A second wave of companies has entered the agriculture business, taking advantage of abandoned farmland on the outskirts of sprawling metropolises and increased help from local governments.
At least 1,049 companies have started operating farms since the agricultural land law was revised in 2009 to ease regulations and promote the efficient use of farmland. The number is 2.3 times the figure before the revision.
The scramble for farming near Tokyo and other large cities has been mainly fueled by the easy access to huge markets, avoiding a snag that had hampered businesses in the first wave.
The number of new agriculture businesses shot up 4.3 times to 121 in the Kanto region, which includes Tokyo and Yokohama. In the Kinki region, which includes Osaka, Kyoto and Kobe, 127 companies began farming, a sevenfold jump.
Abandoned farmlands in the Tokyo area have increased in number mainly because aging growers have failed to find successors. That trend has created an opening for companies like Aeon Agri Create Co., a subsidiary of supermarket chain operator Aeon Co.
Aeon Agri Create cultivates Chinese cabbage on a 10-heactare plot on the outskirts of Hidaka, Saitama Prefecture, just north of Tokyo.
Most of the subsidiary workers are novice farmers, but they use digital devices to make up for their inexperience. To exchange tips and assessments of their farming, they regularly share pictures of their vegetables with peers on other farmlands.
The harvest is sold at Aeon outlets in the capital and surrounding areas.
“We want to engage in agriculture in a way that wins the trust of consumers and owners of farmland,” said Kazumi Otsuka, a 29-year-old who oversees the Hidaka plot and sold farm products at an Aeon store until two years ago.
Aeon Agri Create was established in 2009, when the agricultural land law was overhauled.
The company grows vegetables on a combined 45 hectares on six sites around Tokyo, including Hidaka and Ushiku in Ibaraki Prefecture.
The vegetables are sold through Aeon’s sales network, and imperfect products are used in ready-made meals sold at Aeon outlets.
Yasuaki Fukunaga, president of Aeon Agri Create, says farming in areas within easy access to large markets has great promise.
“By going through the entire process, from growing to processing and retailing on our own, our operation can prove highly profitable,” he said.
The city of Hidaka has helped Aeon in leasing plots in hopes that the projects will create more jobs.
City officials asked all landowners who had stopped farming if they were willing to lease their plots. They also held briefings on the city’s program for businesses to use idled farmlands.
In Saitama Prefecture, the number of companies moving into farming grew tenfold to 40 after the law was revised.
An office was set up to serve as a liaison between businesses and municipalities and businesses and farmers. But Saitama prefectural government officials do more than just act as go-betweens; they also go out of their way to assist in the paper work.
“If local governments continue to provide support to businesses, it will become easier for these businesses to remain in the market,” Yukio Shibuya, associate professor of farm management at Tokyo University of Agriculture, said. “New entries to the market could spur the reform of the existing farms.”
The first wave of businesses getting into agriculture was in 2003, after Prime Minister Junichiro Koizumi’s structural reforms gave them access to special deregulated zones. Restaurant operators and construction companies were among those that came aboard.
But 79 of 436 companies that entered the field from 2003 to 2009 had pulled out by September 2012, citing their worsening balance sheets.
The biggest factor behind the failures, according to the agriculture ministry, was their inability to secure sales channels for their products.
The companies now are seeking urban-focused farms, and they are not just retailers.
Two years ago, Yokohama Technos Co., an auto parts maker based in Yokohama, took up agriculture in Ayase, Kanagawa Prefecture, south of Tokyo.
The manufacturer grows taro and green onions on a 5-hectare site, about eight times the size it initially had, and sells the produce to restaurants in the capital.
The company now has set its sight on a 100-hectare plot.
“I have always thought a large-scale farming operation has great business potential,” said Shigeru Yaguchi, former president of Yokohama Technos, 65. “It is important for farming enterprises, like manufacturers, to make more efforts to expand their sales channels.”
Saitama Fuji Co., a maker of electronic components, has been growing scallions and garlic on a 0.5-hectare farm in Chichibu, Saitama Prefecture, since two years ago.
The Chichibu-based company plans to sell its produce at supermarkets in the prefecture.
(This article was written by Hiroyuki Komuro and Takuya Ikeda.)
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