Data shows Japanese agri-problems

I am going to stay in Hanoi, Vietnam for a month starting from today to the end of August. The main purpose of living in Hanoi is that making a team to speed up the development of AGRIBUDDY, which is reaching the best part of completing and launching all of the facilities. Although I sound like I am so energetic for this development, I am kind of useless here right now since I can’t even write a code. So, the thing I am doing here is just being careful and quiet not to bother the engineers who are really focusing on their job.

Well, today’s blog is about there are many interesting facts going on at developing countries in Asia, where many users of AGRIBUDDY are living. A various data of the agriculture of each of these countries tell us that there are many facts we should think about.

First of all, let’s take a look at the start-ups of the field of agriculture in the U.S, which are recently booming. The number of the famers (we can say ‘people who does the agriculture business’) in the U.S is approximately one million. Massive plow lands in the U.S, which are 168MM hectares in total and cover 10% of the plow land of the world, are owned by only one million farmers. This means that 153 hectares (Little bit bigger than Augusta National Golf Club) of the plow land is owned by one farmer and it makes approximately $1600 sales per 1 hectares  (10,000㎡ or 2.47ac).

Let’s talk about Cambodia, the country I am currently living in. The number of people who do any kind of agricultural businesses in Cambodia is 3.8 million, which is about four times as big as the U.S. On the other hand, the total size of the plow land is 4.2MM hectares, which is about 1/40 of the plow land of the U.S. The yearly seals of 1-hectar-plow land in Cambodia is approximately $1200 and one farmer owns 1.1 ha on average. So, on a simple level, the annual sales (not annual income) is about $1320 and this number proves how poor the farmers in Cambodia are.

The reason why the productive value per 1 hectare of both the U.S and Cambodia are such a low is that both of them grow the low-value-added products, which are commodity products, such as corns, wheats, and rice. However, the farmers of the U.S are succeeded to gain some profits by producing huge amount of crops by implementing a model of “the large-scale production with a small group people”. In Cambodia (actually in any developing countries), they also grow the low-value-added products as the U.S does, but they do their agriculture business with a labor-intensive-method. Therefore, it makes sense that the farmers in Cambodia never be able to be rich no matter how hard they work.

Let’s talk about my country, Japan. Japan, which has many agricultural problems in many ways, has surprisingly $11,000 seals per 1 hectare and it seems like Japan is very good at the agriculture like an A-student in a school. However, by looking at it from another angle, we can see some problems, which we knew there would be.

スクリーンショット 2015-11-01 5.32.36 PM

The chart above is showing a comparison between the agriculture in Israel, which is known as one of the agricultural developed countries and the one in Japan. First of all, please take a look at the number of production value per one farmer. Compare to the number of Japan, which is about $30,000, the one of Israel is $120,000, which is four times bigger than the amount of Japan. Furthermore, the value per 1 hectare is $10,000 (Japan) and $20,000 (Israel), which means the difference between them is close to the double. Furthermore again, let’s take a look at the size of the plow land owned by one farmer. One farmer in Israel has 2.5 times bigger plow land than the plow land owned by one Japanese farmer. Let me explain this fact in short;

“The agriculture in Japan never pursues the thorough productivity. Since each of plow land is owned by Japanese workers with high labor cost, the productive value of the agriculture is not even close to the average income of Japanese workers of other business fields.”

In short, the first problem is that the number of the farmers is too big for the size of the plow land in Japan. I think it works better if we reduce the number of the farmers to 1/3 of the present number. The next problem is that the productive value per size is very small. Even the country, which is located in the middle of desert and spend 60% of the national budget as the defense expenditure, can make some profits by implementing its agriculture effectively. The fact, which is that the farmers in Japan make only half of the profit of that country, brings the result, which is “there are so many, actually more than necessary unmotivated farmers staying in the agriculture business in Japan.

I am pretty sure if these unmotivated farmers leave their land to the motivated farmers and start another jobs, these problems will be resolved immediately. However, on the other hand, I know there are some reasons we can’t even reveal are protecting the Japanese farmers. Well, even though we analyze the issues of the agriculture in Japan, there is little thing we can do to change these facts. On the other hand, regarding developing countries, there is a lot we can do. Since the labor fee of the developing countries is pretty low at first, if the farmers can grow some high-value-added-products, their life will be several times as good as the present life. The focus AGRIBUDDY is aiming at exists in these facts.

Well, I am sorry, I didn’t mean to write such a long blog. Anyway, let me say hello to everyone in Hanoi and I would appreciate if all of you could accept and take care of me starting from today.

The border of the land and the boarder of the nation

In Cambodia, where border lines of lands are very unclear compared to Japan, it is not a surprise that our neighbors ignore the border of the land. They intrude into our land more than dozens of meters and start to grow their crops without our permission. Of course as soon as we find out, we report it to the local leader, then we pull the crops out and put the stakes, which were moved by the neighbors without notice, back to the original position. Sometimes we have very disquiet in the air with everyone who is on the spot.

No one wants to have any trouble, of course. However, we should avoid the fact that someone trespasses and intrude into your property without any permission for no reasons. Fortunately, there is no huge trouble yet since all of us are just civilians with no weapons. Protecting your property is normal, so I am pretty sure that there are few people who feel sense of discomfort to protect own property from others.

However, if you have your own house and lands across or face to the international border and you can have a trouble with neighbors such as easily. Then, it is a totally different story and it is not as easy as the normal trouble. Well, first of all, we need to understand the border of your neighbor’s land is the actual international border as well. Therefore, if something happens, even it is a tiny happening, the situation could be serious as the soldiers with machineguns get together to ready for a war.

The police of your own country or the local government leaders are useless at this kind of situation. The neighbors are deadly serious and insist, “You are the one who cross the border and intrude into our land without any permission”, and the soldiers are already here and ready to kill you with no hesitation. So again, what the police or the government leaders can do for you under this situation?

Since all the border lines of Japan are located at sea, no one in Japan has the situation, which is that “the border line of your property” is the same as the international border line. However, in this Cambodia (their neighbor, Vietnam as well), there are many farmers who owns their land at the very delicate areas.

Both of the government of Cambodia and Vietnam, who focus on the piece and the economic development most importantly, are working very closely (it is said that the government of Cambodia is the puppet regime of the government of Vietnam). However, at this moment, even between Cambodia and Vietnam, a fragile and a touch-and-go situation occurs daily basis.

89BF1308-BFFB-49BA-A264-45320030854D_cx0_cy4_cw0_mw1024_s_n_r1
Cambodian farmers face to Vietnam solders at a border area (Source Voice of America)
http://learningenglish.voanews.com/content/clash-vietnam-cambodia-border/2845262.html

cambodia-vietnam-border-clashes
Right ; Cambodian. Left ; Vietnamese (Source International Business Times)
http://www.ibtimes.co.uk/clashes-between-authorities-civilians-vietnam-cambodian-border-leave-dozens-injured-1508879

I don’t know whose affirmation is correct. Unfortunately, only one of them is correct, not both. If one of the affirmations is correct, that means the other one is completely wrong without any doubts, which automatically means that they just come and steal other’s property intentionally. Like my neighbors, there are many people who lives with a shameless rule, such as the “first-come, first-served” rule, and they think it is lucky if their neighbors don’t complain. The number of people those who live with this way is definitely bigger than we expect, that is very unfortunate.

I am definitely against wars and I definitely don’t want to kill anyone or be killed by someone. I rather think we don’t need any international borders. Furthermore, I also think that possessing own nationals and own lands is the biggest cause which sets up complicated issues. However, if I apply the same logic to a smaller scale, like my family and my friends, I would protect my own property if someone tries to steal it intentionally and illegally. Yes, I would do it even though they threatened me by violence.

Of course in Cambodia, there is a law to protect individual assets. There is also the judicial branch of the government (it is kind of bullshit though) to enforce it. Also, among the nationals, there are organizations, such as the International Court of Justice and United Nation, to declare the rules of what we can do or cannot do. However, on the other hand, it is also true that the number of the people those who ignore the rules and start illegal things with a thought of “it is lucky if no one say anything” or “I don’t care whoever says whatever”, is getting bigger endlessly.

Although it is egregiousness that we start to set the illegal actions, it is just a fantasy to think “if we don’t do anything, they won’t do anything either”. That is why thinking what we should do for the best when someone sets up something nasty to us is an assignment we need to think about all the time.

Well, it is said that the Prime Minister Hun Sen wrote a letter to the President Obama to ask his help to prove the legitimacy of Cambodia by using the map of the border line negotiated in 1963. Well, we will see what will happen.

Fact or fiction? The dream super crop

Although we are growing crops called cassavas right now, we are also paying attention to crops called sweet sorghum. Sweet sorghum is a crop, which could play an important role for the world food supply and the energy supply. Since its seed has so much protein and its stem has a great sugar content as well, it is possible to produce alcohol (bio fuel) by fermenting the juice of sweet sorghum. In addition, it is also known as a crop which has a high-yielding.

I heard that one of my Cambodian friends, he owns a farm as well, was going to have some tests to grow this sweet sorghum on a large scale, so I just visit him to listen to his story. He was saying, “I am thinking to grow a crop called super sorghum, which one of the Japanese companies has already succeeded to grow in Indonesia. In order to produce basic materials of the biomass power generation, we make pellets with super sorghum stems and Mitsui & Co., Ltd from Japan is going to purchase them”. Two facts, one is that a Japanese company has already done this test in Indonesia and the other one is that Mitsui & Co., Ltd is going to purchase the pallets from Cambodian farmers, made me so surprised, so I decided to study about this super sorghum a little bit.

The company, which does the business with the super sorghum, is a corporation in Singapore called SOL ASIA HOLDINGS PTE., and its parent company is SOL Holdings, one of the listed companies of JASDAQ (6636). Until few years ago, they were in the field of semiconductor business, however since all the member of the management were completely changed, they have started to do the business with the super sorghum. In the twinkling of an eye, they made a great success, which even caught an attention of the Indonesian government, and now they are trying to get their hands on Cambodia while expanding their business to Mexico. It can be said that they are the company carried all before it.

Their current stock price is 242 yen and the market capitalization is four billion and three hundred million yen. I thought that even though they had a great success, the stock price (I mean the corporate performance) didn’t reflect it, so I did some researches on their IRs and found one of them, which was issued on July 3, 2014, showing an interesting fact.
http://www.sol-hd.jp/pdf/20140703.pdf

In short, it was just one of the corporation notice, which was saying “we have issued the stock option”. However, the number of the stock option they issued is 2,002,000 stocks, which covers 11.16% of the total number of their issued stock, which is 17,933,612 stocks. Furthermore, they have set two conditions in order to enforce the stock options, which are; “in the case of the stock price is over 800 yen per stock at least once (even at least ‘moment’) between present and May 31, 2016” and “in case of the sales amount of March 2015 or March 2016 exceeds over two billion and four hundred million yen”. According to this fact, it ab be said that they are a company, which adopt an amazing game-like compensation structure. Well, their current stock price is 242 yen and this amount is still far away to enforce the conditions of the stock options (it means the condition, with which you can get stocks for free), so I was wondering what was going on and took a look at their stock price chart from the past.

スクリーンショット-2015-06-27-1.00.11-PMhttp://www.nikkei.com/markets/company/chart/chart.aspx?scode=6636&ba=9&type=6month

Well, well, the stock price had exceeded the amount totally! Moreover, the price respectfully exceeded over 800 yen for only one day! After that, it went down outstandingly to the level of 200 yen and it looks like it keeps staying there, no sign to boost again.

Anyway, one of the conditions is completed, so if the sales amount closed on next March reaches two billion and four hundred million yen, all the management team will get entitlements to gain a massive number of stocks. Of course, even after they get the stocks, the price has to be over 372 yen, otherwise, there is no profit to them. Well, even though I am just an amateur for the stock market, I am able to see that their stocks or their conditions is as suspicious as delusion. I’ve been wondering whether Securities and Exchange Surveillance Commission or whatever it is called comes and investigates them or not.

I mean, I don’t see any connection between the field of agriculture, which needs hard work and persistent improvements, and “the ex-semiconductor company”, which uses their stocks for their money game…, is it really ok? The story, which Mitsui & Co., Ltd buys the pallet made of super sorghum in Cambodia, is really true?

Well, if the business of the super sorghum by SOL HOLDINGS is true and if the Cambodians, who simply believe this business and do the test of the super sorghum, make a great success at end, that is, of course, the best scenario. However, I don’t know exactly why but various things weigh on my mind. Of course I told my Cambodian friend what I’ve found from the research and how I felt about the company. Well, I heard that it is very hard to change people’s minds especially after he/she has believed and made up his/her decision. And first of all, it is only my guess that the company is suspicious…

I just hope Cambodians won’t have any nasty experience anymore because of Japanese companies.

Increase of milk cow in Vietnam.

The other day I met Mr. Ichikawa who does agriculture in Hanoi. Base company of his business is West Development Agriculture which is the largest company in Japan with large scale farming. Currently Mr. Ichikawa works as resident officer in Vietnam and working at around the north of the country to start mass rice farming project. Well, but even they say “the largest in Japan”, it is 600 hectares. In here, we say “well, anyway let’s try with 100 at the beginning”. I guess there is a bit of gap when they say large and when we say large in Cambodia.

Then, Mr. Ichikawa told me something interesting. Export of milk cow is increasing in Vietnam. Vietnamese were not drinking milk but they start drinking it suddenly and domestic produce can not keep up with the demand now. So they import a milk a lot. But of course domestic product is an ideal, so number of companies are start importing cows by bulk.

I actually have been studying the relationship of GPD/population and meat consumption for a while. And well, if I just wrap it up that the conclusion is that “If people become kinda rich, they start to eat a meat”. But when we I say “kinda rich” means that the people who could be out of poverty and with the GDP of 5,000USD to 20,000USD. In rapid growing Asian region, most of the countries will be in this zone in next 10 years. So, thinking only about Asia, some big change is coming soon.

Population of Asia is 3.6 billion by the way. Meat consumption of us, the Asians, are 27 kg / person a year (Only Japanese which has high GDP would be 48kg). Asian population are estimated to reach 4.5 billion and meat consumption are estimated to be 35 kg.

3.6 billion population X 27 kg of meat will expand to 4.5 billion X 35 kg. This must give a significant impact.

And of course we are eating “live stocks” but those live stocks are eating feed grains. Simply saying, we are in fact converting feed grains into meat and then eating them. Then this conversion efficiency is extremely low.

1kg of beef = 11kg of corns

1kg of pork = 7kg of corns

1kg of chicken = 4kg of corns

Until now, such low in efficiency luxury was only for the people in developed countries. For example, if we do not use corns as feed grains to produce meat that consumes in the U.S, we can feed 800 million people. Raising a meat (I mean cow or pork, you know.) cost a lot. So, we are indulging ourselves in such a luxury of eating a meat and now it will be not only for someone but for everyone on earth. This is the new era we will be living.

When I heard about Vietnam from Mr. Ichikawa, I give myself a compliment and say “See? my hypothesis of when citizen becomes rich enough, way of food consumption dramatically changes and increase a number of live stocks was right!”. And then, rapid increase of number of milk cow means that there will be a sudden increase of demand for feed grains. Regard to this I as well have been thinking and have some hypothesis but it will be too long, so I will tell you next time.

 

Visiting Hanoi for the first time in a long time

Maybe not? It is not so long time, is it?

Since we develop our AGRIBUDDY in Hanoi and the fact I often see the management team of Framgia, an offshore company with the biggest drive in Hanoi, every time when they come to Phnom Penh and Siem Reap, I can’t remember well when the last time I came to Hanoi was.

Although Siem Reap, a place where I live now, is basically a country town with 180,000 population, approximate four million visitors per year come here for sightseeing. Because of this fact, the downtown is packed with only the tourists and there are many restaurants owned by French or Italian people, where we can enjoy authentic French and Italian cuisines with very reasonable price (which is a little more than 20USD per person). So there is no problem to say that Siem Reap is a very convenient town to live. Moreover, the most special thing I have to mention to everyone is the closeness to the airport. You can get to the airport within 15 minutes from anywhere in Siem Reap.

In addition, once you get on an airplane, it is a little bit less than one hour to Bangkok, about one hour to Ho Chi Minh City, about one and half hour to Hanoi, and about two hours to either Kuala Lumpur or Singapore. So, they have definitely great accesses to each city in South East Asia, like we travel between Osaka and Tokyo. I think it is more convenient if the immigration was abolished and we were able to go in and out each countries in South East Asia without any paperwork, like EU countries. Well, I think this issue will be solved sooner or later (actually I want to believe it will happen).

Anyway, each city in South East Asia is not only physically but psychologically close to me as well, so I don’t have any feeling as I am in a different country from the one I live. I feel each city is so close and familiar that I even talk to Vietnamese in Cambodian. I think this is the surefire rule anyone in South East Asia cannot ignore, I guess. Uh…, I wish someone make a software, which able to translate any languages in live, sometime soon.