Media  Global Economy  2015.02.16

The Industrialisation of agriculture

English translated version of "Business Prospect" on NHK Radio Channel 1 on December 06, 2014

1.Someone says that agriculture is different from manufacturing. What does this mean?

Agriculture is an industry that has to deal with natural phenomena like changes in weather as well as dealing with plants and animals. Farm work is subject to seasonal changes and there is a significant fluctuation in demand for manpower. As a result, it is difficult to maintain a constant level of workload throughout a year. In rice farming, for example, transplanting and harvesting require a lot of work. If a farmer hires a number of employees to meet peak demand, he will have a surplus of labour in other periods. This imposes high costs. Therefore, farmers operating as enterprises should somehow manage to maintain the constant level of manpower throughout a year.

2.How can farmers manage to do this? Can you give any examples?

It is generally thought that farming in hilly and mountainous areas where there is uneven ground is disadvantageous. However, in such areas there is a difference in temperature due to the differences in altitude which enables farmers to take two to three months for transplanting and harvesting rice. There are farmers taking advantage of this in the Chugoku District or Niigata Prefecture operating only with the farmer and his wife cultivating 20 hectare farmland larger than the average farm size of 10 hectare farmland in Hokkaido (which is itself larger than the national average, about 2 hectare). In Japan crops grow at different times in different places as its landscape is spread wide from north to south. An enterprise which takes advantage of this transfers employees and equipment from its southern farms to its northern farms for work required at different times due to change in weather conditions, and thus utilises employees and equipment effectively throughout any given year.

Even when there is no difference in altitude the transplanting period can be extended by combining early, mid-term and late-maturing varieties of crops. For example, there are some grape farmers who successfully make large profits with small areas of farmland by combining open-field and greenhouse cultivations and growing different varieties of grapes to have an even workload throughout the year.

In addition, farmers can have a combination of many crops and livestock, such as rice farming, vegetable cultivation and stockbreeding. Operations where there is cultivation of different crops and livestock are called "mixed husbandry." An advantage of mixed husbandry is that a farm's labour force can be used efficiently throughout the year dealing with different tasks due to different time of planting, growing, stockbreeding and so forth. Combining with stockbreeding has also an advantage of using cattle manure to grow crops and thus save money on fertilizers.

Manufacturers make the same effort as farmers to optimise their labour force throughout the year. Toyota had suffered inefficiencies in its use of labour due to the unreliable supply of auto parts from subcontractors. Toyota's famous "Kanban" production system started from aiming at "level the daily production of cars", in other words to produce the same quantity of cars every day.

3.Would you give me examples where a private company has entered into an agricultural business?

Some claim that private companies can be more successful than farmers in agricultural business. In reality this is not the case.

A big electronic manufacturer built a large greenhouse aiming to completely control the environment for growing crops by climate control equipment. However, they failed to control growing conditions in the greenhouse because there are differences in light volume, temperature, moisture and other conditions from place to place within the greenhouse due to a difference in elevation of the ground or a variety of other reasons. After a short period of operation the company gave up. A well-known company that processes tomato entered the tomato growing business. It has only recently generated a profit after more than ten years' operation. One of the people responsible for the operation in that company said in public that he realised it is really difficult for a private company to succeed in farming. On the other hand farmers could make a profit from growing tomatoes straight away.

Mr Uichiro Niwa, who is the former Japanese ambassador to China and used to work for the trading company Itochu, looked around farms in the US to obtain information to predict the future price development of grains in the Chicago Board of Trade. One day I attended his lecture, and in his presentation he stated flatly that "a joint-stock company is not good at agriculture" as company employees generally go home at 5 o'clock there is no one to care for the crops if, for instance, it rained heavily at night.

In order to succeed in the farming industry it is important to get "sense of the scene" to cope with natural phenomena and dealing with living things; how does the wind blow, how is the weather (sunny or cloudy), whether plants wither away or grow vigorously and so on. Whatever IT technologies are used, it is impossible to get all of the wide variety of on-site information unless a person is present on the farm; it is also impossible for someone not physically present to pass on instructions to farm employees.

4.What do you think about plant factories?

Plant factories providing artificial light by LED illumination are too costly to succeed. On the other hand, plant factories utilising natural sunlight to grow tomatoes and other vegetables are actually successful on a commercial basis.

I recently paid a visit to the experimental greenhouse operated mainly by Ishiguro Nozai Co., Ltd. in Toyohashi, Aichi Prefecture, which grows tomatoes. The engineer who designed the plant and has no background in agriculture grows tomatoes there. An average yield of tomato in Japan is 20 tons per decare. This experimental plant introduces the Dutch-origin technology and improves it to apply to the drastically changing weather in Japan, and produces more than twice the average yield of tomato after just two years in operation. One of the reasons for its success is that he gathers and analyses the necessary data and information by using computers rather than counting on feelings and farmers' instincts. However, according to him, even though 90% of problems can be handled by computerisation, the remaining 10% can only be solved by the judgment of a person watching the plants in the field. This is applied to all industries. If everything could be done by computer, everyone could do things the same way with the same success. Managing a business ultimately requires people and their judgement; this is also true for agriculture.

(This article was translated from the Japanese transcript of Mr. Yamashita's speech in the "Business Prospect" session of the radio program "First in the Morning News" broadcast by NHK Radio Channel1 on December 06, 2014.)