Issues Concerning Food Resources Sources: Supply issues 1 and 2. Calculated using the FAOSTAT Web site of the Food and Agriculture Organization of the

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1 Food Resources The supply of food resources is not keeping pace with the growing world population and rapidly increasing demand for food, resulting in a deteriorating balance between supply and demand. The world's cultivated land is not increasing, and crop yields are declining due to soil degradation. In response, the Ajinomoto Group is employing high-value-added fertilizers and livestock feed additives to improve food productivity. Vast amounts of edible food resources are being discarded over the world, particularly in advanced countries. Therefore, the Ajinomoto Group works to make the most efficient use of resources to help deal with shortages in food supplies. 32

2 Issues Concerning Food Resources Sources: Supply issues 1 and 2. Calculated using the FAOSTAT Web site of the Food and Agriculture Organization of the United Nations (FAO) 3. Ecosystems and Human Well-being: A Framework for Assessment, published by the Millennium Ecosystem Assessment Demand issues 4. World Population Prospects, the 2010 Revision, published by the United Nations 5. OECD FAO Agricultural Outlook , published by the Organisation for Economic Co-operation and Development (OECD) and FAO 6. World agriculture: towards 2015/2030, published by FAO 7. Status of Food Waste, published by the Ministry of Agriculture, Forestry and Fisheries of Japan (in Japanese only) 8. OECD FAO Agricultural Outlook , published by OECD and FAO 33

3 Current Issues Affecting Food Resources Food demand is growing rapidly with population increase The world's population is expected to reach approximately 7.0 billion in 2011 and grow to 9.3 billion 9 in Vast amounts of food will be required to feed the increasing population. Furthermore, rising economic wealth is encouraging higher consumption of meat, thereby creating the need for more grain to feed livestock. To produce one kilogram of meat, four kilograms of grain is required for poultry, seven kilograms for swine, and 11 kilograms for cattle. Facts about food production The total area of cultivated land is not significantly increasing worldwide. Crop yields per unit of land have been declining, and increasing food production will be challenging. The environment for growing food is worsening as soil deteriorates on land used for cultivation and grazing. Improving Food Productivity Meanwhile, biofuel is competing with food production, as corn and other forms of sugar are used for raw materials. Greater amounts of food resources are also being discarded as waste, further increasing overall food demand. Shortages in the food supply While food demand rises, the arable land available for production and crop yields per unit of land area are not increasing. Land previously used as farmland is shrinking, and with unusual weather conditions caused by climate change, crop cultivation is unlikely to continue producing the same yields as in the past. Facts about the use of food resources In line with population growth, food production must increase more than 70% by Demand for livestock feed is growing as a result of increased consumption of meat in developing and emerging countries due to changing lifestyles. Large amounts of edible food resources are being disposed as food waste, especially in developed countries. With the growing demand for biomass energy, a serious debate has arisen with regard to the use of food resources for either biofuel or food products. Maximizing Usage of Food Resources The balance between the supply and demand of food is gradually deteriorating, resulting in increasingly slim prospects for boosting food production to the level needed to meet growing demand. 9. Data taken from the World Population Prospects, the 2010 Revision, published by the United Nations 34

4 Improving Food Productivity Initiatives for Improving Food Productivity The Ajinomoto Group leverages its products and expertise to improve food productivity. Among its main businesses, the amino acids business in particular has made significant contributions to the agriculture, livestock, and fisheries industries. In these industries around the world, nutrient-rich by-products generated from the group's amino acid fermentation process are being used as fertilizers and feeds. With the addition of minerals, the by-products can also be used to produce foliar fertilizers that greatly increase plant resistance to crop damage by replenishing their nutrients more effectively. The Ajinomoto Group is working to introduce and further promote the use of these high-value-added products over the world. Amino acids are the building blocks of proteins that are present in plants and animals, and are also one of the vital nutrients necessary for growth. The Ajinomoto Group makes the most of amino acids' nutritional aspects in its feed-use amino acids for livestock. Research is being conducted on amino acids suitable for fishery products, such as feed for farming fishery resources. By developing relevant processing technologies, the group intends to provide alternatives to fishmeal, of which supply is unstable. Essential for life, amino acids have potential applications yet to be discovered. In the future, the Ajinomoto Group will carry out further research and development in the field and draw on its expertise to improve food productivity. Amino Acid Production Plants and Use of Co-Products over the World The Ajinomoto Group produces nutrient-rich by-products in the fermentation process for amino acids and nucleic acids at its globally based production plants. These by-products are regarded as co-products that can be made into value-added products, such as fertilizers and livestock feed for use in agriculture, livestock and fishery industries over the world. Amino acid and nucleic acid production plants, and use of co-products over the world 35

5 Co-Products Contributing to Agriculture, Livestock, and Fisheries Industries In Fiscal 2010, Ajinomoto Co., Inc. launched A-Link, an agricultural materials project aimed at expanding business, in addition to promoting the development of higher-value-added co-products and the use of amino acids and nucleic acids globally. As part of this initiative, the group developed AJITEIN high-grade livestock feed by separating protein-rich fungus bodies from the co-products previously used for liquid fertilizers and livestock feed. AJITEIN production and sales began in Thailand, Indonesia and Vietnam in fiscal Established primarily in South America, sales of AJIFOL foliar fertilizer was also extended to Southeast Asian countries. Made with a special combination of minerals and amino acids generated from co-products, AJIFOL is used on soybeans, vegetables and fruits to enable their leaves to effectively absorb nutrients contained in the product. Farmers have commended AJIFOL for its role in the growth of healthy crops and increasing harvest yields. In Japan, Ajinomoto Frozen Foods Co., Inc. and Knorr Foods Co., Ltd. have been jointly studying the cultivation of rice and vegetables using co-products rich in nucleic acids produced at the Kyushu Plant of Ajinomoto Co., Inc., and confirmed their effectiveness as agricultural materials. Ajinomoto Co., Inc. reported the results at the agricultural materials exhibition, Agro-Innovation Japan 2010, and received inquiries from a large number of attendants. The fertilizer was later developed and released as AMIHEART in April The Ajinomoto Group intends to continue research and development aimed at further increasing the added value of co-products, in an effort to release products that meet customer demand over the world and improve food productivity. Initiative 1: Activities of FD Green (Thailand) FD Green (Thailand) Co., Ltd., a group company, was established in It specializes in co-products generated from the amino acid fermentation process of Ajinomoto Co., (Thailand) Ltd., which are used as agricultural materials. Employing the slogan, "We will make the world green," FD Green (Thailand) develops technologies that effectively utilize co-products, and actively promotes products that enhance the productivity of regional agriculture, livestock and fishery businesses. Rather than selling co-products in their raw form, the company processes FD Green (Thailand) Co., Ltd. them according to the requirements of particular regions to create high-value-added agricultural products. In fiscal 2010, an array of products totaling about 220,000 tonnes by weight were sold, including AMI-AMI liquid fertilizer, AMIMATE solid chemical fertilizer, AJIFOL foliar fertilizer for promoting plant growth, and AJITEIN protein-rich feed. AMI-AMI has been popular among farmers in Thailand for over 30 years. Farming Tilapia and other freshwater fish is widely practiced in Thailand. Use of dedicated fishmeal, however, has yet to be adopted; the common feeding method employs a food cycle where the fish eat water fleas that feed on phytoplankton, which is in-turn generated by adding chemical fertilizers to fishponds. As an alternative, AMI-AMI is highly beneficial for fish farmers, as its abundance of nitrogen, other minerals and organic compounds greatly increases phytoplankton growth when added to water. In the future, FD Green (Thailand) Co., Ltd. will work with A-Link, the co-product project of Ajinomoto Co., Inc., to further develop, produce and market products with added value. A fish farmer shows a tilapia raised on feed made from liquid fertilizer 36

6 The Cassava High-Yield Cultivation Project in Indonesia The Ajinomoto Group has been carrying out the Cassava High-Yield Cultivation Project (the "Cassava Project") in the Indonesian province of Lampung since fiscal 2005, with the aim to help improve the livelihoods of cassava farmers and support the sustainable development of local communities. Cassava Cassava is both a major food resource in Southeast Asia as well as one of the fermentation raw materials used to make the umami seasoning AJI-NO- MOTO. The group works with the Lampung Bureau of Agriculture and community development specialists to provide working funds for the project and for improving cassava cultivation techniques and community development know-how. Although a number of difficulties were initially faced when the project started, including language and cultural differences, irregular weather such as drought, and acidic soil, production per unit of land increased 2.5 times over five years, thereby greatly improving the farmers' incomes. Much of the land in the East Lampung region in Indonesia is infertile due to acidic soil and lack of irrigation facilities. Moreover, the average household income for a cassava farmer with one hectare of land is about 560 to 1,130 US dollars per year. In comparison, the annual household income of an Indonesian rice farmer A typical Indonesian farmhouse with one hectare of land is about 1,690 to 2,250 dollars. 1 A family participating in the Cassava Project 1. US dollar figures are based on the average telegraphic transfer selling (TTS) rate of Japanese yen in fiscal Cassava Project activities in fiscal 2010 Annual yield of the Cassava Project Before project First year Second year Third year Fourth year Fifth year (FY2010) Average crop yield (tonnes/hectare) Aiming to provide a foundation for activities to continue independently, the Cassava Project set up a farmers' cooperative, locally known as koperasi, in The cooperative recorded a surplus balance of payments in fiscal 2009, its second year of operations, and demonstrated the ability to produce stable profits after three years in fiscal A meeting held at the farmers' cooperative Farmers commended for their good work at the awards ceremony 37

7 The farmers' cooperative provides its members with the following services: (1) instructions for cassava cultivation, (2) bulk purchasing of fertilizers and pesticides at reasonable prices, (3) assistance with harvesting and shipping the cassava, and (4) the establishment of lasting relations with customers that purchase the cassava. Through these services, members have gained easy access to fertilizers, cultivation management techniques, and sales information. As a result, farmers have increased their crop yields and secured a stable group of buyers. The commemorative photograph of the ceremony Members of the community watch the ceremony In an effort to continuously develop, the cooperative started trial production of low priced compost to replace chemical fertilizer from fiscal It also began to set aside a portion of profits in a fund for replacing trucks and other equipment in the future, thereby establishing a foundation for enabling continuous operations going forward. In March 2011, the farmers' cooperative held its harvest festival for fiscal 2010, along with a ceremony to celebrate its founding. At the ceremony, local government officials praised the cooperative's activities, calling it a "model koperasi" in the region. The Ajinomoto Group intends to continue working together with the cooperative in the future, monitoring onsite activities and providing guidance. A message from Sudarman, the head of the farmers' cooperative The Ajinomoto Group not only provided funds for the Cassava Project, but also gave us ongoing support with its expertise in managing the cultivation of cassava, and setting up and operating our farmers' cooperative. On behalf of our members, I would like to express my deepest gratitude to the Ajinomoto Group for helping us to independently carry out our activities. In the future, we hope that our efforts at the cooperative will contribute to the development of the local community. Sudarman, the farmers' cooperative head, gives a speech Feed Additives Contributing to the Livestock Industry For a number of years, demand for corn, wheat, and soybeans 1 for use in livestock feed has been increasing as meat demand grows worldwide, driven by changing lifestyles in both developing and emerging countries. Furthermore, demand for corn as a source of biofuel has been growing rapidly, and more arable land in the United States is being used for this purpose. Against this backdrop, it is becoming increasingly vital to curtail the use of crops for livestock feed and more effectively utilize food resources in order to ensure that overall food demand can be met with the limited land available. Recognizing this issue, the Ajinomoto Group is working to help improve food production by providing feed additives that boost feed efficiency and increase livestock productivity. 1. Soybean meal remaining after oil is extracted for use as a protein-rich ingredient in feed 38

8 Initiative 2: Improving livestock feed efficiency through use of feed-use amino acids Amino acids are indispensable nutrients for animals; essential amino acids in particular must be absorbed from food, as they cannot be synthesized in the body. Unfortunately, however, livestock are raised on feeds that are generally deficient in certain amino acids, owing to commonly used mixtures of energy sources like corn and wheat, and protein sources such as soybean meal. Achieving optimum livestock growth is challenging when some amino acids are lacking. Regardless of intake, the amino acid most deficient in the feed sets a limit to the amount that can be utilized by the animal. Consequently, other amino acids above this level are excreted. Advantages of adding lysine to feed Recognizing this problem, the Ajinomoto Group produces and sells feed-use amino acid products that can compensate for specific amino acids commonly lacking in feeds, particularly lysine, threonine, and tryptophan. By supplementing feeds with these feed-use amino acids, farmers can ensure that their livestock utilizes all amino acids more effectively, resulting in improved growth and higher feed efficiency. The best balance of amino acids based on the barrel theory 39

9 Effective land use Feed-use amino acids reduce the area of land required for feed-use crops and contribute to the effective use of limited arable land. For example, if the portion of soybean meal used in feed were replaced with a combination of corn and feed-use lysine, the land area required to grow the corn would be reduced by approximately 70% as its yield is about three times higher than that of soybean. In other words, if feed-use amino acids were not available, the expansion of arable land for feed-use crops would have to be accelerated to support the increasing consumption of meat, possibly leading to deforestation or other environmental destruction. Thus, feed-use amino acids enable the saved land to be used for producing food for the world's growing population. Results of replacing 50 tons of soybean meal with corn and feed-use lysine Initiative 3: Beneficial bacteria that reduce crops required for livestock feed Calpis Co., Ltd. has accumulated technologies related to bacteria through many years of research on intestinal flora, the ecosystem of the numerous bacteria in the intestines. Leveraging these technologies, the company began producing and selling CALSPORIN, a feed additive for conditioning the intestinal environments of livestock. At present, CALSPORIN is being used as a feed additive mainly for chickens and pigs, and is sold in 39 countries in North and South America, Europe, and Asia, including Japan. CALSPORIN increases beneficial bacteria such as CALSPORIN lactobacillus and bifidobacterium in the intestines of livestock, resulting in better intestinal flora. This enables livestock to gain body weight with less feed, thereby increasing the feed efficiency 1. Through the worldwide usage of CALSPORIN, approximately 500,000 tonnes of crops used for formula feeds such as soybeans, corn, and wheat are saved every year as a result. CALSPORIN has been highly evaluated in terms of safety. It has been designated as a feed additive in Japan, and was the first Japanese feed additive to gain certification under the European Feed Addictives and Premixtures Quality System (FAMI-QS), a quality and safety management system that meets legal requirements in the European Union. It has the strictest requirements in the world for feed efficiency, quality, and safety at the genetic level. 1. Feed efficiency indicates livestock weight gain in proportion to feed intake. For example, if 3 kilograms of feed are needed to increase the weight of a pig by 1 kilogram, then the feed efficiency is 33%. Accordingly, the higher the efficiency, the less amount of feed is required for livestock to gain weight. 40

10 Maximizing Usage of Food Resources Approach and Efforts to Maximize Usage of Food Resources While Japan depends on imports for a significant proportion of its food products, a vast amount of food is wasted in the country. Meanwhile, food shortages are becoming increasingly serious around the world as populations increase. Using limited food resources more effectively can help reduce hunger, lower environmental impact and bring food costs down. With this in mind, production plants of the Ajinomoto Group are taking stringent measures to maximize usage of the food resources processed and minimize leftover waste. Furthermore, the plants are making every effort to re-use materials remaining after production processes in fertilizer and livestock feed products, thereby establishing a recycling pattern. To ensure that no food products are wasted even after they have been produced for consumption, the Ajinomoto Group is working to increase the accuracy of its demand-side management of product shipments. Stock on hand is reduced, and any products that remain undelivered are effectively utilized. In addition, efforts are being stepped up to promote cooking ideas and recipes that minimize food waste and maximize flavorful ingredients to encourage customers to refrain from wasting food in the kitchen and at the dining table. Click here for more information on effective usage of byproducts and achievements in recycling resources under the Ajinomoto Group Zero Emissions Plan. Initiative 1: Recycling resources as organic fertilizer The Shikoku Plant of Ajinomoto Frozen Foods Co., Inc. (FFA) produces about 130 products for retail and food services, such as gyoza (dumplings) and Agezuni Sakuttosan, a range of low-calorie frozen food products that are not fried in oil. Large amounts of vegetable residue, such as the cores and outer leaves of cabbage not used for products, in addition to other organic residue are generated in the food production process. To make full use of these remaining natural resources, the plant introduced equipment to compost the residue on-site, and began to sell it as organic fertilizer in fiscal Fertilizer made at the Shikoku Plant is used for cabbage fields From the second half of fiscal 2008, the Shikoku Plant began selling the fertilizer to the local-area farmers that it has contracted to produce cabbage and onions. In this way, the plant is using the farm produce as raw materials for frozen foods and returning unused materials back to the source in a recycling loop. By fiscal 2010, 40% of the entire amount of fertilizer produced at the plant was being used in the local area. In the future, FFA intends to continue collaborating with the local farmers it contracts to supply produce as a means to fully use natural resources and promote resource recycling. Fertilizer made at the Shikoku Plant is used for onion fields 41

11 Initiative 2: Promoting delicious, environmentally conscious recipes to customers To raise customer awareness on the importance of maximizing food resources and minimizing waste in everyday cooking, Ajinomoto Co., Inc. has been expanding an "Eco-Uma" initiative, which promotes recipes and tips for delicious and ecologically conscious meals. In fiscal 2010, the company began a campaign inviting customers to submit "Eco-Uma Recipes." From a large number of entries, the company awarded prizes to 15 winning recipes and ideas, and featured them on its Web site, in promotional leaflets, and at related events. Looking ahead, Ajinomoto Co., Inc. will broaden the campaign to include customers' tips and cooking techniques, such as their choice of environmentally friendly ingredients and seasonings, as well as preparation, cooking and preservation methods. Through such campaigns, the company intends to take advantage of a variety of opportunities to promote the message that ecological living begins at the dining table. "Eco-Uma Recipes" are featured on the Ajinomoto Group Web site (Japanese only) Initiative 3: NPO cooperation to donate to food banks as a way to effectively use food resources As food products cannot be sold if their expiration date approaches while they are still in storage before shipment, they must be disposed of through incineration. Although Ajinomoto Co., Inc. makes every effort to minimize the disposal of such products, several hundred tonnes are nevertheless incinerated annually. To address this situation, in previous years the company continually examined the possibility of donating the products to food banks 1 as a way of effectively using valuable food resources. In fiscal 2010, Ajinomoto Co., Inc. began its first trial food bank donation, and provided 75 cases of food items in cooperation with Second Harvest Japan, an NPO the company selected on the basis of the results and scope of the organization's activities. The final trial will conclude in fiscal 2011, and an in-house system to begin full-fledged donation activities is being planned. Along with these activities, the company will continue optimizing production plans to minimize the number of products that cannot be shipped out. 1. Food banks often receive donations from corporations of food that, despite having no quality issues, cannot be sold in the market due to damaged packaging or other reasons, for distribution to people in need. 42