October 08, 2018

The Rice Milling Business: Quality and Profit II

by Yoshito Matsumoto, Manager, China Marketing, Satake Corporation

In the June issue, we highlighted an awareness to the fact that the rice milling industry is often a low profit industry and that there are four basic methods to increase business profit for the agricultural sector. Satake has been promoting a shift to production of higher quality milled rice, which would result in an increment in profit margin by virtue of higher selling price.
 


Other methods are more general but remain inconsistent and imperfect. For example, increasing the operation and production rate has less impact in improving the fundamental cost structure. Similarly, any effort at decreasing variable costs is only a temporary solution, due to an increase in labour cost in developing countries. The only way to pursue fundamental business stability is therefore to embrace a change of business structure.

A unique market
The Japanese rice market appears different in its behaviour when compared to other markets. One example of this would be that Japanese short grain is well regarded by people who eat short grain rice. Tasty rice has seen an increase in demand by an increasingly discerning consumer, due to a change in their social conditions. However, understanding the differences between the current Japanese market and others means tracing the history of a relatively saturated rice market.

It could however give important clues for owners of rice and flour mills in other countries to expand their business. The information described below may prove beneficial for businesses thinking of selling their rice in Japan to understand the Japanese consumer’s demand, especially features exhibited by the Japanese market.

Quantity was the top priority for the Japanese market after the Second World War. To compensate for the rice production shortage, consumption of other grains, such as barley, increased. To meet the demand from the industry, Satake developed equipment such as barley processing machines. Also, the Country Elevator (CE) was introduced to the industry during this era for mass rice production. In 1964, Satake completed the first CE built in Japan.


Read the full article in Milling and Grain magazine, HERE.
 

The Global Miller
This blog is maintained by The Global Miller staff and is supported by the magazine Milling and Grain
which is published by Perendale Publishers Limited.


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