for an extended period of time the cyanide content can cause a paralytic disorder. Ten parts per million is considered a safe level of cyanide compounds in cassava.

It doesn’t make much sense to impose the same standard on flax, which is consumed in much smaller amounts than cassava, but this is good example of Japanese regulators prioritizing food safety. According to the trade commissioner I talked to, most raw flax contains 10 to 20 parts per million of cyanide, if a shipment were to arrive in Japan and test over the limit, it would be sent back at huge cost to the exporter. The only way around the cyanide problem is to roast the flax, which one Regina company is doing.

The other problem I mentioned is GMOs. In 2009, Japan found a trace amount of genetically modified flaxseed in a shipment. (A genetically modified variety of flax had been developed in Saskatchewan but was pulled from the market. However, not before trace amounts were found in a number of Canadian flax varieties.) Because GM flaxseed is not approved for human consumption in Japan, the load was rejected and all subsequent flax shipments destined for food are to be inspected until enough shipments pass the test that random testing can resume. Even if a lot of flax passes a Canadian GMO test, concerns remain that trace amounts will be detected on the other side of the Pacific.

Despite the supposed purging of GMO seed from the Canadian flax crop, exporters remain in a catch-22 situation. Canadian exporters are loathe to send a shipment to Japan in case it gets rejected, so the Canadian system can’t build up the good credit it needs to avoid intense scrutiny.

Another thing we learned is that all imports of wheat and barley to Japan are co-ordinated by their ministry of agriculture. Every year the government asks food processors to estimate their wheat and barley needs for the year. The country’s small domestic production is subtracted from this amount and then the government tasks private grain traders with bringing enough grain into the country to meet the demand. Part of the mark-up on the imported wheat and barley is used to subsidize domestic production.

It’s kind of a reverse Canadian Wheat Board: instead of a single desk buyer, Japanese food processors essentially have a single desk supplier. And it means that Canadian exporters can’t sell directly to a Japanese food processor.

If it sounds challenging to do business in Japan, that’s because it is and the staff from the Canadian embassy didn’t sugarcoat this reality. It can take a long time and many emails and visits to ink a deal. The trade-off? The Japanese desire for a long-term business relationship.

As one commissioner said, “The Japanese aren’t looking for a one night stand, they’re looking for a marriage.”

In my next column I’ll take you to Korea, where we experienced kimchi, Korean BBQ and an onslaught of keen Korean grain buyers.

About the author

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Sarah Weigum

Sarah Weigum grows pedigreed seed and writes at Three Hills, Alta.

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