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Squeeze put on squid profits as catch hits record low

This photo taken in November 2018 shows a squid auction at the Hakodate fisheries wholesale market in Hokkaido. (Kyodo)
A staffer makes salted, semi-fermented squid guts known as "shiokara" at a seafood processing company in Hakodate, Hokkaido, in November 2018. (Kyodo)

HAKODATE, Japan (Kyodo) -- With Japan's catch of Pacific flying squid continuing to reach record lows, wholesale prices for the seafood have more than doubled for companies that process it into delicacies such as "shiokara" and what are normally cheap dried squid snacks.

Not only has the scarcity in waters around Japan taken a bite out of local profits, but the situation has grown dire as prices of foreign squid products have also skyrocketed because of a global slump in the squid catch.

For the time being, researchers predict difficulty in securing a recovery in seafood resources and a continued escalation in prices.

"There's no squid," lamented 69-year-old Toyoji Sato of Hakodate, Hokkaido Prefecture, who has been fishing squid for more than 50 years. "This is the first time I've ended fishing this early. Fuel costs are also high, so if I take my boat out I just sink deeper into debt."

In Hakodate, well-known as a "squid town," Pacific flying squid are normally caught from June through January the following year. But according to the Hakodate Fisheries Cooperative Association, this season as many as 90 percent of about 20 small squid fishing vessels have stayed in port since mid-October last year.

In 2017, the catch of Pacific flying squid was 61,000 tons, or 13 percent less than the previous year -- less than 30 percent of the squid catch from 10 years earlier. In fact, it was the first time since 1956 that an all-time low was recorded for two consecutive years.

In 2018 it was more of the same, with the pace falling below that of the previous year through the end of October. The average price of Pacific flying squid nationwide was once around 200 yen per kilogram, but since 2016 it has risen to more than 600 yen.

According to the National Cooperative Association of Squid Processors based in Tokyo, a report from union members will be issued stating that the cost price of squid procured from overseas has more than doubled from the average year.

Along with the worldwide slump in the squid catch, experts point to overfishing by South Korean and Chinese boats, as well as fears of illegal operations by North Korean vessels in Japan's exclusive economic zone in the Sea of Japan.

Yotchan Foods Co., a company based in Chuo, Yamanashi Prefecture, famous for producing "dagashi" cheap candies and snack food, had an effective price hike of its "Cut Yotchan" squid snack after changing its package to a uniform size last June -- resulting in real price increases of 11 to 38 percent.

Because of ballooning squid wholesale prices, the company has also done away with offering a free package to consumers who draw a prize from inside the bag.

In Hakodate alone, there are as many as 70 seafood processing companies. But many of them are small and medium-sized enterprises, some of which are betting their fortunes on changing to fish products other than squid to stay afloat.

Mikiya, known for its shredded squid snack delicacies, had relied on products from its base in Hakodate but now must procure from 20 to 50 percent of its squid from outside Japan, such as shortfin squid from Argentina.

Indeed, in order to survive, companies like Mikiya are developing new products such as stingray fin jerky, but according to Tokyo Shoko Research Ltd., which conducts market research for businesses in Japan, about 70 percent of seafood processing companies in Hakodate are currently operating in the red.

Shiokara, a Japanese cuisine consisting of salted, semi-fermented squid guts, is considered one of the "chinmi," or "rare tastes," of Japan.

"Chinmi are seen as luxury items now, and if the prices go up any further they won't sell," said one executive of a seafood processing company. "There is a limit to price pass-through (to consumers). Nowadays making shiokara is like running a charity."

Yasunori Sakurai, a professor emeritus of Hokkaido University who specializes in cephalopods, says in recent years incubations have not gone well in the East China Sea, which is a spawning ground for Pacific flying squid. Colder than average temperatures there mean that fewer eggs are surviving in winter.

"Because each year we see a drop in the resources of adult squids the poor catch looks like it will only continue," he said.

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