ITOCHU Corporation (headquartered in Minato-ku, Tokyo; Masahiro Okafuji, President & CEO; hereinafter “ITOCHU”) has signed two business alliance agreements, one with Heilongjiang Agricultural Development Bureau, 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.

With these alliances, ITOCHU will set up a stable supply structure for safe and secure agricultural products, introducing Japanese cultivation technology to produce vegetables and food grains in the farms under the control of Heilongjiang Agricultural Development Bureau and by conducting safety inspections at facilities operated by Heilongjiang Academy of Agricultural Sciences. Furthermore, Heilongjiang Agricultural Development Bureau will target to increase its production and sales of their agricultural products through ITOCHU.

ITOCHU Corporation (headquartered in Minato-ku, Tokyo; Masahiro Okafuji, President & CEO; hereinafter “ITOCHU”) has signed two business alliance agreements, one with Heilongjiang Agricultural Development Bureau, 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.

With these alliances, ITOCHU will set up a stable supply structure for safe and secure agricultural products, introducing Japanese cultivation technology to produce vegetables and food grains in the farms under the control of Heilongjiang Agricultural Development Bureau and by conducting safety inspections at facilities operated by Heilongjiang Academy of Agricultural Sciences. Furthermore, Heilongjiang Agricultural Development Bureau will target to increase its production and sales of their agricultural products through ITOCHU.

Heilongjiang Province, which is 1.1 times as large as Japan, has a farming area of 10 million hectares and the area of farmland per farmer is five times the national average in China. With large-scale farms backed by the Heilongjiang Agricultural Development Bureau, it is the largest supplier of food grains in China, and its soy bean, corn, and rice production respectively account for 33%, 11%, and 8% of the total supply in China, ranking the province first, third, and fifth in the country. In addition, Heilongjiang Province is one of the three largest black earth 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.

Prior to this collaboration, in 2008, ITOCHU established Heilongjiang Tengguang Cereals, Oils & Foodstuffs Co., Ltd., a joint venture with Heilongjiang Jiusan Oil and Fat Co., Ltd., a company under the control of Heilongjiang Agricultural Development Bureau, (ITOCHU (China) Holding Co., Ltd.: 85%, Heilongjiang Jiusan Oil and Fat Co., Ltd.: 15%) and has commenced the supply of soy beans under strict quality control, from cultivation to logistics. It has also agreed to make a capital contribution to Beidahuang Xinya Economic and Trade Co., Ltd. (Investment ratio: 10%) another company under Heilongjiang Agricultural Development Bureau in 2009 to set up a supply structure based on contract cultivation focused on food grains. It is currently in the process of setting up an approach for the supply of vegetables with the Agricultural Development Bureau, with the aim of creating a new joint venture. In the test cultivation, supervision will be provided by farmers in Japan who possess leading cultivation technologies, to first confirm that agricultural products of expected quality and standards are produced, while confirming their safety. Later, contract cultivation for Japan’s supermarkets and retailers is expected to begin.

In line with these developments, ITOCHU, which has previously only had a liaison office in Harbin, is scheduled to form a local subsidiary of ITOCHU (Dalian) Co., Ltd. next month and will be expanding its overall presence in Heilongjiang Province.

Moreover, through the collaboration with Heilongjiang Academy of Agricultural Sciences, ITOCHU is now able to conduct safety inspections of agricultural products inside Heilongjiang Province. Although Heilongjiang Academy of Agricultural Sciences already possesses sophisticated food inspection technologies, technical supervision will be provided by Japan to raise the level still further. Supervision of inspection technologies will be provided by Japan Frozen Foods Inspection Corporation, one of the leading inspection agencies in Japan.

With rising income levels in China, demand for higher value added merchandise is on the increase. Coupled with the recent increase in incidents that threaten the safety of food, the need for safe and secure food is rising rapidly. This alliance adds cultivation management and a local inspection structure to existing marketing functions and distribution networks in China and overseas, while providing a secondary and tertiary inspection structure at both processing and consuming locations. Through these additions, ITOCHU seeks to encourage the creation of merchandise in Heilongjiang Province that meets the individual needs of Japan and China, creating a safe and secure global value chain of agricultural products and establishing an SIS strategy in China.

• SIS (Strategic Integrated System) Strategy:
  A strategy to produce, distribute and sell merchandise efficiently by vertically integrating the　entire flow from resource development to retail domestically and overseas, in all business domains ranging from materials to products and foodstuffs.

Profile of Heilongjiang Agricultural Development Bureau

Profile of Heilongjiang Academy of Agricultural Sciences