January 16, 2024

By Lynda Kiernan-Stone, Global AgInvesting Media

Development Bank of Japan (DBJ) has been making overseas investments in food and agriculture funds since 2020 and acquiring advanced knowledge to solve agricultural issues along the way. 

In November 2020, the bank was the first regional Asian investor to make an undisclosed investment in Equilibrium Capital’s Controlled Environment Foods Fund II. Then, within the span of two weeks in September 2021, DBJ continued to foster a shift in Japan’s investment landscape through its commitment to the TIR Europe Forestry Fund II, and by becoming the first investor in Japan to agree to invest in a food-focused private equity fund by backing a fund managed by Proterra Investment Advisors (Proterra Asia). 

Soon after, in May 2022, the bank was the first Japanese investor to back Cibus Capital’s Cibus Fund II, marking the bank’s fourth investment in the food and agri space, and in May 2023, DBJ became the first Japanese investor to agree to invest in Laguna Bay Fund II. 

Now DBJ’s attention has turned homeward, as the bank has made its first investment in the Japanese agriculture sector (and first direct investment in the sector) through an undisclosed investment in Nippon Agriculture Co., Ltd. through its DBJ Startup Innovation Fund – an investment vehicle established to promote the creation of nurturing of startups and development of an innovation ecosystem. 

This investment was also made as part of its Specified Investment Business, a platform that provides growth capital on a time-limited and concentrated basis by utilizing partial investment by the government to promote the competitiveness of Japanese firms. 

Established in 2016, Nippon Agriculture develops farmland for fruit trees (mainly apples) and vegetable production, along with sorting and selling these crops both domestically and on international markets. 

By incorporating insights into overseas production and fruit sorting methods into Japanese production, DBJ stated it is contributing to improving both production and value chain efficiency in the country’s domestic agriculture industry while expanding the country’s potential for crop exports. 

A Way to Give Back

In Japan, the average age of agricultural workers is 67 years, and between 2015-2030 the number of self-employed farmers in the country is expected to decline by 40 percent.

Compounding this issue is the highly fragmented nature of Japan’s farmland, with the average cultivated area under management being just three hectares (7.41 acres) per household; dietary changes resulting in the yearly decline of rice consumption leading to paddy fields being converted to low-profit crops such as feed rice, wheat, and soybeans; and little shift toward higher margin crops that can support the maintaining of the country’s farmland. 

In response, through its fund investments, DBJ is aiming to utilize information garnered from partners through overseas best practices as a way to give back to Japan’s food and ag industries by providing the opportunity for the country’s existing players to collaborate by leveraging the bank’s vast network. 

DBJ stated that its ongoing efforts through its “social investment operations” will continue to strengthen the sustainable development and competitiveness of Japan’s food and agriculture industry by solving production and distribution challenges, adding that it will actively support its clients’ work to develop markets related to growth funds and revitalize local economies.

This strategy aligns with DBJ’s corporate philosophy – “Design the future with financial expertise: Continue to expand financial frontiers; Provide the best solutions for customers and society; Pursue sustainable development for Japan and the world”.

~ Lynda Kiernan-Stone is editor in chief with GAI Media, and is managing editor and daily contributor for Global AgInvesting’s AgInvesting Weekly News and  Agtech Intel News, as well as HighQuest Group’s Unconventional Ag. She can be reached at lkiernan-stone@globalaginvesting.com.

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