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Initiatives for Agriculture

Providing Support as a Financial Institution to Make Japan's Agriculture a Competitive Industry

Japan's agriculture, forestry, and fisheries industries have a number of strengths. These include a well–developed production infrastructure, high–level technology capabilities, abundant production materials, and a wide range of agricultural products as a result of a bountiful climate and land resources. In addition, as the increase in population and incomes worldwide continues, demand for Japan's safe, high–quality agricultural and fishery products is strong, and the latent potential of Japan's agricultural, forestry, and fisheries industries as export industries is high. However, these sectors are beset by problems that include a small scale of operations and the status of practitioners, who are often part–time with second jobs. In addition, other serious issues include the rising average age of agricultural professionals and a shortage of successors. These various factors make it difficult for Japan's agriculture, forestry, and fisheries industries to become competitive as independent sectors.

In view of these issues, Mizuho has established a basic policy of "taking active initiatives as a private–sector financial institution to ‘make Japan's agriculture a competitive industry.'" These initiatives include the creation of a "Sixth Industry Initiative Support Desk," "supplying risk money," "structuring frameworks that will strengthen competitiveness," and "policy suggestions that make use of Mizuho's knowledge and insight regarding various industries."

Supplying Risk Money through Investments in the Agriculture, Forestry, and Fisheries Sixth Industry Fund

The Fund for the Conversion of Agriculture, Forestry, and Fisheries Sixth Industry into Growth Industries (hereinafter, the fund) is providing growth capital and management support to support Sixth Industry initiatives*. Investors in the fund include the Agriculture, Forestry, and Fisheries Fund Corporation for Innovation, Value–chain and Expansion Japan (hereinafter, the organization) as well as financial institutions and local governments and their entities. The fund is organized by regions and related themes.

Mizuho believes that this fund is an effective means for helping to make Japan's agriculture, forestry, and fisheries industries growth industries and is active in establishing sub–funds in collaboration with regional financial institutions and the organization.

As of May 2014, there were 43 sub–funds, either organized or in the process of being organized, and these had decided on making investments in 23 projects. Among these, MHBK had invested in 10 of the sub–funds, and they have made the decision to invest in three projects.

In management of these sub–funds, MHBK is drawing on its broad customer base and knowledge of industries, collaborating with joint sub–fund investors, including regional financial institutions, local governments and their entities, and the organization, to play the roles of business matching at the global level for technology and sales channels. In addition, Mizuho Capital Co., Ltd., which is funding some venture businesses and has abundant experience in providing management support, is taking part in the management of some of the sub–funds.

  • *Sixth Industry initiatives: This is a drive to promote stable growth and development of the agriculture, forestry, and fisheries industries and promote revival of the regions' economies by increasing added value in the agriculture, forestry, and fisheries industries through the integration of their production, processing, and logistical operations under a model in which their practitioners (primary sector workers) not only supply the raw materials, but also take a core, comprehensive role in the secondary sector (manufacturing and processing), and the tertiary sector (wholesale, retail, and tourism) activities.
Scheme of the Agriculture, Forestry, and Fisheries Sixth Industry Fund
Funds in Which Mizuho Has Invested

Realizing Investments from Sub–funds Aimed at Regional and Economic Revitalization through Development of the "Maguro" (Tuna) Brand

Among the sub–funds with Mizuho involvement, the first investment was in Aomori Kaisan Co., Ltd., through the Tohoku Future Support Fund, which was set up jointly by the organization, four regional banks in the Tohoku area, MHBK, and Mizuho Capital.

Fukaura Town in Aomori Prefecture, where Aomori Kaisan is located, boasts the largest catch of tuna in the prefecture. However, because there were not sufficient refrigeration facilities in Fukaura Town, shipments are only made during the summer, which is the best season for fishing, because the systems were not in place to provide for stable, year–round shipments. To deal with this situation, consideration was given to branding the tuna catch of Fukaura Town as a whole as "Fukaura Maguro" and to expand distribution channels as well as provide for year–round shipments by installing the necessary refrigeration facilities.

To provide financial assistance for the installation of this equipment, the Tohoku Future Support Fund evaluated the prospects for revitalizing this industry and rejuvenating the region as major, and in January 2014 made the decision to invest JPY 100 million in Aomori Kaisan. In addition, as a Sixth Industry partner, AP Company Co., Ltd., which operates a restaurant chain, made an investment in Aomori Kaisan.

Going forward, Aomori Kaisan will make use of the new facilities and expand its direct sales channels to the Tokyo metropolitan and other areas, where there are concentrations of consumer spending as well as network sales systems. Efforts will also be made to promote tourism in connection with the Fukaura Maguro Brand.

Examples of Agriculture, Forestry, and Fisheries Sixth Industry

Collaboration and Discussions with Middle Eastern Government Investment Companies Aimed at Promoting Growth of Agricultural, Forestry, and Fisheries Exports

As part of activities to create frameworks for strengthening competitiveness, Mizuho is taking initiatives to promote exports of agricultural, forestry, and fisheries products.

One of the promising export destinations will be the member countries of the Gulf Coordination Council (hereinafter, GCC*) of the Middle East. The member countries of GCC are importing many agricultural and fisheries products and, since they have strong economic power as oil–producing countries, demand there for reliable, safe, and healthy food products of high quality is growing. For this reason, agricultural and fisheries products and processed foods from Japan, which have a good reputation, are thought likely to be competitive in the local areas.

In addition, since it is also necessary to make supplies of desalinated seawater available for farming activities in the area, another problem is providing for high levels of energy consumption and dealing with the resulting high costs. Furthermore, to reduce the strong dependence on the petroleum industry, another important issue is nurturing new industries, such as agriculture and food processing. Regarding these issues also, there is a possibility that contributions can be made by introducing Japan's agricultural and food processing technology.

To respond to these needs of the GCC countries, in August 2013, MHBK and the six GCC countries established the Gulf Investment Corporation (hereinafter GIC) and signed a memorandum of understanding for business cooperation. The objectives of the GIC memorandum include promoting exports of Japan's food and agricultural products and introducing Japan's agriculture–related technology. Looking ahead, efforts will be made to develop schemes for collaboration while continuing discussions with GIC.

  • *GCC: Consists of six countries: the United Arab Emirates, Bahrain, Saudi Arabia, Oman, Qatar, and Kuwait

Participation in Research Groups of the National Federation of Agricultural Cooperative Associations and the Norinchukin Bank for "Strengthening Competitiveness in Food and Agriculture"

The National Federation of Agricultural Cooperative Associations and the Norinchukin Bank in August 2013 formed a research group with the objective of strengthening the competitiveness of Japan's agriculture and food related industries. As a result of the favorable evaluation of MHBK's record of financing in the agricultural, forestry, and fisheries fields and the support it has provided for a broad range of industries within the food–related sector, MHBK was also invited to join this study group.

From August 2013 onward, the group met seven times and participants actively exchanged views regarding a range of topics that include the issues facing Japan's agricultural sector, awareness of the business environment, latent capabilities and possibilities, themes related to measures for strengthening competitiveness, and examples of successful initiatives. As the next step, the group will move forward to implement specific policies.

Mizuho will offer policy suggestions based on its industrial knowledge, and, together with regional financial institutions, government organizations, and others, will work to contribute to the creation of jobs and revitalization of the economy through making Japan's agriculture, forestry, and fisheries industries growth and export sectors.