No.2537
09/28/2020

Farm Fresh Business Market: Key Research Findings 2020

Yano Research Institute (the President, Takashi Mizukoshi) has conducted a research on the farm fresh business market in Japan, and found out the market trends, the trends by market players, and the future perspectives.



 


Market Size Transition and Forecast on Farm Fresh Business
Market Size Transition and Forecast on Farm Fresh Business

Market Overview

Farm fresh business in this research refers to businesses operating off-market business that distributes farm produce directly from farms to retailers and consumers, disintermediating traditional wholesale market. The farm fresh produce indicates domestically produced fruits and vegetables that are distributed by these operators. While online marketplace of vegetables delivered from producers to consumers boomed in recent years, farm stands within roadside stations and contracted farms in partnership with food processing makers are also selling well.
In the time that a number of abandoned farms are increasing in Japan due to aging of population and labor shortage, revision of Farm Land Act was enforced in 2009 to stop this trend by relaxing regulations for entering agriculture business. Today, decline in production owing to abandoning of farms is covered by agriculture production corporations and general corporations entering agriculture, and size of the whole farm produce market was 9,225,000 million yen for 2019, 100.6% of the previous year (based on the gross merchandizing sales at businesses). Out of this market, the farm fresh market exceeds growth rate of the entire market, and is estimated to be 2,942,400 million yen, 104.2% compared to the preceding year. 

 

Noteworthy Topics

Sudden Rise in Demand for Organic Vegetables due to COVID-19 Crisis

As “meal externalization” (‘shoku-no-gaibu-ka’, a coined term which refers to purchasing of meals instead of making them, including eat out and use of ready-made meals) progressed along with increase of double-income households and single households, consumption of fresh vegetables at home is on a decline. However, situations such as staying home due to COVID-19 crisis and rise of ethical consumerism in consideration of environment and health have led to expansion in demand for organic vegetables grown without use of pesticides or chemical fertilizers. 
Consumers that used to eat out frequently before staying-home campaign started to buy ingredients with the budget they have otherwise used for dining out; with plenty of time to spend for cooking at home, they tend to purchase healthy organic vegetables even if they are expensive. While growth of organic vegetable consumption is mainly among general consumers, demand for business use at retailers and processed food makers are also increasing. 
To expand the market of organic vegetables further, retailers are working on price reduction. As demand is expected to grow more, it is assumed that enhancement of production system will be required.


 

Future Outlook

Since domestic population decreases and meal externalization increases, consumption of fresh vegetable is on a decline. As limited demand leads to an issue of who distributes how, competition between wholesalers and farm fresh produce distributors will become harsher. 
Because price of farm fresh is decided by distributors (traders) and demanders (retailers, restaurant chains, and processed food makers), it has an advantage of stable purchase price which is free from price fluctuation in the marketplace. In addition, sales operators are making marketing efforts to penetrate farm fresh produce by ensuring freshness, making rare products available that are not normally distributed, and proposing new recipes making the most of product features.
While farm fresh is increasing its presence through these attempts, amended Wholesale Market Act came into force in June 2020, to compete with the situation by reducing regulations for trade in wholesale market and market entry of private companies. In the revision, regulations such as “ban on intermediary wholesaler trading off market”, “ban on trade of farm produce off market” and “ban on sales to non-market-authorized buyers” were relaxed; for example, intermediary wholesalers are now allowed to trade without wholesalers and purchase directly from farmers. Direct delivery from farms to demanders became possible, instead of delivering to wholesale market. Moreover, by taking away barriers such as by allowing wholesalers to sell to customers that are not intermediary wholesalers or buyers (retailers/mass retailers) in the market, deregulation is aimed to vitalize wholesale market and streamline distribution.
Meeting the needs of demanders wanting stabilized purchase price, consumers selective about food ingredients, and farms attempting to increase revenue, farm fresh market is on the rise: The market size is projected to reach 3,548,900 million yen by 2024, 120.6% compared to 2019 (based on the gross merchandising sales at businesses). Whole farm produce market, including the wholesale market, is forecasted to attain 9,453,300 million yen, 102.5% likewise.


 

Research Outline

1.Research Period: June to August 2020
2.Research Object: Agricultural businesses (private farms, contracted farms, CSA), farm fresh produce distributors (organic farm produce distribution, off-market distribution of farm produce), farm produce sales businesses (farm stands, food loss prevention businesses, agricultural theme park operators, farm produce home delivery service providers, supply and demand matching businesses) .
3.Research Methogology: Face-to-face interviews by the specialized researchers, indirect interview via telephone or questionnaires, and literature research

Farm Fresh Business Market

Farm fresh business in this research refers to businesses operating off-market business that distributes farm produce directly from farms to retailers and consumers, disintermediating traditional wholesale market. The farm fresh produce indicates domestically produced fruits and vegetables that are distributed by these operators. Nevertheless, imported products are excluded. 
The market size is calculated based on the gross merchandize sales at businesses, which is a total of domestic fruits and vegetables sales at each end channel.

<Products and Services in the Market>

Private farms/contracted farms, CSA (Community Supported Agriculture), organic farm produce distribution, farm produce off-market distribution, farm stands, food loss prevention businesses, agricultural theme park, farm produce home delivery services, supply and demand matching businesses (online marketplace).

Published Report

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