Nippn : Reference Materials May 22,20245,487KB

May 22, 2024

Reference

Materials

Code number: 2001

NIPPN CORPORATION

https://www.nippn.co.jp/en/index.html

Table of Contents

1.	Basic Knowledge of the Flour Milling Industry	・・・	P3
2.	Current State of the Flour Milling Industry (1) - (5)	・・・	P4
3.	Wheat Price Revision Rules - Imported Wheat	・・・	P9
4.	Factors and Mechanisms That Cause Wheat Flour
	Prices to Fluctuate (1) - (4)	・・・	P10
5.	Changes in Government Selling Prices (1) - (2)	・・・	P14

6. Government Selling Prices of Imported Wheat for the

	Period Ended April 2024	・・・	P16
7.	Current Status of Wheat Bran Market (1) - (2)	・・・	P17

8. Progress of International Trade Negotiations -

	Our Response	・・・	P19
9.	Growing Calendar for Wheat	・・・	P20
10.	NIPPN Company Profile	・・・	P21
11.	NIPPN Group Overview	・・・	P22
12.	NIPPN's History	・・・	P23
13.	Main Business Locations	・・・	P24

14.	Changes in Operating Results (1) - (2)	・・・	P25
15.	Business Segments	・・・	P27
16.	Flour Milling Business	・・・	P28
17.	Food Business (1) - (3)	・・・	P29
18.	Other Business	・・・	P32
19.	Overseas Business	・・・	P33
20.	Corporate Governance Structure	・・・	P34

2

Basic Knowledge of the Flour Milling Industry

Yokohama Plant

Current State of the Flour Milling Industry

Wheat Price Revision Rules - Imported Wheat

Factors and Mechanisms That Cause Wheat Flour Prices to Fluctuate

Changes in Government Selling Prices

Wheat fields in the U.S.

Chicago Board of Trade

Government Selling Prices of Imported Wheat for the Period Ended April 2024

Current Status of Wheat Bran Market

Progress of International Trade Negotiations - Our Response

Growing Calendar for Wheat

3

Current State of the Flour Milling Industry (1)

Number of flour milling companies and plants

Changes in the volume of wheat processed for domestic

flour milling

Million tons

95
90
	88
		83
				81
					77
								74
118	114								72
										66
109	104	102						64		63
98
95
42		93
42									87
39											86
	39	38							85
				37	36	36
										36	36
35														36
32	29
27	27
	27
				27	27
10	10	10					27	27
10	9	8	8			23
7
								7	7	7
31	30	31	28	28	26	24	23
17	16	15

Number of companies

Number of

plants

7.00

	Wheat produced in
	Japan
6.00
5.00
4.00
3.00
Wheat produced in
2.00	foreign countries
1.00

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Fiscal year

Less than 50 50~less than 100 100~less than 200 200 or more

Unit: tons (daily production capacity)

0.00
2011	2012	2013	2014	2015	2016	2017	2018	2019	2020	2021	2022

Fiscal year

Flour Milling Industry Share (FY2023)		Percentage by country of origin
	(average import volume from FY2019 to FY2024)
					(Survey by Nikkan Keizai Tsushin Co., Ltd.)		Produced in	(From Trade Statistics of Japan,
										Ministry of Finance)
										Japan
Other		Nisshin Flour			Produced in Australia
	Milling Inc.			17.5%	Produced in the United
											States of America
	20.1％					39.1%
			Big Four
			Companies					13.8%	38.2%
						NIPPN
			79.9％
					CORPORATION
						24.4%	Showa Sangyo	9.3%		Produced in
								Canada
							Co., Ltd.
							7.1%		30.4%
							Nitto Fuji Flour
							Milling Co.,Ltd.

4

Current State of the Flour Milling Industry (2)

D i s t r i b u t i o n o f w h e a t i n J a p a n

	Produced		Private Sector Distribution Liaison
	in Japan		Council
		Producers' organizations and actual consumers jointly
Production volume:	exchange information and determine the structure of
	approx. 1 million tons	private distribution transactions.
Number of wheat farmers:	Private Circulation
	approx. 100,000

Flour milling company

(63 companies)

Producing area

councils

Promote the setting of quality improvement and production cost reduction targets and their implementation with the participation of producers, consumers, extension organizations, municipalities, etc.

Bidding transactions approx. 30%

Relative transactions approx. 70%

Demand:

approx. 5.46 million tons

(Estimated for

FY2024)

Produced in

foreign

countries

Total imports: approx. 4.55 million tons

U.S.A.

Approx. 2.27 million tons

Canada

Approx. 1.59 million tons

Australia

Approx. 0.69 million tons

Others

Imported

centrally by the

government

through national

trade

Government (Ministry of Agriculture,

Forestry and Fisheries)

• Imports of wheat varieties that are in short supply in Japan and wheat varieties for which domestic wheat cannot be used due to quality

・Marginal gain from imports of foreign wheat are used to subsidize domestic wheat production

Soy sauce

companies,

etc.

Sell

Demand:

approx. 100,000

tons

Survey by Ministry of Agriculture, Forestry and Fisheries

5

Current State of the Flour Milling Industry (3)

Protein content

Main raw wheat

types used

Brand name

	Flour for bread
Main	Flour for
noodles
applications
Flour for
	confectionery
	Home use
	Industrial use
	Other

F l o u r	T y p e s		a n d	U s e s
Bread flour	All purpose flour			Pastry flour	Cake flour	Durum semolina
11.5 ｰ 13.0％	10.5 - 12.5％			7.5 - 10.5％	6.5 - 9.0％	11.0 - 14.0％
Dark Northern Spring	Hard Red Winter				Standard White
(DNS)	(HRW)				(ASW)	Western White	Durum
Western Red Spring	Prime Hard				Wheat produced in	(WW)	(DRM)
(1CW)	(PH)				Japan
DNS	HRW				ASW	WW	DRM
1CW	PH
Loaf of bread	Loaf of bread			Udon noodles	Castella	Spaghetti
	Sweetened bread			Hiyamugi, somen	Cakes	Macaroni
	French bread, etc.				noodles	Japanese
				Cookies	confectionery
	Chinese-style
			Japanese	Tempura flour
	noodles
			confectionery	Cookies

Yakifu, karinto, gluten, starch

Snacks, starch glue

Baking adhesive (industrial use), feed

(Based on materials from the Ministry of

Agriculture, Forestry and Fisheries of Japan)

6

Current State of the Flour Milling Industry (4)

Breakdow n of Wheat Flour Production

Wheat distribution volume: approx. 5.6 million tons

(Wheat produced in Japan: approx. 0.97 million tons)

(Wheat produced in foreign countries: approx. 4.52 million

tons)

From the outlook on wheat supply and demand for FY2025

Annual flour consumption per capita ≒ 31.7 kg

Wheat flour:

approx. 80%

Wheat Bran:

approx. 20%

Raw grain silos

Wheat flour
Industrial use 1%	For feed, etc. 13%
Home use 3%
	For bread 40%
For confectionery 11%
	For noodles 33%
From the summary of the survey of flour milling plants for FY2023

Wheat Bran (for feed)

Wheat Bran

7

Current State of the Flour Milling Industry (5)

The Current State of Japanese Agriculture - Background

o f	W h e a t	S y s t e m	R e f o r m
(1) Decline in food self-	sufficiency rate	(2) Decrease in farmer population

		1990	2022
Self-sufficiency rate of staple grains	67％ →	61％
Food self-sufficiency ratio based on the total calorific value supplied	48％ →	38％
Import	63％
Produced	37％
in Japan

Changes in farm population, etc.

Million			Farm population (farm household
people			members)
13.88		Farm employment population
		Core agricultural workers
15.00
10.00
5.00	4.82	2.93	3.49
	2.49	1.36
0.00
	1990		2020 (approximate)

(3) Progressive aging of farm households

(4) Increase in abandoned lands

Percentage of Core Agricultural Workers by Age Group

26.8%	12.2%	4.9%	25.5%
	69.6%
	61.0%		Under 39 years old
		65 years old or older
			40~64 years old
	1990	2020 (approximate)

Abandoned land area

Ten thousands

hectares

50

40

30

20	42
10	22

0

19902015

Source: Ministry of Agriculture, Forestry and Fisheries, "Census of Agriculture and Forestry"

8

Wheat Price Revision Rules - Imported Wheat

Government purchase price (variable) Announced monthly ・Weighted average price for the last 6 months*

(*) Last 6 months: September of the previous year to March of the current year in the

case of the April revision

March of the current year to September of the current year in the case of October revision

+

Markups (marginal gain from import) Yearly fixed ・Domestic wheat production promotion measures

appropriation + government administrative expenses

+

Port fees

Yearly fixed

・Suction fees, etc.

Makea decision	Government selling prices

The Ministry of Agriculture, Forestry and Fisheries states that pricerevisions are to be carried out twice a year in principle in order to mitigate the effects of fluctuations in international markets.

Chicago Wheat Market Trends

(Dollars/bushels)

Source: Reuters/ES=Jiji Press

Note: CBOT (Chicago Board of Trade) near-month prices for each weekend of the week

Trends in Wheat Supply and Demand

Production and Consumption		Inventory ratio at end
(million tons)		of period

Production

Consumption

Inventory ratio atend of period

Optimal inventory level: 25-26%

Source: USDA, "Grain World Market and Trade"

Trends in marine freight, crude oil, and exchange rates

Marine freight	Crude oil	Exchange rate	160
			140
			120
			100
			80
			60
			40
			20
			0

Source : World Maritime analysis, Nihon Keizai Shimbun	Dollars per barrel (crude oil price)
: Overseas Economic Data, Cabinet Office,	Yen/dollar (exchange rate)
Government of Japan	Dollars per ton (shipping costs)

9

Factors and Mechanisms That Cause Wheat Flour Prices to Fluctuate (1)

Institutional

factors

Changes to the sales system for imported wheat

Introduction of a system linked to market prices

Introduction of the SBS system

Impact of changes in the demand structure on food production,	Weather
	etc.		factors
			Unseasonable
Increasing demand	Rise in the price of	Economic development	weather
and population growth in
for bioenergy	corn	Drought
developing countries
		Floods, etc.
Switching from wheat	Increased demand for	Increase in demand	Change in
to corn and other	wheat as feed in the
for food	circumstances
crops	United States
			Political instability in
		Decrease in wheat	exporting countries
Decrease in wheat production	such as Russia and
stocks
		Ukraine, etc.
R i s e i n t h e p r i c e o f w h e a t

Economic factors

Exchange rate

High price of

crude oil

Rise in marine

freights

Inflow of

speculative

funds

Export

controls

Change in Circumstances (Part 1)

Increased wheat	Recovery of
production due to
wheat stocks
weather and price
conditions

Change in Circumstances (Part 2)

Reduction of tariffs and

markups due to the TPP11, Japan-US trade agreement, etc.

Change in Circumstances (Part 3)
Such as the COVID-19	Global	Withdrawal
of
and the Chinese default	economic
speculative
issue	slowdown	funds

F a l l i n t h e p r i c e o f w h e a t

10