ASEAN supply chain woes drive up food prices in Japan
Prices of poultry from Thailand have jumped to rarely seen highs in Japan due to closures at processing plants. © Reuters
MAIKO SUGIYAMA, Nikkei staff writer | ASEAN
TOKYO — Coronavirus-induced worker shortages at farms and food distributors in Southeast Asia are being felt by supermarket shoppers thousands of kilometers away in Japan.
The price of palm oil — an ingredient in margarine and many other products — has spiked in Japan to a high not seen since 1985, up 32% from a year earlier at around 217 yen ($1.97) per kilogram this month.
The challenge facing food makers is the same as the one that forced Toyota Motor to cut global production: securing vital imports from understaffed Southeast Asian suppliers.
In Malaysia, a major exporter of palm oil that produced roughly 1.52 million tons in July, production is down 16% from a year earlier, according to the Malaysian Palm Oil Board. Malaysia and other Southeast Asian nations depend on migrant workers for labor-intensive work like farming.
This is having a knock-on effect in Japan. Food company Meiji, a household name in products from milk to chocolate bars, said it would raise margarine prices by between 4.3% and 12.8% starting with October deliveries. Its rival Megmilk Snow Brand will raise prices on its margarines by between 1.9% and 12.2% as well from the same month’s deliveries.
“It has become difficult to find workers in places like Malaysia, which produces the palm oil,” a Meiji manager said.
Prices of imported pepper, white and black, have been rising all summer in Japan. © Reuters
Palm oil is not the only Southeast Asian import affected by the coronavirus.
Wholesale prices of Thai poultry have jumped to 42-month highs because processing plants have been closed due to worker infections. Frozen chicken thigh meat, a dinner table staple, now cost 390 yen per kilogram wholesale. Thailand accounts for about a quarter of Japan’s chicken supplies.
For Japanese meat wholesaler Starzen, production at a Thai supplier has plunged owing to a cluster of coronavirus infections among factory workers. Because of entry restrictions on migrant workers from Myanmar and Laos, the supplier appears to be experiencing a labor shortage.
Starzen projects that deliveries of outstanding orders will be delayed by about two months. The company has halted new orders, and plans to cover the shortfalls with supplies from Brazil and elsewhere.
Nichirei, a major Japanese frozen food company, is struggling to secure Cambodian workers for its Thai subsidiary. Factory usage has declined between 15% and 20%. Nichirei has been forced to limit this fall’s launch of a new fried chicken product to east Japan.
Pepper has hit roughly three-year highs. Trading houses are selling black pepper to spice makers at about 1,030 yen per kilogram, up about 20% since the beginning of the summer and double the prices from a year earlier. White pepper, the spice of choice in instant ramen, has risen to about 1,280 yen per kilogram, a 60% increase from a year earlier.
With COVID-19 outbreaks in the Association of Southeast Asian Nations members showing no signs of abating, the strain on supply chains looks likely to continue. This indicates disease control measures will continue to affect key industries. In Japan, makers of daily necessities are starting to discuss changes to business continuity plans.
“At this stage, there is no significant direct impact,” said a representative at Kao, which makes and sells detergent and other products in ASEAN. But “we are discussing [business continuity plans] concerning production and other areas” to prepare for a prolonged pandemic, the person added.