AKIKAWA FOODS & FARMS CO., LTD.

Feed raw material prices fluctuate significantly due to crop conditions, shipping freight rates, exchange rates, global demand trends, and speculative capital flows. Although a compensation mechanism exists through the feed stabilization fund system, if price surges become prolonged, cost increases become unavoidable and it becomes necessary to pass these on to product prices. If price pass-through proves difficult, there is a risk of a direct impact on profitability.

Highly pathogenic avian influenza continues to occur in various regions worldwide, and outbreaks at the Group's farms could result in reduced production and sales. Even outbreaks at neighboring farms could lead to reduced sales due to government-imposed movement restrictions on products or reputational damage. However, the company assesses that the scope and duration of movement restrictions have become smaller in consideration of economic impact, and reputational damage also tends to be diminishing.

The proportion of sales to consumer co-operatives, particularly the Green Coop Federation of Consumer Co-operatives and the Seikatsu Club Consumers' Co-operative Union, is high, and deterioration in these major business partners' performance or changes in their policies could directly affect the Group's sales and profitability. Although the functional division of roles and mutually beneficial relationship between both parties has been maintained over the long term, concentration among business partners remains a structural risk factor.