MIE, Japan (Reuters) - Japan's akoya pearl industry, which began in the 1890s when Kokichi Mikimoto created the world's first cultured pearls, is facing collapse due to plunging sales and stiff competition from China.
In the small fishing town of Wagu on central Japan's Ago bay, about half of the 45 growers are about to close down their pearl beds after prices halved this year, sending them even deeper into the red.
"It's the end if you lose your passion for the work you do -- and I'm losing it," said Akihiro Takeuchi, 43, one cultivator of Japan's renowned akoya cultured pearls.
"We can't live like this. It's really unprofitable ... Akoya may die out completely in this town in a few years."
Saltwater akoya oyster pearls have long been a benchmark of quality in the industry, with domestic production peaking at 88.5 billion yen ($900 million) in 1990.
But by 2008, output had fallen to one-fifth of that.
First, a "red tide" of deadly phytoplankton washed in each year in the mid-1990s, killing two-thirds of the country's akoya oysters. Then the market was flooded with less expensive Chinese freshwater pearls.
At the same time, young people's tastes have shifted to more casual accessories.
The current recession -- the country's deepest in decades -- could be the last straw. Loss-making jeweler Tasaki Pearl (7968.T: Quote, Profile, Research, Stock Buzz) has closed seven of its eight pearl farms in Japan this year, and U.S. upscale retailer Tiffany & Co (TIF.N: Quote, Profile, Research, Stock Buzz) has announced plans to end its pearl-only store outlets.
In Wagu, young growers have already drifted away, while their elders see little hope of survival after this year's open tender, which was delayed by a month, resulted in a 50 percent drop in prices.
"Those who can quit are lucky, but many can't because they've got bank debts from the past," said Makoto Yamamoto, president of the Pearl Cultivation Fishery Union in Mie, where one-third of Japanese akoya pearls are produced.
"I was always optimistic in the past, even when we had the red tide, but this time I've got no ideas," the 74-year-old veteran said in an interview for the Reuters Luxury Summit.
SEEKING SURVIVAL
Chinese growers have succeeded in cultivating freshwater pearls as big and round as akoya and have been exporting them since the 1990s. Unlike akoya oysters, which can yield a few pearls, a single freshwater mussel can produce as many as 40.
China now has 50 times Japan's pearl production capacity and the pearls are much more price-competitive, according to Mikimoto director Takashi Shimokura. Continued...
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