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ITOCHU Has Set Up Integrated Supply Structure for Safe and Secure Agricultural Products in Heilongjiang, China
In June 2010, we signed two business alliance agreements, one with General Bureau of Heilongjiang State Farms, which manages a vast national farm in Heilongjiang Province, one of China's largest producers of vegetables and food grains, and the other with Heilongjiang Academy of Agricultural Sciences, a specialist research organization for agricultural products.
Heilongjiang Province, which is 1.1 times as large as Japan, has a farming area of 10 million hectares the largest supplier of food grains in China. In addition, Heilongjiang Province is one of the three largest black soil areas on the planet, together with the Midwestern United States and Ukraine, featuring conditions ideal for the cultivation of excellent agricultural products, with its rich soil, long hours of sunlight from spring to summer, and large temperature differentials between day and night.
With these alliances, we will introduce advanced cultivation technology of Japan to produce vegetables and food grains in the farms under the control of General Bureau of Heilongjiang State Farms. We will also conduct safety inspections at facilities operated by Heilongjiang Academy of Agricultural Sciences. This will add farm product cultivation management and on-farm inspection system to the marketing functions and distribution networks we have already established inside and outside China. Thus, we will create a stable supply chain for safe and secure agricultural products, and strengthen and promote SIS strategy in China and sales structure for retailing and foodservice markets in Japan.
Business Integration in the Food Distribution and Marketing Business
In September 2010, ITOCHU began discussions and an examination of business restructuring with NIPPON ACCESS, Inc., Family Corporation Inc., ITOCHU Fresh Corporation Inc. and Universal Food Co., Ltd. In December 2010, we reached an agreement on a merger involving these four companies.
We decided to advance the merger promptly, to establish a structure that will enable the integrated promotion of the strategy and to make more intensive and effective use of management resources of each company. These efforts are aimed at improving customer satisfaction in our food distribution and marketing business, which is the core of the value chain in the SIS strategy of the Food Company, and improving the corporate value of the ITOCHU Group.
The merger is expected to provide effects including: (1) enhanced satisfaction for customers; (2) expansion and improvement of earning platforms in ITOCHU's food distribution and marketing business, and; (3) acceleration of the overseas expansion of ITOCHU's food distribution and marketing business.