Message from the President

For the Agricultural Chemicals and Agriculture-related Business, in addition to expanding our existing business, we have been promoting growth strategies in new fields and regions such as by “Expansion of research and business domains” and “Ensuring diverse sales routes.” We are always looking for opportunities to quickly enter into new fields through M&A. During the current Mid-Term Business Plan period, we acquired shares in Agricore Corporation, which develops new agriculture using cultivation techniques based on microorganisms and environmental control technology through IT, and acquired shares of the Singapore-based company AAI, which has agricultural chemical sales routes in Asia and Africa with high growth potential.

In the Fine Chemicals Business, we newly established our New Material Research Laboratory at the Process Chemical Research Center of the Chemical Research Institute for maximizing business. At the New Material Research Laboratory, researchers have been assigned from group companies in addition to Kumiai. Our goal is to establish a cross-sectional research system in our group by integrating research and development that had been carried out by each company into one laboratory, and will promote co-creative initiatives that utilize the knowledge, know-how, and technology of each company.

By deepening collaboration within Kumiai Group and with outside institutes, we will maximize our Fine Chemicals Business by developing new fields and moving business downstream.

Our stance is to continuously develop new agricultural chemicals through brute innovation as a research and development oriented company. It has been said that the probability of commercializing a new agricultural chemical from a given evaluation compound is 1 in 160,000. However, we have been able to developed new agricultural chemicals at an extremely high probability of 1 in 8,000. Major reasons why we are able to continue developing new products are the following: We develop products based on our understanding the needs of growers and our ability to anticipate the future market, our teams are composed of researchers from various fields which use integrated sciences for development, each individual researcher has wide expertise allowing for comprehensive value determination at the researcher level.

Based on the goal of strengthening our research and development system, we are building a new Chemical Research Institute in Shizuoka Prefecture that will integrate three Chemical Research Centers that were formerly divided for chemical discovery, formulation technology, and process chemistry, which will open in the Fall of 2023. This will allow researchers from various fields to share their opinions and information in one space. This Chemical Research Institute includes “Shimizu” in its name which is where Kumiai was founded. The name Shimizu Innovation Park (abbreviated as “ShIP”) was chosen based on in house selection, and will be a place where various innovations can go beyond the framework of agricultural chemical and fine chemical products to create new technologies and business. The concept is a ship from Shimizu Port departing into the vast open sea. We will accelerate our research and development at this world’s most advanced research center allowing us to develop new compounds based on our dreams.

In the “Strategy for Sustainable Food Systems, MeaDRI” that was formulated by MAFF in May of 2021, targets related to agricultural chemicals were set for pesticide manufacturers, which seemed to have aggressive goals like reducing the amount of use by 50% in terms of risk-conversion by 2050. On the other hand, the “MeaDRI” clearly stated that improvement of agricultural productivity and sustainable agriculture should both be promoted through innovation. In the Mid-Term Business Plan, we set our Ultimate Goals as a 100-year old company to be an “Advanced chemical manufacturer with innovative technologies and a unique business field contributing to agriculture that supports stable food supply.” The business strategy formulated to realize this “Ultimate Goals” already incorporates the vision presented in the “MeaDRI,” including responses to environmental protection and energy issues, etc., and we believe that our directions are largely in line with this.

We believe that the development of agricultural chemicals that are safer, more effective, and have a lower environmental impact, as well as the development of technologies for IPM (Integrated Pest and Weed Management), smart agriculture, and microbial pesticides, will continue to be business opportunities for us as a research and development oriented company. We will confidently endeavor to establish innovative technologies that contribute to “Innovation that will enhance potentials and ensure sustainability in a compatible manner” in the “MeaDRI.”

At the beginning of FY2022, we established our Basic Policy on Sustainability and set up a Sustainability Promotion Committee. In May 2022, we also established our Responsible Care Promotion Section to enhance the organization of the Sustainability Promotion Department, and made other efforts to strengthen the sustainability management platform throughout FY2022.

We also conducted a review of existing materiality based on Kumiai Group business strategy and social changes affecting us. By identifying new materiality, we will reflect ESG elements to our management strategy and aim to improve corporate social value by improving non-financial indicators while improving corporate economic value through business growth. By setting KPIs for each materiality and collaborating with the business plans of each department according to the Mid-Term Business Plan, we will take the initiative to work toward achieving these.

Kumiai Group will accelerate initiatives toward sustainability management with the aim of contributing toward the realization of a sustainable society while also improving corporate value.

As for initiatives in response to climate change and for reducing the load on the environment, which are deeply connected with our core Agricultural Chemicals and Agriculture-related Business, we have established targets for reducing greenhouse gas emissions from Kumiai Group by 30% by FY2030 compared to FY2019 through energy efficiency improvements and effective use of renewable energy. As for climate change mitigation and adaptation, in addition to these initiatives, in July 2022, we responded to the CDP (an international environmental non-profit organization which operates a global environmental disclosure system), and in November 2022, we announced our support for the TCFD (Task Force on Climate-related Financial Disclosures), and are engaging in information disclosure based on TCFD recommendations. In particular, we are reducing GHG (greenhouse gas) emissions by improving energy efficiency based on capital investment in our own factories and effectively utilizing renewable energy such as solar power, and are promoting GHG control by absorbing CO2 through the management of 640 hectares of forest which we own in the town of Fukushima, Hokkaido. We are also conducting verification tests for practical use of technologies for controlling methane gas generated on farmland.

As the global population continues to rise, there is a limit to how much farmland can expand. Therefore, the agricultural chemicals that we develop, produce, and sell are essential for the stable supply of food to the world, and consider it to be one of our important missions to maintain stable business for supporting society as a whole. Although growers who are end-users of our agricultural chemicals understand the usefulness and risks of these chemicals and use these properly, general consumers of farm produce have few opportunities to understand the usefulness of agricultural chemicals. Therefore, some people have a negative view of agricultural chemicals based on unscientific information. We believe that it is extremely important for our stakeholder to have an accurate understanding of the need and safety of agricultural chemicals. We have published free manga brochures entitled “Okome wo Mamoru Hanashi” (“Protecting Rice”) and “Ringo to Mikan wo Mamoru Hanashi “(“Protecting Apples and Oranges”), and make visits to elementary schools to teach about this, targeting 5th grade students. Through such efforts, we are proactively engaging in educational activities that teach about the necessity and safety of agricultural chemicals along with the importance and challenges of agriculture.

FY2023 is the final fiscal year for the Mid-Term Business Plan, so we want to focus efforts on various initiatives for achieving our future “Ultimate Goals.” In the Shimizu Ward of Shizuoka City, where Kumiai was founded, our new Chemical Research Institute (ShIP) with cutting-edge equipment has been reborn as a state-of-the-art research facility.

In October 2022, Agricore Corporation was added to Kumiai Group as a company with specialized technology that takes advantage of unique microorganisms and IT. As we continue to conduct research and development of agrochemicals and chemical products, we will continue to innovate, which is like seeds for new business, and move forward with our aim of becoming a 100-year old company.

Since Kumiai moved to the Prime Market of the Tokyo Stock Exchange in April 2022, we have a greater awareness of our social responsibility while we continue to expand our business. We believe that corporate value is determined by the extent to which we can help to address social issues. Therefore, we need to make effort to deepen our sustainability management, which will allow us to have both economic and social value.

Kumiai Group aspires to create a flow where each individual has dreams and then works to achieve them, and where satisfaction can be experienced through accomplishment, resulting in happiness. We refer to this as the Dreams and Triangle for Happiness. We also believe that sustainability management means pursuing the happiness of all stakeholders including employees, shareholders, and business partners, and means aspiring toward accomplishment including social contribution and responding to the environment, not just business performance and achieving targets, which will extend to happiness for the planet earth. We will continue increasing earnings and profits as we have been doing by “Strengthening shareholder return” and promote earth-friendly “Strengthening of sustainability management” in order to realize our Ultimate Goals for Kumiai Group toward becoming a 100-year old company.

In the next Mid-Term Business Plan that will be formulated during this period, we will also pursue much balanced shareholder return and capital allocation. I want to thank each of you for your continuous understanding and support.

Representative Director, President