Contributed Content: Japanese Agriculture’s Rising Sun…

Contributed Content: Japanese Agriculture’s Rising Sun…

December 12, 2019

By Misako Terui and Greg Mellinger of HighQuest Partners, LLC.

Japan has long had a reputation as a country with an agricultural trade deficit, with challenges facing its declining population and market. Japan is known as a major importer of a range of agricultural commodities such as wheat, corn, soybeans, meat products, and vegetable oils; its mountainous terrain coupled with the 70 year old average farmer’s age suggests a dim future, agriculturally.

The largest cooperative association in the world – the National Federation of Agricultural Co-Operative Associations (ZEN-NOH) – dominates agriculture in Japan. ZEN-NOH was formed in 1972 and its reach encompasses rice, grain, fresh produce, and livestock production, agribusiness, agricultural materials and machinery, consumer, and export businesses. ZEN-NOH’s 945 cooperative unions generated $40 billion in revenues in 2018. With such a traditional yet diverse set of stakeholders to support, ZEN-NOH realizes that its membership, and itself, must adapt to the changing market conditions and do so quickly.

HighQuest Partners’ Senior Advisor Ms. Terri Terui sat down with ZEN-NOH’s CEO, Mr. Shuji Yamazaki, at the recently held AgSum conference, organized by NIKKEI, in Tokyo on November 18, 2019. In this interview, Mr. Yamazaki outlined today’s changes and the reasons why he is optimistic about the future of Japanese agriculture.

Three-Year Business Plan

ZEN-NOH launched “3-year Mid-Term Plan” from 2019 to 2021, through self-reform based on “challenging all together and creating the future”. Four major goals and strategies focus on production, distribution, revitalization, and overseas expansion. ZEN-NOH executes these goals together with Japan Agricultural Cooperatives (JA group). In order to increase overall agriculture production value, ZEN-NOH and their group members are focusing on new technology to enhance productivity, support agricultural labor shortages, and utilize Information Communications, and Technology (ICT).¹

Farming and Labor

Japanese agriculture has varied for years due to the threat that the Trans Pacific Partnership (TPP) negotiations implied, with or without U.S. participation. TPP’s trade liberalization meant that commodity/small scale farmers would be hard-pressed to compete in the new environment, especially outside of Japan. Japan’s farmer population today is 1.75 million, a 50 percent decline in 20 years; only 20,000 new farmers per year under the age of 49 enter the workforce. However, there are more foreigners participating in Japanese farming, a new and necessary dynamic. Japanese farms are also adopting technology and other efficiency practices as rapidly as possible.

“Smart farming”, i.e. the use of drones, sensors, robotics, and coordinated purchases and joint usage of costly farm equipment, is widespread today and is helping Japanese farmers to “do more with less.” Due to the severe labor shortage in Japan, part-time labor is also playing a role; having a single day’s help by a laborer is better than none at all. Japanese farmers are also growing more specialized products, such as fresh fruits and vegetables, which incorporate farm eco-tourism when they are near cities.
Sustainable Japanese Farms and the Role of Women

Mr. Yamazaki further described how Japanese businesses have rapidly adopted the United Nation’s Sustainable Development Goals (SDG’s) which include 17 areas such as No Poverty, Zero Hunger, Gender Equality, Reduced Inequalities, Climate Action, and Responsible Consumption and Production among its principles. ZEN-NOH supports these SDG’s for its membership. Addressing gender equality and the urgent need for more farm labor, Mr. Yamazaki stated that women have long played a critical role on Japanese farms with housewives and other members of the family in important jobs. Farming operations are figuring out how to embrace female workers by developing light farm machines, tech riding, and farm tools that women can use. Within ZEN-NOH’s regional structures, there is a “strong” female department whose job is to develop new products and innovations in an effort to make farming more productive for women.

New Products and Business Models

Though Japan’s overall population is shrinking, the number of households has grown from 31 million in 1975 to over 53 million in 2015. The number of single and two people units are increasing due to (1) delayed marriages, and (2) an increase in senior couples, including those living alone. As a result, the Japanese market has become much more focused on consumer trends that include more eating out, prepared meals, ecommerce, and home delivery.²

Japan has also seen a surge in foreign visitors and consumers of its high quality food products and restaurants. Inbound tourists increased from 6.22 million in 2011 to 31.19 million in 2018. Tourist spending increased from 0.8 trillion yen (US$0.73 trillion) in 2011 to 4.5 trillion yen (US$4.13 trillion) in 2018.³ This represents a new and growing opportunity for higher quality niche products that Japanese farmers are well equipped to provide. It also plays to ZEN-NOH’s strengths in finished food.

change in foreign ZEN-NOH’s consumer businesses have allowed it to compete outside of Japan where similar trends are taking place. ZEN-NOH recognized the need for overseas investments to promote Japanese agricultural products and exports. This has lead to M&A, JV, and alliance initiatives with foreign entities to control the availability and sale of high-end Japanese food and beverage products including beef, sake, and fresh fruits and vegetables. International investments by ZEN-NOH have been made in New York, LA, Scotland, and Bulgaria in wholesale distribution, sushi, Wagyu beef, and high-end Japanese restaurants.

ZEN-NOH is the largest agricultural cooperative in the world and by some measures is one of the most innovative. We were struck by the many changes being adapted by its cooperative members and by ZEN-NOH itself to help Japanese farmers to compete, be more sustainable, provide more opportunities for women in the agriculture workforce, and to move away from commodity crops to more value-added products. These shifts are allowing ZEN-NOH to meet today’s consumer desires in Japan and to pave the way for enhanced presence outside of Japan. While counted out a few years ago, Japan’s farming sector appears to be rising instead.

About Shuji Yamazaki, CEO of ZEN-NOH

Mr. Yamazaki is president and CEO of ZEN-NOH, a National Federation of Agricultural Co-operative Associations in Japan which was formed in 1972. He has had a long career with ZEN-NOH, previously serving as senior executive vice president, executive vice president, and president of the Fertilizers and Agrochemicals Division, respectively. He graduated from the Faculty of Economics and Business, Hokkaido University.