A YEN FOR JAPAN
By Steven Biggs
Contributing Editor, Country Guide Magazine
February 2009
"THEY LIKE OUR FARMERS, THEY REALLY LIKE OUR FARMERS,” says Dale Petrie, general manager of Ontario Soybean Growers, as he describes the desire of Japanese soybean buyers to connect with farmers.
“They want to talk to the farmers who are growing the food that they are going to eat. They want to go to the farms, they want to meet them and their families. They want to see the equipment that they’re using, they want to walk the fields and look at the dirt.”
Importantly, these Japanese buyers want to come in September as the crop is coming off, so they can pluck pods straight from the plants, then taste-test the beans right there in the field.
It’s a buyer-meets-producer story that’s getting more and more common across Canada, and a business model that is converging on some unlikely models.
In fact, it’s becoming more apparent that buying soybeans is like buying wine. Major wine buyers stroll through the vineyard, taste the wine, meet the winemaker, and learn about terroir — that elusive term that sums up what makes a wine unique because of the characteristics imparted by soil, climate and topography.
If the idea of refined palates craving Canadian soybeans sounds over the top, it may not be as much of a stretch as you might think. For much of the world’s population, soybeans are a premium food product, and many cultures consume soy-based foods and beverages daily.
With over 340,000 tonnes of Canadian beans going to Japan alone in the 2007/08 crop year, many Japanese soy-foods have a distinctly Canadian taste. More than just taste, many soy-food packages now brandish a maple leaf that tells consumers there are Canadian soybeans inside.
For growers here, that’s good news. Taste buds and sensibilities that esteem Canadian soybeans — that want high-end, identity preserved (IP) Canadian soybeans — mean growers have options beyond commodity beans.
To tap that market , however, Canadian soybean growers will need to continue absorbing the lessons of other sectors, and then go a huge step beyond.
Quality for a price
Michael Loh of London Agricultural Commodities Inc. explains that until about 25 years ago, Asia was self sufficient in soybeans, with Chinese food-grade soybeans supplying most of the region. But the region is no longer self sufficient, and Canadian sales of IP soybeans to Japan have been growing at a steady rate for 25 years.
“It’s Canada’s best-kept secret,” Loh beams. From supplying a mere sliver of the Japanese market, Canada’s market share has grown to 30 per cent, worth about $180 million.
Loh puts the opportunity in perspective: “If you supply the Japanese market 100 per cent — right now it’s about 30 per cent — let’s say you could supply 100 per cent, you’re looking at every other row of soybeans grown in Ontario being consumed in the Japanese market.”
Loh says that’s not going to happen, but he does see major growth ahead. Indeed, he thinks it’s possible to double Canadian exports to Japan over the next five years.
Loh trumpets the opportunities offered by Japan. He explains that it’s a complex market, which makes it a good fit for Canada. Japanese buyers shun genetically modified (GM) beans. They are highly discerning, and they want long-term relationships.
Most important, they’re willing and able to pay premiums to get what they want. In fact, they may have little choice. While domestic Japanese soybean production has been shrinking, Chinese supply is also constricting due to export taxes, and American production has moved heavily towards Roundup Ready technology.
Loh illustrates the market opportunity with a picture showing a plate of wafer-thin strips of tofu fried to a rich, golden-brown colour. Chefs in Japan have very stringent requirements, he explains. Tofu used for this dish can have no deep pockmarks; once fried, the colour must not be too dark or too light; and it must puff properly when
fried. Otherwise, the batch is discarded.
These rigorous requirements make it important to match the end use with beans having the right characteristics. “Because there are very strict specifications,” Loh says, “it’s the kind of business we should get into — there’s product differentiation.”
Looking beyond Japan, Loh feels other countries will offer better export opportunities
as they become more affluent — but for now, Japan offers the best opportunity.
It’s also a market where Canada can build on progress we’ve already made, says Jim Gowland, a Bruce count, Ont. IP soybean grower and chair of the Canadian Soybean Council. “We’re starting to see that with premiums this year,” Gowland says. “International markets have sat up and took notice that Canada does have a safe, traceable supply.”
Richard Audy, business development manager at Syngenta Seeds Canada agrees that Japan is currently the best target market. While Korea, Philippines, Malaysia — even Europe — are potential markets for IP soybeans, he considers these middle-grade markets, because they aren’t looking for the same level of quality as Japan — and that means a smaller premium for growers.
Growing the IP niche
For Loh the business logic behind IP beans is unassailable: “Either you’re the first, the biggest, or different.” Canada’s soybean industry will never be the biggest, nor was it the first. But it can differentiate itself.
“I feel we’re at a tipping point,” Loh says. While he sees the potential to double exports to Japan, he also fears that the industry could lose sight of the niche marketing strategy that has served it well over the past 25 years.
Loh sees only one main competitor in the niche Japanese market — the U.S. He notes the enthusiastic promotion of specialty beans by the American Soybean Association. “They’re professionals,” he says, referring to their impressive infrastructure and governmental support.
Loh fears that if we don’t grow our niche market, there’s a risk of losing it.
Audy, too, is guardedly optimistic: “We’ve got a big wave behind us now... but this wave can disappear very, very quickly,” Audy says. As a seed supplier, Audy sees attractive seed varieties as the way to ride this wave, yet he’s quick to acknowledge it’s a two-way street. Companies can produce varieties only if there’s strong grower support.
Taste the difference
Petrie says that Japanese buyers aren’t enthusiastic about the taste of South American soybeans. “They like the taste of our beans,” he says.
Japanese buyers use the word “balance” to describe the taste they’re looking for — a
bean with the right proportions of protein, sugar, and oils.
It’s not an accidental taste: Michael Loh explains that in the beginning, Canadian breeders travelled to Japan to study popular varieties, and then brought back samples for use in breeding programs here. This research and breeding has yielded varieties suited to Canadian conditions, having the traits desired in Japan.
Loh also compares the climate in southwestern Ontario to that of the northern Japanese island of Hokkaido, home to many of Japan’s domestic soybean growers. Along with similar latitude, they share something else in common: A climate influenced by a large body of water.
But Audy doesn’t think the Japanese affection for Canadian soybeans is only about taste. He sees the key attraction as traceability in a well-developed IP system.
Still curious about the notion of Canadian terroir, I ask Loh to describe the taste. Half expecting a complicated answer involving bouquet, structure, and finish, I get one word: “Beany,” he says. It turns out, that’s exactly what the market wants, and what Canada
can deliver better than anyone else.
Need a professional freelance writer? Need a farm writer? Need a food writer?
Get clean copy. On time.