Agricultural Business Trends Launched by Leading Enterprises in Japan: Key Research Findings 2019
Yano Research Institute (the President, Takashi Mizukoshi) conducted a survey on the agricultural business launched by leading enterprises (entering from different types of industries) in Japan, and found out the market size, the trend in market players, and the future outlook.
The agricultural business launched by the leading domestic enterprises (entering from different types of industries) is estimated to achieve 69,753 million yen in FY2018. The value breaks down into: 11,232 million yen by the enterprises eligible for owning farmland (agricultural corporations), 29,550 million yen by the farmland lease (general corporations), 5,969 million yen by the plant factory using artificial lighting system only, 1,761 million yen by the plant factory using both artificial lighting system and sunlight, and 21,241 million yen by the plant factory using sunlight.
In recent years, business environment surrounding domestic agriculture is severe; ageing of farmers, decreasing labor force in the agricultural industry, and increasing number of abandoned farmland are often pointed out as the critical issues. Moreover, worldwide food shortage, influence of climate change on farm produce, and promotion of free-trade are considered as the matter of concern that influences domestic agricultural business.
With these circumstances, together with other aspects such as growing concern among consumers on food safety, rise in consumer health consciousness, promotion of “the sixth industrialization for agricultural development”*, recovery from the earthquake disaster and growing interest toward farming itself, interest among the enterprises toward the agricultural business such as plant factories and gardening using facilities are increasing further.
*The sixth industrialization for agricultural development’ is a term which refers to the vertical integration of business by the farmers (primary sector) to diversify into food processing (secondary) and to food distribution (tertiary). The “sixth” here means the primary (1) x secondary (2) x tertiary (3) = (6).
Agricultural Business Launched by Enterprises of Different Industries is Ever-Increasing
As the Agricultural Land Law Amendment was enforced on December 15th 2009, the restrictions were eased considerably for the enterprises other than agricultural corporations to newly enter the agricultural business; As long as the farmland is rented (leased) and the enterprises fulfill certain requirements on the use of farmland, they are authorized to start the agricultural business across the country. Under the deregulation, not only the number of enterprises eligible for owning farmland (agricultural corporations) but also the number of general corporations starting agricultural business is increasing significantly.
According to the data by Ministry of Agriculture, Forestry and Fisheries, 427 enterprises made the entrance to the industry in 6 year and a half between April 2003 to December 2009, while in approximately 7 years from December 2009 to the end of December 2016, 2,249 enterprises enlisted in the agricultural business, showing steady increase of general corporations newly entering the market after the Agricultural Land Law Amendment 2009. As of the end of December 2017, there were 3,030 general corporations conducting agricultural business using farmland.
By farm produce category, of all the general corporations that entered the market (3,030 enterprises), 1,246 (41%) produce vegetables, 522 (18%) are multiple farming, 558 (18%) harvest grains such as rice and barley, and 382 (13%) grow fruit trees.
The size of the agricultural business launched by domestic leading enterprises (from other types of industries) in FY2019 is projected to reach 77,441 million yen.
Due to the deregulation by revision in the agricultural law, the enterprises unrelated to farming are still eager to make the entrance to the agricultural business, and the number of enterprises conducting agricultural business using farmland (general corporations and enterprises eligible for owning farmland) is expected to expand continuously. As to the agricultural business using facilities (with artificial lighting system only / with both artificial light and sunlight / with sunlight), advancement in the technology for environmental control has enabled operation of the large-scale plant factories in recent years. Production of genetically modified plants, the herbal plants, and vegetables with functional claims such as the low-potassium lettuce are likely to boost the business results of the agricultural business by the enterprises entering from different types of industries.
Under such circumstances, the market size of agricultural business launched by domestic leading enterprises (entering from different types of industries) is assumed to expand to 127,716 million yen by FY2024.
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