Close to Narita International Airport, on a 6.7-hectare patch of ground where spinach, radishes, “komatsuna” and carrots are grown, stands a white sign with the words “Lawson Farm” in blue lettering.
The farm, in the city of Katori, is indeed run by convenience store giant Lawson Inc., which entered the agriculture business by opening this farm in 2010 to generate a stable supply of fresh vegetables for its stores.
Lawson, the country’s second-biggest convenience store chain, now runs as many as 10 large farms across the country.
With Japan expected to join the Trans-Pacific Partnership trade negotiations, which could potentially lead to the throwing open of doors to food produced overseas, experts say that Japan’s farming sector, now characterized by aging farmers protected by high tariffs, must be revamped. The entry of nonagricultural players such as Lawson is viewed as one way to help do that.
Deregulation over the past few years has allowed a growing number of nonagricultural firms to use their business expertise to help farms rebound to financial health.
A total of 1,071 companies have launched food businesses since the Agricultural Land Law was revised in 2009, allowing corporations to rent farmland across the country.
“The revision helped nonagricultural firms embark on farming businesses,” said Takashi Nishizawa, president of Nomura Agri Planning & Advisory Co., which started agribusiness consulting in 2010.
The trend was also spurred by companies that hoped to diversify as the domestic market shrank along with the population and the yen’s strength against the dollar ate into profits.
Manufacturers that moved production lines overseas to sidestep the strong yen are trying to turn the now vacant sites into vegetable factories, Nishizawa said.
“An increasing number of firms are thinking that agribusiness will give them a new business chance,” he said.
Starting a new business is not always easy. Some companies shut down the ventures after a few years.
For example, in 2002, Uniqlo owner Fast Retailing Co. started a grocery delivery service but pulled the plug after just a year and a half.
Likewise, electronics maker Omron Corp. started growing tomatoes in 1999 but stopped after about three years.
Others have meanwhile succeeded by applying unique technologies to agriculture.
Secom Industries Co., a unit of security company Secom Co., runs herb farms in the city of Shiraishi, Miyagi Prefecture, taking advantage of sensor control technology used in its home security devices.
“It is relatively easy to grow herbs by controlling the environment,” said Seiichi Tani, who is in charge of the farms.
“Growing leaf vegetables can be profitable because we can harvest them much quicker than rice and other types of grain. Also, herbs have additional value in Japan,” he said.
The facilities, launched more than 20 years ago, keep temperatures cool and humidity low, similar to countries facing the Mediterranean Sea, where the herbs come from.
They produce 700,000 packages, or 12 to 13 tons of herbs, every year.
Last year, the facilities started to sell new noodle products using harvested herbs in collaboration with a local firm.
For some companies, entering the agricultural sector brings synergies to their original business.
Lawson Inc. started farming in 2010 to reinforce its supply of safe vegetables at its Lawson Plus and Lawson Store 100 outlets, which sell fresh vegetables and daily foods.
The purpose is to broaden the range of customers, such as housewives and seniors who are more health-oriented than the young men who used to be their mainstay customers.
Lawson can control the size and kinds of vegetables at its farms.
They aim to also support young farmers, who in general lack management skills and funds, through joint ventures, the convenience store chain said.
For example, the Lawson farm in Chiba is run with local farming corporation Shibayama Farm.
It appointed Toshihiko Shinozuka, the 28-year-old son of the family running Shibayama Farm, as president. Lawson buys all its farm products from its Lawson farms.
Lawson also helps improve cost management by introducing computer systems to manage balance sheets quarterly as well as the amount of fertilizers and chemicals.
“We are planning to open 15 new farms mainly in the Kanto and Tohoku areas, where plans were suspended after the Great East Japan Earthquake (in 2011) . . . and this will bring the total to 300 farms, including the existing ones, by fiscal 2020,” said Atsushi Maeda, a deputy general manager in charge of agribusiness at Lawson.
For the business year that ended in March, sales at eight Lawson farms stood at ¥637 million, up sharply from ¥15 million two years earlier, Maeda said.
The secret is to secure sales channels, Nishizawa of Nomura said.
In addition, it is important for nonagricultural companies to tie up with farmers at the local level and use their experience so the new entries can concentrate on product control.
Nomura also entered the farming business to create synergies with its financing business.
The brokerage has 177 branches across the country, but the long economic slump has slowed financing in many districts.
Nomura started consulting services to support local farms, which will in turn help grow its financing business in the future.
To support its consulting services, Nomura also runs two experimental farms, in Chiba and Hokkaido.
“I don’t know what will happen to the TPP negotiations, but I hope different businesses joining in agriculture will bring new management ideas to traditional farming,” Nishizawa said.
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