TT-868 -- US$5 Lettuces and the Move to Vegetable Factories, e-biz news from Japan

An Insider's comments on Japan's high tech business world
* * * * * * * * TERRIE'S TAKE - BY TERRIE LLOYD * * * * * *
A weekly roundup of news & information from Terrie Lloyd, a long-term
technology and media entrepreneur living in Japan.

General Edition Sunday, October 09, 2016, Issue No. 868

- What's New -- US$5 Lettuces and the Move to Vegetable Factories
- News -- Is Japan paying JPY20trn to get Southern Kuril islands back?
- Upcoming Events
- Corrections/Feedback
- Travel Picks -- Fish market in Wakayama, Halal ramen in Shinjuku
- News Credits

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While shopping at bulk food supermarket Hanamasa the other day, we were
surprised to see heads of lettuce on sale for JPY498 (almost US$5) -
triple their normal price... And stems of spinach for JPY400, also
triple the normal price. Apart from those two crops, the store had no
other outside-grown green leafy vegetables for sale at all. It's not
just Hanamasa, if you take a look at the Seiyu supermarket website for
veges, you can see that there are no outside-grown perishable (seasonal)
vegetables for sale - only those that can be stored or from greenhouses.
So what's going on? (Seiyu website veges listing)

According to the Meteorological Agency, Japan's weather in September
2016 set a 70-year record for the least number of sunny days, just 64%
of a normal September, and in Nagano the rate was even worse, at 40% of
normal. Given this and the prevalence of typhoons, the damage to
nation's lettuce, spinach, corn, potatoes, and soy bean crops has been
severe. Indeed, in Tokachi in Hokkaido, assessed damage has already
exceeded JPY57bn.

This of course doesn't bode well for vegetable prices or the economy in
the next couple of months. Although the CPI in Japan ignores fresh food
in its inflation calculations, and currently the CPI continues to fall
(down 0.5% year to date) real people in the street will be feeling the
pinch as they spend up to three times more on fresh food than normal.
This will of course impact the disposable spending on other items and
drive the measured CPI down even further through to Christmas.

What the weather does point to, though, is the wisdom of Japan moving
towards inside-growing, via vegetable factories. What we noticed both in
Hanamasa and on the Seiyu website is the continued availability and
stable pricing of factory-grown sprouts and imported fruit and veges.
Producers are doing a roaring business in sprouts for example, a
nutritionally superior product to fully grown vegetables, and consumers
seem to know it. Inventory and turns of sprouts are going up and yet a
packet of Kaiware sprouts costs just JPY45, letting people can stay
healthy and survive on restricted incomes.

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[...Article continues]

We wrote about vegetable factories in 2014, (,
where we gave some statistics about the segment. One company we covered
is called "Spread" and this firm has moved forward on its plans to
create a gigantic lettuce factory that will push out about 10m heads a
year, all controlled and all producible regardless of the weather
outside. Spread reckons that the lettuce market in Japan is worth about
JPY150bn a year, and globally about JPY7.5trn. Since its costs are so
much lower (see the link to their page below), it of course is looking
at the market from a purely economically competitive angle versus
regular farm-grown lettuces. But in fact with the climate change going
on globally their model may become the only way the masses can enjoy
proper nutrition in the future. Spread say that they will start
producing lettuces in their mega factory from the fall of 2017, exactly
a year from now, meaning that JPY500 lettuces may become a thing of the
past from that point on. (Spread's English webpage.)

Although climate change is driving us to hydroponics and factories,
setting up a vegetable factory for profit is not a guaranteed
undertaking. Several major players have recently either pulled out or
drastically reduced their involvement after failures in greenhouse food
production. In March, food giant Nichirei pulled out of the vegetable
storage in Chiba Prefecture after failing to make a profit after 6 years
of operation, and in April, restaurant chain Yoshinoya reduced
operations at a large company-owned farm in Kanagawa. In both cases,
labor and general cost control were the deciding factors, with the
companies going back to their core operations.

But other players are proving more adept at controlling costs and/or
producing without lots of human input. These companies are generally
either competent at informatics, like Spread, or they have special
expertise in other cost inputs, such as heating. One such company is
industrial gas producer Air Water, which bought a failed greenhouse
tomato-growing venture in Hokkaido from Omron in 2011. Just this spring
they were able to turn a profit by streamlining operations and reducing
heating costs through solar heating. Air Water now has about 8 hectares
of tomatoes under cultivation, and 30 hectares of covered greenhouses
all together. (Air Water agriculture webpage.)

Another example is Aeon Agri Create, which now operates 21 farms across
the country for a total of 350 hectares. The company leases rather than
buys its land, and solves some of its labor problems by rotating
employees out of its supermarkets to help on the properties - although
mostly the farming is done by local (and possibly foreign?) part-timers.
Of course being vertically integrated and having direct sales to
consumers to chop out at least 3 layers of distribution costs, also helps. (Aeon agriculture webpage)

Going back to the soaring prices at the supermarkets, it's notable that
while domestic outside-grown perishable veges have been so badly
affected by the weather, those from Japan's very efficient import system
and from its vege factories are still available at stable prices and in
stable supply. As good cases in point, root vegetables such as potatoes,
onions, and garlic; low-perishable above-ground veges such as pumpkins,
squash; and hot house tomatoes, cucumbers, capsicums, and piman (small
green capsicums) are all selling at more or less the same prices they do
each year. Also cool-store fruit such as apples, nashi pears, and
persimmons, and semi-tropical and tropical fruit such as bananas, dragon
fruit, oranges, lemons, avocados, and kiwifruit are also in plentiful
and reasonably priced supply.

So, while the weather is inconvenient, for many of us the biggest impact
is a change in our diets as we substitute traditional for available
produce - perhaps showing how we are trivializing global warming...

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+++ NEWS

- Mount Aso in Kyushu active again
- Is Japan paying JPY20trn to get Southern Kuril islands back?
- Persians teaching math in 700 AD
- Amazon commits faux pas in Japan
- Cell phone rare metals rule change

=> Mount Aso in Kyushu active again

Mount Aso in Kumamoto Prefecture, Kyushu, has erupted for the first time
in 19 years and the public is being warned not to approach it. The
eruption started on Saturday morning and sent ash 1,000m into the air,
drifting in a 30km radius from the ejection site. Falling ash was
reported as far as 150km away. ***Ed: Bad luck for those tourists
wanting to hike or ride (horses) in the area around Aso, which is
extremely scenic. We imagine the number of reservations at various onsen
in Kurokawa village, just 10km away, have also fallen substantially as
well.** (Source: TT commentary from, Oct 07, 2016)

=> Is Japan paying JPY20trn to get Southern Kuril islands back?

The Nikkei has published a tepid article about PM Abe planning to ask
for an exchange of a Japanese JPY1trn investment in return for Japanese
visitor access to the Southern Kuril islands, when Putin visits Japan in
December. However, in Russia the media reports are of a much bigger
deal. According to the Russian media the Japanese are offering to invest
in over 100 infrastructure projects over a period of ten years and in
stark contrast to the JPY1trn number, they say the real number being
bandied around is closer to JPY20trn and that in return Japanese are
asking for Russia to hand over the four Southern Kuril islands. ***Ed:
The question is whether pragmatism or national pride will sway the
Russians. If we were them, we'd lead the Japanese on but keep them
waiting for a decade of inbound investment for a formal decision - as a
kind of trade insurance policy if things get too hot with the USA.**
(Source: TT commentary from, Sep 30, 2016)

=> Persians teaching math in 700 AD

New infrared imaging techniques have discovered a narrative on a
1,300-year old wood veneer tablet that states a Persian mathematician
was living and teaching in Nara, the capital of Japan at the time. The
tablet is the first direct evidence that ancient Japan was not only
actively trading with the continent but was also welcoming of foreigners
living in its midst. Apparently the Persian was an official
representative of his court and worked at an academy that trained
Japanese government officials. ***Ed: Some things haven't changed, other
than the locations...!** (Source: TT commentary from,
Oct 09, 2016)

=> Amazon commits faux pas in Japan

Amazon Japan's flat-rate electronic publications service has been so
successful that they blew past their internal budget for royalties to
publishers, and accordingly have now removed about 1,500 popular titles
from the service to balance out costs again. This has angered both the
subscribers and publishers, and appears to have given Amazon a public
black eye. According to the WSJ the problem was that Amazon
underestimated how quickly readers would get through the first 10% of a
publication, the trigger point after which Amazon has to pay the
publisher. ***Ed: Speculation is that Amazon's US-based product planners
hadn't counted on the speed at which Japanese read Manga. Given that
Amazon Japan makes about US$8.3bn in revenues for the company, you'd
think they would be more careful to localize their planning and further,
after having made this kind of basic mistake, not to antagonize their
users.** (Source: TT commentary from, Oct 4, 2016)

=> Cell phone rare metals rule change

The rare metals recycling business in Japan is about to take a turn for
the better, with a change in government rules over the import of trashed
cell phones from overseas. METI plans to allow imports of disposed cell
phones to receive expedited clearance through customs and hazardous
materials authorities, reducing the current inspection/approval period
from 2-12 months to just 2-4 weeks. As a result instead of sending their
old phones to Europe for recycling, SE Asian and East Asian countries
are expected to start sending them to Japan. There are currently about
140,000 tons of old phones sold to Japanese recyclers but the overall
inventory available is more like 14.1m tons. (Source: TT commentary from, Oct 6, 2016)

NOTE: Broken links
Some online news sources remove their articles after just a few days of
posting them, thus breaking our links -- we apologize for the inconvenience.


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No events to announce this week.



=> Kuroshio Market, Wakayama
Eat fresh sushi from a just cut tuna

You've probably heard a lot about Tsukiji fish market in Tokyo. But do
you know about Kuroshio market in Wakayama? Take a short bus ride from
Wakayama City to the nearby man-made island and enjoy fresh sushi or
sashimi from a just-cut maguro or blue fin tuna. You can actually see
how they are cutting it.

Wakayama's Marina City is a recent finished complex with hotels, hot
springs, a theme park, sea fishing space, fruit village, and fish
market. It's a modern and nice area to walk around, but Kuroshio Market
is definitely the highlight.

If you are a foodie, you will enjoy spending some time inside the
market. There are more than fifteen food stands, each of them preparing
and selling their own specialty. You can find anything from raw seasonal
fish, barbecued and grilled oysters, tempura, noodles, roasted tuna, and
of course sushi. Eat small bites in each place, and be sure to leave
some space for some more maguro!

Three times a day (11:00 am, 12:30 pm, 5:00 pm), a professional
fishmonger comes out with a 100-kilogram just-caught blue fin tuna and
cuts it in front of the audience. He explains the filleting process and
the grading system for the meat. The 15 minutes presentation is only in

=> Shinjukyugoen Halal Ramen Ouka
Yes, it's fully certified!

In the quiet neighborhood of Shinjukyugyoen sits a humble ramen shop
called Shinjukyugyoen Ramen Ouka. Its plain looking facade might deceive
one into thinking that it is just another ramen shop, but come a little
closer and you will see a small decal showing the word "Halal".

For any Muslim individual traveling around the world, coming across an
eatery with the Halal sign is like finding a piece of home. This shop
not only prepares special dishes for Muslim customers (like other
eateries that state they are Muslim-friendly), it is also fully
certified by the Otsuka Mosque. Just slightly more than a year old,
Ramen Ouka was opened on the 9th of September 2015 by Mashriq Wachi, a
Japanese convert. The store has 10 staff in total - including a good mix
of Malaysians, Japanese and Indonesians.

This unpretentious eatery has a traditional wooden interior and seats
about 15 people on high stools, all of which face the chef. They're
clearly tight on space, but then again aren't most Japanese ramen
stalls? The friendliness of the staff and their willingness to have
conversations make up for it though. Classical music plays as customers
stand in front of the order machine deciding what to eat. Options
include the crowd favorite, Gozen Ramen, followed by Spicy Noodle.



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