Why Abenomics is leading to a squid shortage in Japan
“Abenomics” — Prime Minister Shinzo Abe’s aggressive reflationary fiscal and monetary policy — is widely praised for injecting optimism into the world’s third largest economy and making Tokyo stocks the best performing equity market in the world this year.
However, in Japan, something odd is happening as a result of Abenomics — a big shortage of squid.
Japan Squid Fisheries Association (JAFRA) decided to halt all fishing operations this Friday and Saturday because a weaker yen is pushing petrol prices higher, to the extent that going out to the sea will bring a guaranteed loss. The yen has lost more than 13 percent against the dollar since the start of the year.
Squid fishing is highly energy-intensive because fishers use light to lure squid at night. Fuel makes up around a third of the cost of fishing.
There is a government subsidy for fishermen when energy prices surge. But according to JAFRA, even with the subsidy, the average loss per boat can go up to as much as 200,000 yen ($2,009) per year at the current dollar/yen exchange level of around 100.
The temporary halt is only affecting squid fishing, but people are worried other fishermen may be forced to follow suit if the yen weakens further. The Federation of Japan Fisheries Cooperatives is planning an emergency meeting to ask the government for more financial help.
As a result of the two-day halt, retail squid prices are almost certain to rise (the popular way to eat it is as raw, in sashimi). Then again, it may help introduce inflation in Japan?