IT in Agriculture in Japan. Kansendossier Japan

IT in Agriculture in Japan Kansendossier Japan

Colofon Kansendossier IT in Agriculture in Japan Datum 2 5 2013 Agentschap NL is een agentschap van het Ministerie van Economische Zaken. Agentschap NL voert beleid uit voor diverse ministeries als het gaat om duurzaamheid, innovatie en internationaal. Agentschap NL is hèt aanspreekpunt voor bedrijven, kennisinstellingen en overheden. Voor informatie en advies, financiering, netwerken en wet- en regelgeving. De divisie NL EVD Internationaal stimuleert internationaal ondernemen en samenwerken en een positieve beeldvorming van Nederland in het buitenland. 2013 Agentschap NL Hoewel deze publicatie met de grootst mogelijke zorg is samengesteld kan Agentschap NL geen enkele aansprakelijkheid aanvaarden voor eventuele fouten. Niets uit deze uitgave mag worden verveelvoudigd en/of openbaar gemaakt door middel van druk, fotokopie, microfilm of op welke andere wijze ook zonder voorafgaande schriftelijke toestemming van de uitgever. Foto s:[ ]. Pagina 2 van 14

Summary of the Report The Japanese agricultural sector faces a number of serious challenges: shrinking and aging farming population, increasing fallow farmlands and threats to food security due to the lack of self-sufficiency. Moreover, the sector is now standing at the crossroads as Japan is likely to be forced to scrap import tariffs on various agricultural produce and products or liberate its agriculture field if it joins a free trade deal in the Pacific region known as the Trans-Pacific Partnership. Application of IT such as sensing, communications and biotechnology is attracting much attention as a trump card to not only revitalize the Japanese agriculture but also help farmers cope with trade liberalization of agricultural products. Field management monitoring, growth condition monitoring/control, GPS guidance, agricultural robots, weather information and other agriculture-related services are being developed jointly by the government, private companies and academics and they are still in the field test stage. Farmers are paying much attention to IT as an indispensable tool to deal with free trade and aging farming population without younger successors. Japanese farmers and others have keen interests to learn from the Netherlands due to the high unit-area yield of its protected horticulture and many Japanese are visiting the country to directly see what is going on there. This report covers the current situation of IT applications and information about IT service providers in the Japanese agriculture and it aims to identify opportunities for the Dutch protected horticulture industry in the Japanese market. Rising IT Use in Agriculture in Japan 2010 2015 2020 IT use in agriculture 6,000 10,000 60,000 (millions of yen) Production 600 3,000 21,000 Collection/distribution 3,000 3,600 18,000 Sales/consumption 2,400 3,400 20,000 Source: Seed Planning Inc. Opportunity areas for Dutch protected horticulture industry are: Business tie-up with distribution channel operators or restaurant chain operators who own or operate their protected horticulture facilities Cloud computing services via collaboration with Japanese telecom operators, IT companies and agricultural corporations in this field. Consulting services for Plant Factory manufacturers and operators (definition of plant factory is: http://www.meti.go.jp/english/policy/sme_chiiki/plantfactory/about.html ) Pagina 3 van 14

Contents A. IT Market in Japanese Agriculture B. Current and Future Situation C. Problems Faced by Japanese Agricultural Sector D. Comparison between Dutch and Japanese agricultural sectors E. Key to entering IT in Agriculture Sector for Dutch Companies F. Major Players Pagina 4 van 14

A-1. Scope of IT in agriculture This report covers as IT applications in the agricultural sector agricultural production management systems (field management/monitoring, growth condition monitoring, etc.), collection and distribution systems of produce (direct sales to consumers, distribution tracing, etc.) and sales and traceability management systems in the sales and consumption phase. <Concept and scope of IT applications> Applications Description Production Field controlling/monitoring (GPS, cloud-computing) Growing condition management (sensing systems) Collection and Collection/shipment/direct sales systems (POS) distribution Product tracing systems (traceability systems) Sales and Online sales (traceability, product tracing systems) consumption Weather, sales support, consulting services A-2. Market size The IT service market totaled 5,023.6 billion yen in 2010, and IT services in the agricultural sector were estimated at 5.5-6 billion yen, 0.01% of the total. Special agricultural areas have been designated after a great earthquake in March 2011, and new production management systems have also been introduced as part of efforts to reconstruct devastated areas. IT use in the agricultural sector has been spreading due partly to the formation of agricultural corporations by new entrants from other sectors. The market of IT services in the agricultural sector is expected to grow to 10 billion yen in 2015 and 60 billion yen in 2020. 1 A. IT Market in Japanese Agriculture Pagina 5 van 14

2 Current and Future Situation B-1. IT application by farmers The agriculture ministry conducted a survey about IT applications among 6,000 farmers, who have an arable field of more than 3,000 sq. meters or earn 500,000 yen from selling crops. Of them, 2,037 responded. This survey was conducted in 2004. (The data shown below may not reflect on the latest situation) The ownership of PCs was 61% at that time and it is estimated to have risen to about 80% now. 24% of the respondents said that they used IT equipment in their agricultural operations. PCs were used by 20.7%. 7.9% of the farmers used mobile phones with online connections, and other IT devices such as fixed-line phones and personal digital assistants were used by 2.9%. Their use ratios were extremely lower than in other industries. With the remarkable development of IT lately, IT (used as a generic term indicating the Internet, data communications, computers and others) has become vital in a wide range of industrial sectors. IT is expected to help not only improve production, distribution and consumption of agricultural produce and its processed food but also create new value for customers. <IT applications by farmers> Use of IT devices 1) PCs owned by 61%, mobile phones by 71% 2) Internet services used by 69% IT use in agriculture 1) 24% by farmers, 43% among certified farmers IT use objectives 1) 59% used IT for sales, management, 51% for production 1 management 2) 2 Internet service uses: 3 45% checked market prices, weather data, 4 34% got management, blight/illness data, 24% got government farm policies, 14% used for material purchase and crop sales Benefits of IT use 1) Benefits of using IT: 52% said they improved data gathering, 33% said they improved farm management, 19% said speedy data adjustment, 9% said they expanded sales and customer base, 18% said they felt no benefits. B-2. IT service providers in agriculture Different types of firms are key IT service providers between the production side and sales area in agriculture. IT companies and agricultural machinery makers are active in the production side for improving productivity and lowering labor burden. In consumption, retailers and firms specializing in building management systems are key players. Chemicals, steelmakers and others are expected to enter the market with government policies to encourage them to do so for revitalizing agriculture. Pagina 6 van 14

<Main players by supply stage> The major entrants in managing farms and production (GPS guidance, monitoring): Nikon-Trimble, Topcon, Geosurf, Elab-experience, Xbow, Production Tools, Fujimic Saitama, Fujitsu, NEC Fielding, Hitachi, NTT Group, Dai Nippon Printing, agricultural machinery makers (Kubota, Yanmar, Mitsubishi Agricultural Machinery) Large retailers and food processors are building IT-based food collection/distribution chains with their farms and farmers. Retailers include Aeon and 7 & I Holdings. Restaurants, Collection and online sales and food producers are Aucnet, Oisix, Saizeriya, distribution Wagoen, Radishbo-ya, Watami and Shinpukuseika. IT providers include Agricompass, Fujitsu, NTT Group and E- supportlink (NEC). Providers of POS systems for direct sales to consumers include Toshiba Tech, Teraokaseiko, Ehime Computing Center, NTT East, Takasaki Kyodo Computing Center, Datasystem, Sales and Bisicom, Input and other local IT suppliers. consumption Cloud-computing is increasingly being used to manage production, distribution and sales. Fujitsu, NEC, Hitachi, NTT Group and other telecom carriers are entering the market. IT-based agricultural-related operations are called agribusiness in which they provide with new technology, ideas and services to farmers. The reasons why they are paying much attention to agribusiness are: Aging farmers and shortage of their successors, Increasing acreage of fallow farmland, Competition with imported food, Distrust of food safety such as mislabeling and chemical residue, Sense of crisis over falling food self-sufficiency, Rising consciousness about environmental destruction. Pagina 7 van 14

3 Problems Faced by Japanese Agricultural Sector General data on Japanese agriculture The data below were compiled from the agricultural ministry s statistics. The agricultural and fisheries output totaled 4,602.5 billion yen, about 1% of GDP. Japan s food self-sufficiency ratio is below 40% in terms of calorie and 66% in production value. The government plans to raise it to 50% by 2025. The number of farmers was 2.9 million, down from a peak of 14.57 million. Their average age was 65.8 years old. There were 16,816 facilities where farm produce is directly sold to consumers, and the number of agricultural cooperatives was 754 nationwide. <General information on Japanese agriculture> Source: Seed Planning Items Data Remarks GDP *1GDP statistics (Cabinet Office) 470,623.2 billion yen 2011 Agricultural production 4,602.5 billion yen Peak at 7,937.7 bil yen Forestry production 159.2 billion yen 2011 Fisheries production 688 billion yen 2011 Subtotal 5,449.7 billion yen Selfsufficiency Value basis 66% 76% Calorie basis 39% Aimed at 45% in 2015 Per capita Rice 112kg in 1963 to 60.5kg in 2012 consumption Livestock 58kg in 1963 to 132.5kg in 2012 indexes Basic Food Agricultural indexes Supply Agricultural output Farmers d Labor Certifie Total output (*2 product value estimated from related sectors 8,246.3 billion yen Peak at 11,717.1 billion yen Rice production 1,849.7 bil yen Peak at 3,930 bil yen Vegetable production 2,134.3 bil yen 2011 Fruit production 743 billion yen 2011 Livestock production 2,550.9 bil yen 2011 Arable land Produce selling farmers Farming population Paddy field 2,474,000 hectares 2011 Other fields 2,087,000 hectares 2011 Total Aged 65 or over (AV. Age) New farmers Aged 39 or younger Agricultural corporations -Joint-stock companies Entrants after revised land law 4,561,000 hectares 2.52 million 1.7 million 2.90 million 67,000 62% (65.8) 15,000 11,829 1696 328 Peak at 6.18 million Peat at 14.57 million 2010 2010 Pagina 8 van 14

4 Comparison between Dutch and Japanese Agricultural Sector Netherlands (has.): 4 mil., farmland; 200,000, protected horticulture; 10,000. It produces 800,000 tons of tomatoes or 60kg per sq. meter. Japan (has.): 38 mil., farmland; 4.5 million, protected horticulture; 50,000. It produces 700,000 tons of tomatoes or 20kg per sq. meter. Protected horticultural harvest per unit area in the Netherlands is by far higher than that of Japan. <Comparison between Japan and the Netherlands> Netherlands IT applications Selection & focus Farm enlargement Strict cost management Crop selection and Promoting farm Growing condition control focusing enlargement Based on environment data *Tomatoes, paprika, *Protected horticultural Automatic control in cucumbers represent areas average 3 has. greenhouses 75% of vegetable output. * Growing condition control based on growing data is under development. Japan Lax cost management Some farmers conduct strict cost management, but others remain lax. Limited growing condition control Relying on experience and instincts Manual labor-based protected horticulture *Growing condition- and growing data-based agriculture is in test stage. Growing various crops *Tomatoes, most popular item, represent only 16%. Ratios of protected horticultural areas by crop Small farming *Protected horticulture areas average 0.5 has. Tomatoes, paprika and cucumbers account for 75% of total Dutch vegetable production. JAPAN: Tomatoes16, Melons12, Strawberries11, Spinaches11, Cucumbers9, Watermelons6, Eggplants3, Others42 The Netherlands Tomatoes 36 Paprika 26 Cucumbers 14 Eggplants 2 Others 22 Source: Seed Planning Pagina 9 van 14

5 Key to Entering IT in Agriculture Sector for Dutch Companies <Production> Although many IT service providers have entered the agricultural sector to help farmers manage their fields and crop growing, none of them can be said to have succeeded. But, IT application for efficiently managing farms and labor saving will be indispensable amid the aging farmer population with young successors in short supply and promotion of farm-scale expansion. Knowledge of Dutch agricultural sector in this field could greatly contribute to the revamp of Japanese agricultural sector. For providing services in the production side, collaboration with agricultural cooperatives, large farming corporations and municipalities will be crucial. Approaching agricultural cooperatives needs effective connection channels in Japan as cooperation with them often involves political judgment. <Distribution and sales> In the distribution and sales side, IT service providers are expected to offer services to help distribute safe and reliable food (who produced and where it was harvested), in addition to ensuring traceability. Retailers, food restaurant chains and food processors supply food harvested at their own farms or procure food through their own purchase channels. Dutch companies could provide their crop growing know-how to such Japanese retailers and restaurants through business tie-ups. Cloud-computing services have begun to enter the agricultural sector. Dutch firms may have opportunities to collaborate with Japanese telecom carriers, IT companies and agricultural corporations in this field. There are 16,000 to 18,000 agricultural corporations in Japan, about half of which are large-scale farming organizations. <Japan Cloud Consortium (JCC)> The consortium plans to build an agricultural cloud-computing model through cooperation among the agricultural, ICT sectors and municipalities to realize industrialization of agriculture and sustainable farming management. It will consider building such a model in which ICT service suppliers help municipalities construct agricultural cloud-computing infrastructure or provide food suppliers, farmers and others with information about management, production technology, sales, distribution and financing. Municipalities will provide them with infrastructure and services as part of their efforts to vitalize their regions. <Major IT research organizations in agriculture> Universities and research institutes active in the field include Hokkaido University, Chiba University and the Agricultural Research Center of the National Agriculture and Food Research Organization. Food producers such as Shinpukuseika in Miyakonojo City, Miyazaki Prefecture and Sowakajuen in Arita City, Wakayama Prefecture have already started IT-based production. Advanced companies include Fujitsu, NEC, NTT Group and Agricompass. Pagina 10 van 14

Hokkaido University http://avse.bpe.agr.hokudai.ac.jp/html/ground.html.var http://www.bpe.agr.hokudai.ac.jp/en/labos/ Chiba University http://www.h.chiba-u.jp/english/index.html Agricultural Research Center of the National Agriculture and Food Research Organization http://www.naro.affrc.go.jp/english/index.html Sowakajuen http://sowakajuen.com/ (Japanese only) Major Players in the Japanese Market IT in food production Nikon-Trimble Co., Ltd. http://www.nikon-trimble.com/uc2012/index.html Topcon Corp. http://ag.topconpositioning.com/ Geosurf Corp. http://www.geosurf.net/products/pf/pf.html (Japanese only) Elab-experience http://www.elab-experience.com/ (Japanese only) http://www.elab-experience.com/fieldserver-pointview Xbow http://www.xbow.jp/eko.html (Japanese only) Tools Co. http://tools.jp/agri/index.html (Japanese only) Fujimic Saitama Corp. http://www1.kasseika-shien.jp/ (Japanese only) Fujitsu Ltd. http://www.fujitsu.com/global/news/pr/archives/month/2012/20120725-02.html NEC Corp. http://www.nec.com/en/global/solutions/nsp/m2m/prod-sv/prodsv1.html http://www.nepon.co.jp/sitemap.html (Japanese only) NTT East Corp. http://www.ntt-east.co.jp/business/industry/agri/ (Japanese only) Shinpukuseika Ltd. http://www.shinpukuseika.co.jp/ (Japanese only) Agricompass Inc. (Mitsui & Co., Ltd.) http://www.mitsui.com/jp/en/release/2009/1190116_1351.html http://www.agricompass.co.jp/ (Japanese only) E-supportlink Ltd. (NEC) http://www.e-supportlink.com/business/nojyo.html (Japanese only) Dai Nippon Printing Co., Ltd. http://www.dnp.co.jp/news/1209908_2482.html (Japanese only) Yanmar Co., Ltd. http://www.yanmar.co.jp/en/aboutus/company/index.html IT in food distribution Aeon Co., Ltd. http://www.aeon.info/en/ Seven & i Holdings Co., Ltd. http://www.7andi.com/en/index.html Aucnet Inc. http://www.aucnet.co.jp/e/flower/index.html Oisix Inc. http://www.oisix.co.jp/ (Japanese only) Saizeriya Co., Ltd. http://www.saizeriya.co.jp/corporate/en/investor/ Wagoen http://www.wagoen.com/main.html (Japanese only) Radishbo-ya Co., Ltd. http://www.radishbo-ya.co.jp/index.html Watami Co., Ltd. http://www.watami.co.jp/ir/english/ http://www.watami.co.jp/farm/ (Japanese only) Colowide Co. http://www.colowide.co.jp/ Pagina 11 van 14

POS system suppliers for direct sales to consumers Toshiba Tec Corp. http://www.toshibatec.co.jp/en/ Teraokaseiko Co., Ltd. http://www.teraokaseiko.com/gaiyou/index.html (Japanese only) Ehime Computing Center Co., Ltd. http://www.ehimedensan.co.jp/service/s_seihin_minkan.html only) (Japanese NTT East Corp. https://www.ntt-east.co.jp/business/industry/agri/ (Japanese only) OCS http://www.ocs-s.co.jp/pps/ojisseki.html (Japanese only) Takasaki Kyodo Computing Center http://www.tkcc.net/products/181/ (Japanese only) Datasystem Co., Ltd. http://satoyama-land.com/ (Japanese only) Bisicom (NTT) http://www.bcpos.jp/system/sancho_main.html (Japanese only) Input http://www.input.co.jp/info/company.htm (Japanese only) Many other local IT startups have entered the market. Plant Factory Manufacturer Daiwa House (Agri Cube): http://www.daiwahouse.co.jp/release/20120321110106.html Sankyo Frontier: http://www.sankyofrontier.com/unithouse/service/plant_factory/ Taisei Co.: http://www.taisei.co.jp/ss/agriculture/menu02/1275870571371.html Mirai K.K.: http://miraigroup.jp/en/ Japan Green Farm: http://www.j-greenfarm.co.jp/ Nihon Advanced Agri: http://www.adv-agri.co.jp/english/index.html Key Stone Technology K.K.: http://www.keystone-tech.co.jp/ Major protected horticulture exhibitions in Japan GPEC http://www.gpec.jp/english/index.html (The show is planned in July 2014) Agro-innovation Japan //www.jma.or.jp/ai/en/index.html (The exhibition will be held in October 2013) This information is compiled by the Embassy of the Kingdom of the Netherlands in Tokyo in collaboration with Seed Planning Inc. Source of data shown in this report was quoted from Seed Planning Inc. s report The Frontline of IT in Agriculture published in 2011. For more information or comments regarding this document please contact the Netherlands Embassy in Japan. Embassy of the Kingdom of the Netherlands Mrs. Sachiko Stone 3-6-3 Shibakoen, Minato-ku 105-0011 Tokyo, Japan E-mail: tok-ea@minbuza.nl Tel: +81 (0)3 5776 Pagina 12 van 14

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