Fresh from a recent agricultural delegation to Japan, NFF Innovation Chair Amy Fay provides her thoughts on one of Australia’s largest agricultural export markets.
As Chair of the NFF’s Innovation Committee, I was lucky enough to participate in a delegation from the NFF which travelled to Japan in June to meet with government, researchers, farmers and industry bodies to talk about innovation in agriculture and understand more about their agriculture industry.
The delegation was supported by the Japan-Australian Foundation, and we met with JA, JA Youth, the Australian Embassy, NARO and Tokyo University. We spoke to a lot of different people involved in agriculture about their views on the current state of Japanese agriculture, perceptions and opportunities for Aussie products, and emerging innovation and technology.
Here are three things that stood out for me from the trip.
Japan, like Australia, is experiencing big changes both in regional communities and in farm businesses. Traditionally agriculture has been made up of small family businesses.The number of farms is declining, but the area of farming land remains fairly stable, meaning that farm businesses are getting bigger in size.
Similar to Australia, the difference in productivity between big farms and small farms is increasing, with only the top 20% of farms producing the bulk of agriculture outputs. Japanese agriculture is heavily subsidised, and land prices are high. This encourages small aging families to stay in business and makes it difficult for young farmers to enter the industry, the average age of a farmer is 67! Japan is also looking at ways to assist the industry to undertake succession planning, and encouraging and retaining young people in agriculture is a key focus over there too. Like Australia, they are trialling a range of options, including leasing and co-signing, which is similar to share farming. A major barrier for young farmers is achieving economies of scale.
The average size farm in Japan in only 2 hectares, so leasing farming land often leaves farmers with scattered plots all around the district. To get around this the government has developed a Landbank program that consolidates land in bigger plots which is then leased to young farmers so they can increase scale quickly and efficiently.
Japan imports a lot of food. Only 39% of food consumed is produced at home. Despite the level of imports, Japan is still very protectionist, and the ag industry is very much geared up to protect small family farms through high levels of subsidisation. JA, the farmers’ representative body in Japan, is very strong. It has an influential relationship with government, and also controls market infrastructure through cooperatives and by acting as a purchasing agent for producers.
Government subsidies are also distributed through the JA membership network. This control over the industry is slowly opening up, as Japanese farmers see opportunity to increase their exports in high value products such as Wagyu, and also as Japanese consumers tastes change and demand for products continue all year round.
A huge opportunity for Australian producers is counter-seasonality. Whilst Japanese consumers prefer to buy home grown produce, there is also increasing demand for fruit and vegetables from other countries when home grown produce is out of season. As Australia is in a different hemisphere, we can supply fresh fruit and vegetables that do not directly compete with Japanese industries, which is attractive to both government and the public. There is real opportunity in the future to supply these demand with Australian produce such as table grapes, kiwi fruit and avocados.
Consumer preference and lifestyles are also dictating market opportunities in Japan. Most of the produce is individually packaged or in small quantities, to make it easier to transport or store, and to cater for much smaller family units. Convenience foods such as grapes are increasing in popularity, over other fruits that are harder to store and eat, such as mangoes. Japan also has a rapidly aging population, and the ‘silver’ demographic is becoming increasing health conscious. This is increasing demand for health foods, and is a huge opportunity for Australian beef imports, as it is much leaner than Japanese wagyu.
A barrier for more Aussie products in Japan is the range of tariffs, particular in industries such as dairy. The TPP agreement was a major improvement for many Australian imports before the US pulled out the deal. Both Australia and Japan ag are keen to see if another version can be struck to provide benefits for both our agriculture industries.
With an aging workforce, a need to increase productivity of small family farms and to encourage young people into the industry, Japan is also looking at what innovation and technology can be adopted for agriculture.
There is significant investment in technology by both the government and private companies. NARO is a research institute funded by the government and is looking at driverless tractors, yield and soil mapping, variable rate application of inputs as well as data management, traceability and quality assurance schemes. The adoption of these types of technology is limited by lack of scale on the majority of Japanese farms. Australia has increased capacity to implement these types of innovations, and is at a similar development point to Japan, and it looks like we may rapidly overtake them, as we have strong drivers to increase efficiency at home.
Japan is also having big discussions between government, industry and commercial sector around ownership and aggregation of data. The Ministry of Agriculture is developing a data exchange platform where everyone can share data. Machinery companies have agreed that farmers will own their individual data but there are ongoing discussions about who owns the aggregated data as it is very valuable! Support for data interpretation is also slowly being improved in Japan. Technicians are being employed by corporates and JA to support farmers to use big data and machinery companies are trying to build their capability in data interpretation and service provision.
We found overwhelmingly that the Japanese and Australian agriculture industries, while operating in a very different context both politically and physically, were dealing with a lot of similar challenges and opportunities. A focus on quality produce to cater for discerning customers is a key focus for both countries, as is dealing with aging demographic, finding economics for scale for family farms, and finding opportunities in a global market. Continuing to develop this relationship will not only help Australian farmers to identify opportunities for our products, but also share information and ideas to help both countries deal with our common issues!
A very big thank you to both the NFF, the Japan-Australian Foundation, the Australian Embassy and everyone who hosted us in Japan for making this trip possible and so beneficial.