Market Overview

The agricultural business by leading domestic non-farming companies is estimated at 104,398 million yen in FY2021. It breaks down into 12,584 million yen by agricultural corporations, 37,753 million yen by general corporation using farmland by lease, 22,300 million yen by plant factories using artificial light only, 1,905 million yen by hybrid plant factories using both artificial light and sunlight, and 29,856 million yen by plant factories using sunlight only.

Domestic agriculture has been facing a number of critical issues in recent years, such as the aging of farmers, the decrease of manpower in agriculture, and the increase of abandoned farmland. There are also worries regarding the influence of a global food crisis, climate change on production of crops, and the impact of trade liberalization on domestic agriculture.

Corporate interest in agricultural business such as plant factories and indoor horticulture has been driven further by increasing demand for prepared meals stemming from the “externalization of food preps”, as well as by the national goal to improve low food self-sufficiency rate, concerns for climate change impact on securing staple food supplies, the government’s growth strategy on strengthening the country’s agriculture by increasing export of farm produce, and national promotion of “sixth industrialization”, which encourages primary producers to diversify into food processing and/or distribution.

 

Noteworthy Topics

Non-Farming Companies in Agricultural Business Increasing Continually

The Japanese Agricultural Land Act was modified on December 15, 2009, to invigorate non-farming entities to start farming operations nationwide, on a condition that certain requirements are met to affirm fair farmland use. By relaxing regulations, new entrants, not only agricultural corporation but also general corporations, have been increasing considerably. 

According to the census by the Ministry of Agriculture, Forestry, and Fisheries*, while 427 corporations entered the industry from April 2003 to December 2009, there were additional 2,249 corporations entering the industry over seven years period between December 2009 and December 31, 2016, showing constant increase of new entrants since the 2009 amendment of Japanese Agricultural Land Act. As of December 31, 2020, there are 3,867 general corporations in agricultural business using farmland by lease.

In view of general corporations in agriculture by plant species, 1,369 companies (35% of the total number of corporations) grow vegetables, 777 companies (20%) harvest multiple crops, 703 companies (18%) cultivate rice and wheats, and 521 companies (13%) plant fruit trees.

* “Status of General Corporations Cultivating Land Rented from Others” by Ministry of Agriculture, Forestry, and Fisheries (announced on Dec.31, 2020)


 

Future Outlook

The market size of agricultural business by leading domestic non-farming entities for FY2022 is forecasted to reach 115,555 million yen. Encouraged by deregulation on the use of farmland, non-agricultural entities stay eager to make market entrance, and thus the number of new entrants to agricultural business using farmland by lease (general corporation / agricultural corporation) is projected to expand continually. In addition, in view of the vertical farms (plant factory using artificial lighting only/ hybrid plant factory using both artificial lighting and sunlight/plant factory using sunlight only), emergence of large facilities has been witnessed, against the background of innovations in leading-edge climate-control technology for indoor farming. While unseasonable weather continues, factory-grown lettuce has become increasingly popular in the current market. It has been attracting commercial demand, such as demand at retailers and ready-made meal vendors, because plant factory guarantees consistent output that assures stable, on-schedule procurement. The market of plant-grown farm produce is expected to grow by the expansion of product variety, i.e., not only strawberries but also genetically modified plants, herbal plants, and vegetables with functional claims like low-potassium lettuce (LK lettuce). Under the circumstances, the market size of agricultural business by major domestic non-agricultural companies is forecasted to expand to 163,751 million yen by FY2027.


 

Research Outline