www.EUbusinessinJapan.eu

Smart Farming Technology inJapan and Opportunities for EU
Companies

January - 2021
ECOS GmbH, N. Temmen

EU-JAPAN CENTRE FOR INDUSTRIAL COOPERATION - Head office in Japan
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Contents
1.

Executive Summary .................................................................................................................................................. 5

2.

Scope of Report ........................................................................................................................................................ 8

3.

Japanese Smart Farming Market .............................................................................................................................. 9a.

Market Characteristics.......................................................................................................................................... 9b.

Market Size ........................................................................................................................................................... 9c.

Political Measures............................................................................................................................................... 11d.

Further Market Drivers & Trends ....................................................................................................................... 14

4.

Key Players.............................................................................................................................................................. 16a.

Ministries ............................................................................................................................................................ 16b.

Associations ........................................................................................................................................................ 17c.

Companies .......................................................................................................................................................... 19i.

Agricultural machinery manufacturers........................................................................................................... 20

ii.

Suppliers of agriculture-related products ...................................................................................................... 21iii.

ICT-related companies .................................................................................................................................... 23iv.

Start-ups ......................................................................................................................................................... 24d.

Foreign Players ................................................................................................................................................... 25e.

Customers ........................................................................................................................................................... 26

f.

Research Institutions .......................................................................................................................................... 27

5.

Distribution Channels ............................................................................................................................................. 28a.

Hardware ............................................................................................................................................................ 29b.

Services ............................................................................................................................................................... 32

6.

Regulations ............................................................................................................................................................. 33a.

Export and Sales to Japan ................................................................................................................................... 33b.

Technical Approval ............................................................................................................................................. 33

7.

Related Trade Fairs ................................................................................................................................................. 34

8.

Opportunities for European SME and Recommendations ..................................................................................... 36

9.

a.

Business Opportunities for European SME ........................................................................................................ 36b.

Challenges........................................................................................................................................................... 37c.

Key Success Factors ............................................................................................................................................ 38d.

Recommendations.............................................................................................................................................. 38
References .............................................................................................................................................................. 40

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List of Abbreviations
AI

Artificial Intelligence

EPA

Economic Partnership Agreement

FY

Fiscal YearGPS

Global Positioning System

GIS

Geo Information System

HQ

Headquarters

IoT

Internet of Things

ICT

Information and Communication Technology

JA

Japan Agricultural Cooperatives

MAFF

Ministries of Agriculture, Forestry and Fisheries

METI

Ministry of Economics, Trade and Industry

NARO

National Agriculture and Food Research Organization

SIP

Strategic Innovation Program

POS

Point of Sale

PSE

Producer Support Estimate

TSE

Total Support Estimate

QZSS

Quasi-Zenith Satellite System

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1. Executive Summary
Since the early 2000s Japan is trying to improve its food self-sufficiency rate (only 37% in 2018) as a major policy goal.
The geographical conditions make it hard to reach the current goal of 45% self-sufficiency: two thirds of the nation’s
surface are mountainous; many areas are hard to reach. Another problem is the shrinking number of farmers, andtheir increasing age (67 years in average). Labour shortage is a major problem, and thousands of hectares farmland
are unused. On the other hand, a structural change towards consolidation is ongoing: large-scale farming as well as
agricultural cooperative corporations are increasing.
Political targets play a major role in the public acceptance of new developments and trends in Japan and foster thedevelopment of smart agriculture. Japan is determined to tackle the negative trends, and as they have done so often
in the past, new technologies are to play a major part in this strategy. In 2016, the Cabinet Office declared to “…makeit [the field of Agriculture] into a growth field using Big Data, IoT and AI”.1 Agricultural policy reforms are being pushedforward. The MAFF has released a roadmap for the business expansion of smart farming technologies and services,which aims at a rash implementation within the next few years. MAFF has established 124 demonstration projects ofsmart farming technologies and services within a large-scale pilot project program, to showcase and facilitate the newopportunities. However, the extraordinary market power of the national association of agricultural cooperatives (JA)stands in the way of improving Japan's sometimes less productive agriculture.
But the decisive growth phase for the smart farming market in Japan is currently underway. The usage of smart farming
technologies and services in Japan’s agricultural sector is increasing. According to the Yano Research Institute, themarket for intelligent agriculture in Japan will almost triple in the next few years from a sales revenue of 15.87 billion
JPY (2019) to an estimated amount of around 44.28 billion JPY (2025). This forecast includes precision farming,
agricultural robot systems as well as cultivation, sales, and operational support solutions but it does not include POS
systems, farm machines or drones for agriculture, so the actual number under a comprehensive market definition is
likely significantly higher.2
The biggest challenges are tied to the general state of the agriculture in Japan. The very high and still rising averageage of farmers makes it difficult to implement new technologies, as many lack ICT literacy. Attracting the younger
generation to this craft is which is considered hard work with low and unsecure income, caused e.g., by frequent
extreme weather events, is also difficult in Japan. Retaining skilled workforce, who can handle the new technology isdifficult. High investment costs especially for new machinery are a major obstacle for the Japanese agriculture, inwhich small farms dominate due to the often-difficult topological conditions.
Driven by those challenges there is a high pressure on politics to facilitate this sector and make it competitive again.
Next to the programs mentioned above, structural changes such as land reforms to foster the use of abandoned
farmland land and to boost large-scale farming are underway and have already shown first results. Smart farming
solutions are especially promoted by progressive legislative reforms, such as the usage of drones or self-driving
vehicles, chemical spraying reforms as well as the quick, comprehensive rollout of necessary infrastructure such as 5G,
QZ Satellite System or the standardized data platform WAGRI.
First results and positive trends, such as a growing number of business farmers, is already emerging. Many smaller
farms, especially those organized in cooperatives, are also increasingly using joint procurement strategies to mitigate
1Strategic Innovation Program: “Technologies for Creating Next-generation Agriculture, Forestry and Fisheries”.
Statista [based on the research of Yano Research Institute](2016): “Sales revenue of the domestic smart agriculture market in
Japan from fiscal year 2015 to 2019 with forecasts until 2025”.
2

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the investment cost impact. The social cohesion and cooperation in Japan’s society is facilitating knowledge andexperience-sharing via platforms. There is also a strong trend towards sustainable food production, e.g., food safety
and origin, which can be much easier traced via new management and sales solutions.
Another interesting trend is the increasing engagement of companies alien to agriculture so far. Not only ICT
companies such as NTT or Fujitsu are participating in the smart farming market, but also companies such as TEPCO
have discovered the smart farming sector as a new segment for the application of their know-how and as a new,promising revenue stream.
In general, Japan is an important sales market for agricultural machinery. In 2019, agricultural machinery worth over
630 million EUR was imported, of which almost 60% came from Europe. Added to this is the strong sales of locally
produced agricultural machinery (total sales value of 2.9 billion EUR in 2019). 3 While the agricultural machinery
markets for tractors and combined harvesters are almost completely dominated by the four major Japanese
agricultural machinery manufacturers (Kubota, Yanmar, Iseki, Mitsubishi-Mahindra), European manufacturers enjoy agood brand reputation in Japan and are known for their high-quality and advanced machines with future-oriented
technology. Especially the easy handling and operator-friendliness is appreciated. Demand in Japan is mainly for labour
assisting and labour-saving technologies, to counter the decrease in farming population.
In the general agricultural machinery market, European small and medium-sized enterprises (SMEs) have the best
opportunities in the export of dairy machinery as well as other machinery for soil cultivation, harvest preparation andcultivation. Duty-free import of foreign agricultural machinery due to the Economic Partnership Agreement (EPA),
government subsidies e.g. for pilot projects and the great potential for automation in Japanese agriculture offer special
incentives. A key element could be the provision of maintenance infrastructure for European SMEs.4
When it comes to new smart farming technologies, European SME should have good opportunities in the field ofdrones and precision farming solutions, which are expected to grow exponentially in the coming years, driven by theunique topological features of Japan and tightening regulations along with progressive legislation in the underlying
areas such as e.g., unmanned vehicle and chemical spraying laws. This kind of technology can be transferred rather
easily, and the necessary infrastructure in form of WAGRI data platform or QZSS is available. This makes Japan apredestined testing ground for those kinds of technologies, making R&D projects in these areas quite appealing.
Smart farming services such as farm management support, POS-solutions for sales support, solutions to share andmanage farming information or production management solutions for the supply chain, especially in the dairy andanimal husbandry sector, are also interesting fields. However, access to the service market is more difficult andrequires a local partner with good knowledge of the regional processes.
When entering the Japanese smart farming market, specific challenges need to be considered. The trust in domestic
Japanese companies and Japanese brands, especially the domestic full liners, is a big obstacle and Japanese companies
are often favoured by the government. In addition, the language barrier is still a major challenge in Japan, especiallyin many segments of a rather traditional business such as agriculture.
A specific analysis of the target market segment as well as competitors and possible partners is key to success. A local
partner, and ideally a local subsidiary with Japanese speaking manager is strongly recommended. This is very

3
4

Bundesministerium für Ernährung und Landwirtschaft (2020): „Der Markt für Landtechnik in Japan“.
Bundesministerium für Ernährung und Landwirtschaft (2020): „Der Markt für Landtechnik in Japan“.
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successfully illustrated e.g., by the case of the German company InFarm, who checked all those boxes when they strucka deal with Kinokuniya to use their indoor farming systems in the Kinokuniya supermarkets (see chapter 5b).
How to ensure costumer service such as training, or maintenance also needs to be considered. Even though it ispossible to do a lot remotely, especially in software segments, Japanese customers emphasize the support of (ideallyJapanese) employees on-site. While this trend is possibly changing due to Covid-19, also because the government
strongly tries to facilitate remote activities, the customer service and maintenance concept is a key issue, especiallywith many uncertainties regarding the application of this new technology in a traditional sector.
Adjustment to Japanese conditions is also very important. This includes e.g., providing a Japanese interface forsoftware, but also adapting the interface layout to Japanese quirks. Interesting opportunities also arise from R&D
possibilities, e.g., within the framework of an adaption process or pilot project. Japan is very advanced in many fields
related to new smart farming segment such as robotics, drones and the use of AI and ICT. European SME might benefit
greatly from such a cooperation and can use Japan as a testing ground for new ideas.
Lastly it is important to mention that the challenge of sustainable and advanced agriculture is not only a national
matter. Japan has very good ties to Southeast Asian countries and possibilities for third-country co-operations withJapanese companies should not be neglected. Japanese companies often look towards opportunities in Southeast Asiaand the demand in those highly populated countries, such as Indonesia, Myanmar or Cambodia, especially fortechnology and solutions in the food and agricultural sector, is considerable. The QZSS satellite system for example isalso being tested in Southeast Asia and applications based on it could be applied to those countries.

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2. Scope of Report
This report is addressed to small and medium-sized companies in Europe who offer innovative technology in the smart
farming sector such as••••

Robots for agricultural use
Technology for precision farming
ICT, Artificial Intelligence, drones for agricultural use
Smart farming services.

The report presents a comprehensive overview of the Japanese smart agriculture market including current trends,
drivers as well as opportunities and challenges for SME’s seeking to develop or strengthen their positions in theJapanese market.
The focus is set on innovative technologies for precision farming such as GPS guidance systems for tractors orautonomous vehicles, agricultural robots (e.g., for grafting or harvesting) and drones, as well as cloud services for
smart farming or IT solutions for complex environmental control (heat, light, ventilation, humidity etc.), for farmmanagement or sales support.
The current size, structure and trends in the Japanese market for smart agriculture are described in part 3, as well as
framework conditions including political measures.
Part 4 lists up the main market players (companies, universities/research institutes, associations). Distribution
channels for both hardware and services are characterized in part 5.
Some relevant regulations are included in part 6, and some relevant trade fairs are listed in part 7.
The report concludes with a short analysis of the main challenges, business opportunities and key success factors for
EU-based small and medium-sized enterprises in chapter 8.
Thus, the report strives to provide practical information for European companies engaging into the smart agriculture
market which helps them to estimate the potential of Japan’s smart farming market for their specific innovativetechnology or service.
The report is based on an extensive desk research of relevant publications and media, including publications by
Japanese ministries, government bodies and research institutions in Japanese language. Furthermore, information
sources such as specialist journals, economic journals, company reports and websites, statistical websites, etc. were
integrated to complement the study.

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3. Japanese Smart Farming Market
a. Market Characteristics
The smart farming market consists of various solutions such as the usage of agricultural robots and drones, GPS based
guidance systems with autopilot or semi self-operating technologies for tracking, monitoring, automating, andanalysing operations. These technologies are ideally closely linked to each other to create an innovative production
chain. Due to the high grade of innovation and frequently introduced new solutions, the definition is subject to change.
Currently the smart farming market in Japan is categorised in the following six segments:5
1. Precision Farmingo GPS Guidance Systems (esp. for tractors)
o Automatic Steering (does not include unmanned vehicles)o Vehicle Robot Systems (incl. unmanned systems)
2. Agricultural Robot Systemso Agricultural Robots (e.g., facility robots such as grafting robots)o Manipulator Robots (e.g., harvesting robots)o Assisting Robots (e.g., Powered suits or exoskeletons)
3. Drone Solutions (does not include the drone as hardware)o Agrichemical Sprayingo Monitoring Service
4. Cultivation support solutions
o Cloud Services for Farming (Farm work management via internet)o Complex Environmental Control Devices (e.g., control of heat, light, ventilation, humidity etc.)
o Production Support for Dairy Farming and Animal Husbandry
5. Management Support Solutionso Accounting Software for Farmingo Accounting Support for Agricultural Corporationso Management Support System (e.g., using climate data)
6. Sales Support Solutionso ICT to connect actors and optimize sales process (connect producers with JA and food businesses toreduce effort in optimal sales of products)
o Sales support service (e.g., using climate data)b. Market Size
Japan is an important sales market for agricultural machinery. In 2019, agricultural machinery worth over 630 million
EUR was imported, of which almost 60% came from Europe. Added to this is the strong sales of locally produced
agricultural machinery. Last year the market for agricultural machinery had a total sales value of 2.9 billion EUR.6
The market of the three largest product categories of agricultural engineering in Japan including tractors, combine
harvesters and rice-setting machines are dominated by the big four manufactures, Kubota, Yanmar, Iseki and
Mitsubishi Mahindra, with a total market share of 97%. 7 Those four hold a market share of 81% of the overall
5

Yano Research Institute Ltd. (2019): “Smart Agriculture Market in Japan: Key Findings 2019”.
Bundesministerium für Ernährung und Landwirtschaft (2020): „Der Markt für Landtechnik in Japan“.
7 農林水産省(平成28年): 米の生産コストに係る日韓比較. Based on the number of sold entities in 2015. Market segments are
as follows: Kubota 46%, Yanmar 25%, Iseki 21%, Mitsubishi Mahindra 5%.
6

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agricultural machinery market, while the remaining 19% are covered by other companies in the market, including
foreign manufactures.
The usage of smart farming technologies and services in Japan’s agricultural sector is increasing. The Yano Research
institute estimates the size of smart agriculture technologies to be 18,110 Million JPY in 2020 with a rising tendency
to reach 24,164 Million JPY by 2021. The overall market value forecast for 2025 is projected to reach 44,200 Million
JPY. Until 2017, the market growth was very much focused on cultivation support solutions including cloud services,complex environmental control systems, and the livestock management solutions for dairy farming. Since 2018, sales
support solutions, which are for example connected with weather forecast and analysis of buying behaviour ofconsumers is expected to grow gradually.
This forecast includes precision farming, agricultural robot systems as well as cultivation, sales, and operational
support solutions but it does not include POS systems, farm machines or drones for agriculture, so the actual number
under a comprehensive market definition is likely significantly higher.8

Figure 1: Size Transition and Forecast on Smart Agriculture Market in Japan 9
Agricultural robots (tractors, rice transplanters and combine harvesters) are already well-established in the agricultural
sector and indispensable for rice and wheat cultivation. The statistic in Figure 1 categorizes vehicle robot system as
precise farming. This seems to be one of the reasons why agricultural robots in this figure does not grow rapidly.
Market analysis of Industry Robots released by NEDO in 2010, however, estimated that the agricultural robot market
will be 466.3 billion JPY in 2035, almost ten times as large as the market size of 2015, so the long-term outlook might
be more positive than this research suggests.10
The expansion of precision farming is triggered by the full-scale launch of the agricultural data collaboration platform(WAGRI) and the four-satellite Quasi-Zenith Satellite System, which enables high-precision GPS to manage farmland
8

Yano Research Institute Ltd. (2019): “Smart Agriculture Market in Japan: Key Findings 2019”.
Graph and survey by Yano Research Institute Ltd. (2019): “Smart Agriculture Market in Japan: Key Findings 2019”.
10
NEDO (2010): “Future market forecast for the robotic industry”.
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more systematically. Having met the market saturation, the technological market trend is turning towards the
agricultural drone market, which is expected to expand significantly from 2019.11
The research of Nomura Agri Planning and Advisory (NAPA) underlines that usage and market size of drones is going
to increase significantly as an innovative farming solution due to political deregulation and facilitation of agriculturaldrone usage. In 2019 the market size of drone products was 31 billion JPY, including the total shipment frommanufacturers, agencies, and various service entities for farmers (services such as agricultural work agencies andgrowth diagnosis). The market will reach 58.3 billion JPY in 2020 and is estimated to increase to 107.3 billion JPY in
2025.12The introduction of drones for faming has been increasing because of its low price compared to previous radiocontrolled helicopters.13 Political support will be also an important factor for promoting drone utilization in Japan.
METI released a “Roadmap for Industry Revolution in the Sky” and set the goals from 4 levels for utilization of drones.14
MAFF also has a target to enlarge pest control by drone to 1 Million ha until 2022.15
Japan introduced a standardized communication protocol for agricultural machinery “WAGRI” in 2019 which is alreadyin full-scale operation. Together with the “Quasi-Zenith Satellite System” QZSS this is the basis for further expansionof drones and precision farming as well as unmanned solutions and those markets are expected to carry the growthof smart farming. Positioning information can be combined with other data such as satellite images, weather
information, geographical and geological data.16

c. Political Measures
Political targets play a major role in the public acceptance of new developments and trends in Japan. There are quite
a few strategies and measures which work very much in favour for the development of smart agriculture.
Since the early 2000s Japan is trying to improve its food self-sufficiency rate as a major policy goal. The Democratic
Party of Japan in 2010 set a goal of 50% self-sufficiency (based on caloric value) until 2030, which was revised by the
Liberal Party to 45% in 2015 as the previous goal was deemed unattainable.17 In 2018 this goal seemed to be as far
away as never before, with the self-sufficiency rate hitting a record-low 37%.18 Japan’s struggles have many reasons.
According to the World Bank only 12.3% (2016) of the land area in Japan is agricultural land19 and the number is everdecreasing. Many areas are hard to reach due to difficult geographical circumstances and Almost 98,000 ha offarmland is currently unused and sitting idle (with Fukushima and Chiba Prefectures having the largest share in it) andthe trend is likely to continue.20 The number of farming population halved from 4.1 million in 1995 to only 1.7 million

11

Yano Research Institute Ltd. (2019): “Smart Agriculture Market in Japan: Key Findings 2019”.
Nomura Agri Planning & Advisory: “Chapter 1 The age of smart farming”.
13
Fuji Keizai Group (2019): “A survey of the growing market for "smart agriculture"”.
14
METI (2016): “Roadmap for the Application and technology Development of UVAs in Japan”.
15
日本経済新聞 (2019): 農水省、農地の半分でドローン活用 22 年度の目標設定
16
Yano Research Institute Ltd. (2019): “Smart Agriculture Market in Japan: Key Findings 2019”.
17
MAFF (2020): “FY2019 Summary of the Annual Report on Food, Agriculture and Rural Areas in Japan”.
18
Yamashita K (2019): “What’s behind the food self-sufficiency `crisis`“.
19
The World Bank: “Arable land (% of land area) – Japan”.
20
Japan Property Central (2019): „Japan has 98,000 hectares of unused farmland“.
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in 2018.The average age of farmers in Japan is 67 years with farmers under 40 only comprising around 4%21 , so labour
shortage is a major problem. A shortage of up to 200.000 farmers by 2040 is prognosed.22
The number of core persons engaged mainly in farming (“business farmers”) decreased in 2019 by 3.2% from theprevious year to 1.404 million. The number of farms decreased by 2.6% from the previous year to 1.189 million farms.
While the number of farms decreased, the number of corporation farms increased by 3.1% from the previous year to
23,000 due to their easier employment and business continuation.23
Japan is determined to tackle the negative trend, and as they have done so often in the past, new technologies are toplay a major part in this strategy. This is displayed for example by the Strategic Innovation Program of the Cabinet
Office, declaring for the field of Agriculture in 2016 to “…make it into a growth field using Big Data, IoT and AI”.24
Agricultural policy reforms are being pushed forward, but critics say they fall short. In particular, the extraordinary
market power of the national association of agricultural cooperatives (JA) stands in the way of improving Japan's
sometimes less productive agriculture.
A decisive driver in the overall use of new technologies is the concept of Society 5.0 as a comprehensive framework
put in place by the government, with the goal to utilize potential of Big Data, Deep Learning, AI, IoT and ICT for all
sectors of economy, including agriculture. This ever-present framework is well-known in all levels of the Japanesesociety. It serves as a vision for the future and greatly enhances the approval of new technologies in all parts of theeconomy, even in rather traditional sectors such as agriculture.
The Japanese agricultural policy is characterized by many interlocking and complementary measures, some of which
are decoupled from production with a high level of protection and support for farmers. The share of measuresdesigned as price interventions and production-related payments has decreased over the last 20 years, but theProducer Support Estimate (PSE) was 41% of the share of gross farm receipt and the Total Support Estimate (TSE) was
0.9% of the GDP from 2017-2019, most of which went as direct support to producers (PSE). This is almost 2.4 times
the OECD average and underlines the current lack of competitiveness of Japanese agriculture. 25
When Abe took over the government at the end of 2012, he planned structural reforms in this sector as one part of
the “Abenomics”26. The strategic aim is to revitalize rural areas economically, to contain the population decline there
and to improve the competitiveness of the agricultural sector by utilizing latest technological solutions.
MAFF’s roadmap envisions a step-by-step implementation of smart agriculture technologies by 2025.

21

Satake A (2020): “Number of Women Farmers in Japan Continues to Decline”, United States Department of Agriculture;
Foreign Agricultural Service”.
22
Swiss Business Hub Japan (2018): “Japanese Agritech Market Overview”.
23
MAFF (2020b): “FY2019 Summary of the Annual Report on Food, Agriculture and Rural Areas in Japan”.
24
Strategic Innovation Program: “Technologies for Creating Next-generation Agriculture, Forestry and Fisheries”.
25
OECD (2020): “Agricultural Policy Monitoring and Evaluation 2020, Japan”.
26
Invest Japan (2017): “Abenomics”.
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Figure 2: Smart Agriculture Business Expansion Roadmap 27••

The Basic Plan for Food, Agriculture and Rural Areas by the responsible Japanese ministry MAFF, together
with the government, sets a comprehensive agricultural policy direction for 10 years (last revision March
2020). In response to the above-mentioned challenges such as the decrease of farming population and theimplementation of new large-scale trade agreements, the plan aims to strengthen the agricultural
production base regardless of farm size or its hilly and mountainous condition.
Emphasis is also placed on sustaining rural areas by accelerating smart agriculture and promoting the digitaltransformation. Finally, the Basic Plan addresses responses related to the COVID-19 providing farmers withfinancial help.28
The Cross-ministerial Strategic Innovation Promotion Program (SIP) is a national program led by the Council
for Science, Technology and Innovation (CSTI), which is under the supervision of the Cabinet Office. As part of
the Society 5.0 framework, the program targets different key economic and social issues and aims to bring
together various key players from their respective subject to achieve interdisciplinary cooperation beyond
traditional disciplinary boundaries.
o

In the first phase from 2014-2018, 12 subjects have been chosen as critical, one of which was led by
MAFF “Making Agriculture, Forestry and Fishery into a growth field using Big Data, IoT and AI”, putting
forward smart farming as the key for the future agricultural strategy in Japan. The program was led by
Noboru Noguchi, Professor for Vehicle Robotics from the Agriculture Dept. of the University of
Hokkaido.29
Projects include e.g. crop growth information collection or self-operating agricultural robot systems.
Through the gain of significant data, Software is used (i.e., AI, deep learning) to produce an optimal

Based on [マイナビ農業 (2020): 2025 年の市場規模は 3885 億円へ], adapted from the Ministry of Agriculture, Forestry and
Fisheries' Program for the Promotion of Field Implementation of New Agricultural Technologies.
28
MAFF (2020b): “FY2019 Summary of the Annual Report on Food, Agriculture and Rural Areas in Japan”.
29
Japan Science and Technology Agency (2018): “What SIP (Cross-ministerial Strategic Innovation Promotion Program) is”.
27

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farming plan, control environmental conditions in greenhouses, make sales plans or facilitate newresearch.
o

In the second phase from 2018-2022, several topics touched on issues of smart farming, for example“Automated Driving as Universal Service”, led by Toyota Corp., which touches on the issue of
unmanned vehicles 30 as well as “Technologies for smart bio-industry and agriculture”, led by Kirin
Holdings which deals with topics such as sales solutions in agriculture or data platforms.31•

On-Farm Demonstration Trials of Smart Agriculture - The projects funded by the SIP include both dataacquisition systems/ data analysis as well as agricultural robot solutions. Since FY 2019, the National
Agriculture and Food Research Organization (NARO) supports and monitors 124 smart agriculture
demonstration projects across Japan, featuring the usage of the latest state of the art smart farming
technology and solutions on a practical basis 32. A total of six application areas for smart agriculture solutions
are worked on in these projects: paddy rice production, field and greenhouse cultivation, fruits, tea andlivestock.33 The total budget of projects supported by NARO for FY 2019 was 7.15 billion JPY 34.

•

The deregulation of agricultural drones promoted by MAFF, for example by relaxing the Civil Aeronautics Act
and Agricultural Chemical Regulation Law 35, has led to a rapid increase in 2019 and will likely continue to grow.
MAFF intends to use drones to spray over 1 million ha of farmland by 2022. Fertilizing and seeding by drones
is the next step and expected to increase rapidly from 2020. This includes remote sensing technology fordrones.36

d. Further Market Drivers & Trends
The Japanese agricultural sector faces many challenges, some of which already mentioned above, which have aneffect on market trends:
•
•
•
•
•
•

Aging farmer population and lack of ICT literacy.
general socio-economic trends such as population decline and an aging society.
Negative reputation of farming (especially among young people) as tedious and hard work, in combination
with relatively low income, makes it difficult to win the younger generation to engage in agriculture. 37
Reluctance to accept new technologies in a traditional sector, especially in older generations.
High investment costs for new machinery and solutions are especially problematic for smaller farms.
Rural-urban migration trend towards the big metropolitan areas makes attraction and retaining of skilledworkers difficult. 38 39

30

Cabinet Office (2019a): “Automated Driving for Universal Services”.
Cabinet Office (2019b): “Technologies for smart bio-industry and agriculture”.
32
農林水産技術会議 (2020):「スマート農業実証プロジェクト」について.
33
Nagasaki Y (2019): “Realization of Society 5.0 by Utilizing Precision Agriculture into Smart Agriculture in Naro, Japan”
34
農研機構 (2020): スマート農業の実証プロジェクト.
35
MAFF (2020a): “Information on aerial spraying of agricultural chemicals by unmanned aircraft”.
36
Yano Research Institute Ltd. (2018): “Smart Agriculture Market in Japan: Key Findings 2018”.
37
Trade and Agriculture Directorate Committee for Agriculture (2018): “Innovation, Agricultural Productivity and Sustainability
in Japan”.
38
Statistic Bureau, Ministry of Internal Affairs and Communications: “Statistical Handbook of Japan 2019”.
39
LBBW Landesbank Baden-Württemberg – Research (2015): „Urbanisierung - Demographische Entwicklungen und
Auswirkungen im globalen Vergleich“.
31

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•

•
•
•
•

Japan’s rather unique topographical conditions (two thirds of the nation’s surface is mountainous, many
areas are hard to reach) and small, fragmented farmland (more than 80% of all farmers cultivate 2 ha or less40
) are a challenge for machinery and equipment.
Fragile income security due to frequent extreme weather events and natural disaster as well as low level ofincome compared to other sectors.
Weakened production infrastructure due to increase in abandoned cultivated land.
Lobbyism and strong influence of JA Group (Japan Agricultural Cooperatives, see chapter 4b) also regarding
smart agriculture machinery and solutions is often an obstacle to improve productivity in agriculture.41
Strong protection of domestic agriculture by government to ensure competitiveness of products. New tradedeals threaten competitiveness. 42

In addition to political strategies and measures described in chapter 3c, some further drivers have an effect on thedevelopment of the smart farming market:
•
•

•
•
•

Political goal of cost reduction and export of Japanese products, especially in high-quality markets for
products such as rice, fruits or sake.43
Consolidation of agricultural land driven by the state: semi-public “Farmland Banks” were established on
prefectural level to ease the allocation of farmland to full-time “business farmers”, which leads to morelarge-scale farming.44
Requirement to label production location of raw materials will lead to increased use of ICT solutions toprovide a gapless information and increase trust of consumers.45
Call for better working conditions and enhanced work safety due to comparably high incident-rates inagricultural sector; will lead to increased use of support systems for difficult or heavy-duty work.
Resource optimisation promotion of land, water, chemicals (fertilizer, pesticides, herbicides) by MAFF to
reduce resource input, minimize impact on natural resources and ensure eco-friendly products. 46

The political measures and other business initiatives have already triggered some trends in the market:•••

Growing share of “business farmers” due to land reform efforts by the MAFF (see above).
Rise in joint procurement strategies (often navigated by JA) for goods with high investment costs, e.g.,
tractors or smart agricultural machinery.
Increased use of drones and unmanned solutions due to the advanced infrastructure, which includes:o National data platform WAGRI, as already commercialized standard for communication andinformation exchange in agricultural sector 47
o QZSS system for geo-data and GPS, enabling very precise control of autonomous units. 48

40

Swiss Business Hub Japan (2018): “Japanese Agritech market Overview”.
Yamashita K (2015): “A First Step Toward Reform of Japan’s Agricultural Cooperative System”.
42
Yamashita, K (2019): “What's behind the food self-sufficiency 'crisis'?”.
43
JA Zen-Noh (2019): „ZEN-NOH Report 2019“.
44Bundesministerium für Ernährung und Landwirtschaft (2020): „Der Markt für Landtechnik in Japan“.
45
JETRO (2017): “Market Report: Smart agriculture”.
46
MAFF (2020): “FY2019 Summary of the Annual Report on Food, Agriculture and Rural Areas in Japan”.
47
Shinjyo A, Wada M, et al. (2019): “Agricultural Data Collaboration Platform: WAGRI-System Structure and Operation”.
48
Cabinet Office, QZSS: “Highly precise positioning achieves more efficient work”.
41

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www.EUbusinessinJapan.euoAdvanced legislation on the use of self-driving vehicles in Japan in the Road Traffic Act, which allow
Level 3 automated vehicles (no need for a driver to monitor the vehicle) to be used on public roads.
49

•
•

•

•
•
•

Shift to product-specific strategies in the agricultural production, depending on rate of self-sufficiency.
For example, increased focus on products with high import-dependency such as vegetables and meat.
Increase in female farmers due to government-lead programs to tackle labour shortage 50 as well as increasein foreign workforce due to the newly established Immigration Act to tackle skilled worker shortage in
specific sectors.
Using ICT and platforms to share knowledge and educate workers in the use of smart agriculture technology
while at the same time maintain a simple-to-handle approach, so access to smart solutions can reach abroader number of farmers and motivate also younger people to engage in farming.51
Trend towards sustainable food production; food safety and origin are increasingly important for consumers,
which also supports domestic production. 52
Change of Japanese consumers dietary preferences, especially “westernization” of Japanese food, reduced
rice and increased milk products and meat consumption. 53
Increased cross-sector collaborations and engagement of companies in agricultural sector that have so far
been alien to the subject, for example TEPCO’s launch of vertical salad farm.54

4. Key Players
a. Ministries
Due to the overarching nature of smart agriculture, many ministries are relevant to different aspects.
•

Ministry of Agriculture, Forestry and Fisheries (MAFF)

MAFF is the cabinet level ministry in charge of agriculture, forestry, and fishing industries and mainly responsible
for legislation in the agricultural sector. Since September 2020 Hideki Miyauchi is the cabinet minister. The
primary function of the ministry is to set quality standards for food products, supervise the agri-product market
and food-sales, as well as promotion of activities to enhance the productivity in these sectors.
https://www.maff.go.jp/e/index.html•

Ministry of Economy, Trade and Industry (METI)

The ministry of Economy, Trade and Industry has jurisdiction over a broad policy area including Japan’s industrial
and trade policies. They are relevant for smart farming e.g., due to the Japanese Industrial Standards Committee(JISC), who issues the Japan Industrial Standard (JIS).
https://www.meti.go.jp/english/index.html

49

HSF (2019): “Japan allows Level 3 automated vehicles on public roads”.
MAFF (2020b): “FY2019 Summary of the Annual Report on Food, Agriculture and Rural Areas in Japan”.
51
JETRO (2017): “Market Report: Smart agriculture”.
52
MAFF (2018): “FY2017 Summary of the Annual Report on Food, Agriculture and Rural Areas in Japan”.
53
Government of Canada (2020): “Sector Trends Analysis – Meat trends in Japan”.
54
Agrigate Global (2020): “TEPCO launches huge vertical farm reliant on artificial light in Japan”.
50

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Ministry of Land, Infrastructure, Transport and Tourism (MLIT)

The Ministry of Land, Infrastructure, Transport and Tourism is responsible for national land planning,
infrastructure building and maintenance, national land surveying, transportation, tourism policy, meteorologicalservices, and disaster countermeasures. It is, among others, responsible for the expansion of the law on theusage of autonomous vehicle (2019) and drones (2020).
https://www.mlit.go.jp/en/index.html•

Ministry of Internal Affairs and Communications (MIC)

The Ministry of Internal Affairs and Communication is a cabinet-level ministry, which supervises the Japaneseadministrative system, manages local governments, elections, telecommunication, post, and governmental
statistics. Many underlying infrastructure issues, such as 5G are in the hands of the MIC.
https://www.soumu.go.jp/english/b. Associations•

Japan Agricultural Cooperatives (JA)The Nogyo Kyodo Kumiai, also known as JA Group, is an association conducting various activities, which include
the collective purchase of materials necessary for agricultural production, marketing of agricultural products,
supply of daily necessities, distribution of agricultural news, financial and insurance services. Having originally been
initiated by the Japanese government in 1954,55 it is now basically a farm lobby organization with widespreadprivileges and a quasi-monopoly on both ends of the supply chain, giving it extraordinary influence in the
agricultural sector in Japan.
The market power of JA Group might also have an influence on spreading smart farming technologies. In its
strategy for the next 5-10 years, new technologies to improve productivity and the implementation of ICT play amajor role. As explained in Chapter 5, Zen-Noh, the marketing and purchasing association of the JA Group, is amajor distribution channel for agricultural machinery in Japan, which can facilitate the implementation of smart
agriculture. Zen-Noh already introduced a cloud farming management system named “Z-GIS” in 2018, whichallows to enter information such as varieties, production history, and farm work for each field on an electronic
map.56 Zen-Noh also co-operates with foreign companies in this field: they started a cooperation with BASF Digital
Farming GmbH in 2020 for introducing the AI cultivation control system „xarvio® FIELD MANAGER” in Japan. The
system will also use Z-GIS as a basis.57
However, the supremacy of the JA might be dwindling in future. The Japanese government under the former Prime
Minister Abe started to reduce the influence of the JA Group, as its power as a non-government organization israther extraordinary. So, the status and power of the JA, while currently still being strong, might change in the
future.

55

Godo Y (2014): “The Japanese Agricultural Cooperative System: An Outline”.
全農業 (2020): スマート産業
57
全農業 (2020): スマート農業を実現する栽培管理支援システム「ｘａｒｖｉｏ®
（ザルビオ フィールドマネージャー）」来春にリリース予定
56

ＦＩＥＬＤ

ＭＡＮＡＧＥＲ

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As of 2015, there is a total of 10.37 million members.58 The JA Group consists of 652 regional, primary-level
Agricultural Cooperative Associations, entities on a prefectural-level (JA federations and Chuokai [Prefectural
Central Union of Agricultural Cooperatives]), and the national level JA federation. The national level includes e.g.:-

JA Zen-Noh, based in Tokyo, is the marketing and purchasing association of the JA Group with sales of 4.8
trillion JPY (2018). It is responsible for wholesale business in food products and production inputs acrossmunicipal and prefectural borders.

-

JA Zenchu as the national headquarter that controls the entire group and manages government relations.

Figure 3: Structure of JA Group 59•

JAMMA (Japan Agricultural Machinery Manufacturers Association)

JAMMA (founded in 1939) is a nationwide association of 63 domestic agricultural machinery makers including
Kubota, Yanmar, Iseki, or Mitsubishi Mahindra. Through the cooperation of its member companies, JAMMA works
on a wide range of tasks in such fields as technical development, safety countermeasure and export promotion
with the goal of furthering the sound growth of the agricultural machinery industry, including smart agriculture
application.
More information: http://www.jfmma.or.jp

58
59

Zen-Noh: “The JA Group”.
Zen-Noh: “The JA Group”.
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JAISA (Japan Agriculture Information System Association)

Established in 2014 with approx. 60 members (35 companies), JAISA is a private industry initiative not tied to any
government entity. It offers services to agricultural businesses including part-time farmers and small-scale farmers.
Joined activities of companies and individuals include the dissemination of innovative agricultural technology.
Support to farmers for the introduction of Agri-tech is offered.
More information: https://jaisa.org/ (Japanese only)•

SMARTAGRI Consortium

SMARTAGRI was established in July 2017 and has currently 104 members. It aims to enhance industry-academia
and government cooperation to further advance and distribute farming technologies by utilizing ICT with UECS
(Ubiquitous Environment Control System).
More information: http://smartagri.uecs.jp/ (Japanese only)•

Japan Agrobot Association

The association comprises 10 members from leading agricultural machinery manufacturers and academic
institutions. The aim is the promotion of industry-academia and government interchange in the agricultural
production technologies, especially in the robotic sector. It also engages in compiling recommendations
concerning safety of robots for agriculture and standard specifications.
More information: http://www.agrobot.jp/english.html

c. Companies
Japan is one of the largest machine manufacturers in the world. Together with China and Germany they make the top
3 producers in 2018.60 The country has traditionally been a reliable producer of electronics and various high-end
machines for the world market and holds its top position in 2020. The agricultural machinery market is no exception.
World-famous manufacturers of agricultural machinery such as Kubota, Yanmar, Iseki and Mitsubishi are particularly
widespread in the Asia-Pacific market and dominate the market in Japan. The following sections lists up the dominating
domestic agricultural machinery manufacturers, suppliers for agriculture-related technology, some foreign players aswell as companies in the ICT sector and start-ups which increasingly engage in the smart farming market.

60 Statista (2019): “Machine tool producers’ market share in 2018, by country”

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i. Agricultural machinery manufacturers
Name

Kubota Corp.

HQ

2-47, Shikitsu-higashi 1-chome, Naniwa-ku, Osaka 556-8601

Websitehttps://www.kubota.com/innovation/smartagri/index.html

Products

Tractors, combine harvesters, rice setting machines, tillers,
harvesting machines, various other agricultural machines

Information Japan's largest producer of agricultural equipment with 41,000
employees and sales around 1.9 trillion JPY/year.
Comprehensive solution provider of agriculture machinery andsolutions with a focus on smart agriculture
Despite the wide range of agricultural technology, foreign products
are also sold in Japan through the Kubota Corporation.
Name

Yanmar Agribusiness Co., Ltd.

HQ

Umeda Gate Tower, 1-9, Tsuruno-cho, Kita-ku, Osaka

Websitehttps://www.yanmar.com/global/agri/

Products

Tractors, mowers, tillers, harvesters, various other agricultural
machines.
Smart agriculture solutions such as auto tractor, drones, unmanned
helicopters, cloud based IoT service, remote sensing, etc.

Information With a sales volume of 797 billion JPY (2019), Yanmar is one of thelargest agricultural technology manufacturers in Japan.
The company has more than 20,000 employees and sells its own
agricultural technology in a wide range of products and machinery.
Yanmar also imports and sells foreign products.
Name

Iseki Co., Ltd.

HQ

700 Umaki-cho, Matsuyama-shi, Ehime-ken, 799-2692

Websitehttps://www.iseki.co.jp/

Products

Tractors, combine harvesters, various other agricultural machines

Information ISEKI’s total net sales topped 160 billion JPY (2019) with around
5,650 employees.

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As a "full-line" manufacturer, the company sells various types ofagricultural machinery, from tractors to combine harvesters.
Technology that is not manufactured in-house is however imported
from abroad and distributed in Japan through its own sale channels.
Name

Mitsubishi Mahindra Agricultural Machinery Co., Ltd.

HQ

667-1 Iya, Higashi Izumo-cho, Matsue City, Shimane, 699-0101

Websitehttps://www.mam.co.jp/english/

Products

Agricultural machinery and agricultural facilities such as forhorticulture, mushrooms or stockbreeding.

Information The company has around 1,500 employees and engage intodeveloping, selling, installing, and repairing of agricultural
machinery and facilities. Capital amounts to 4,5 billion JPY, whilesales (consolidated) reached 44,8 billion JPY in 2017.
A synergistic effect is expected based on respective strengths ofJapanese and Indian sides. Mitsubishi Mahindra Agricultural
Machinery Co., Ltd. is engaged in R&D on new agricultural
machinery and facilities by using biotechnology, computer control
and robot technology etc.
Mitsubishi Mahindra is also involved in construction andengineering projects of greenhouses and other such facilities.

ii. Suppliers of agriculture-related products
Name

Nileworks Inc.

HQ

1-7 Nishihara 3-Chome, Shibuya-ku, Tokyo

Websitehttps://www.nileworks.co.jp

Products

Drones, field support such as precision farming for spraying

Information Private placement of new shares has given Nileworks a total fundingof 2.4 billion JPY.
Founded in 2015, the company focusses on the development ofagricultural use drones and cloud services for growth diagnosis andcultivation management. Investors are companies such as Sumitomo
Chemicals or Kumiai Chemical
Name

Nikkari Co., Ltd.

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HQ465-1, Saidaiji Kawaguchi, Higashi-ku Okayama-shi, Okayama,704-8125

Websitehttps://www.nikkari.co.jp/english/

Products

Farming supporting gear, Power Assist Suits

Information Established in 1959 Nikkari is engaged into manufacturing and saleof agricultural and forestry civil engineering machinery.
Name

INNOPHYS Co., Ltd.

HQ

6th Floor, GRAN FIRST Kanda-Kon'yacho, Kanda-Kon'yacho 15
banchi, Chiyoda-ku Tokyo

Websitehttps://innophys.jp/en/

Products

Farming supporting gear, Power Assist Suits

Information Established in 2013, the company develops body supporting gearwith compressor technology.
INNOPHYS CO., Ltd. is currently in the process of developing afurther improved product under the Project Nagasaki Smart
Agriculture Demonstration Project.
Name

Futureagri Inc.

HQ

Okubonaka 5-chome, Kumatori-cho, Sennan-gun, Osaka, 1102-42

Websitehttps://www.futureagri.co.jp/ (Japanese only)

Products

Farming supporting gear, robot solutions

Information Founded in 2013 the portfolio includes mobile robot, robots for
tomato farming (pollination robot, tomato harvesting robot), robot
for harvesting fragile vegetables and farm field management robot.
Enhancing collaborative work between man and robot.
Name

INAHO Inc.

HQ

1-15-2, Komachi, Kamakura-shi, Kanagawa 248-0006

Websitehttps://en.inaho.co

Products

Autonomous vegetable harvesting robots

Information Start-up that develops autonomous vegetable harvesting robots,e.g., for tomatoes or asparagus, by using AI and robotic technologies

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iii. ICT-related companies
A recent trend is the engagement of companies that have been alien to agriculture so far. Due to the usage of ICT inagriculture new business opportunities open for a lot of companies, some of which are listed below.
The telecommunication company headquartered in Tokyo aims to build up a new
NTT Group food and agriculture chain by bringing together NTT group companies,
NTT research institutes and business partners.
Within the NTT Group, some examples are below
More Information: https://www.ntt.co.jp/activity/en/creation/agriculture/
Name

NTT AgriTechnology

HQ1970 Nishi-hanawa, Chuo, Yamanashi 409-3843

Websitehttps://www.ntt-agritechnology.com/en/

Information The company engages into next-generation greenhouse farming
solutions, e.g., high-tech greenhouse construction, digital farming
system development for optimization of sales marketing, operationor analysing growth data.
Name

NTT Data Corp.

HQ

Toyosu Center Building, 3-3, Toyosu 3-chome, Koto-ku, Tokyo 1356033

Websitehttps://www.nttdata.com/jp/ja/industries/agriculture/

Information Information processing to digitalize agricultural value chains.
Together with NTT Group it offers the agriculture-support platform“Aisaku”.
Name

Fujitsu Limited

HQ

4-1-1 Kamikodanaka, Nakahara-ku, Kawasaki, Kanagawa 211-8588

Websitehttps://www.fujitsu.com/global/themes/internet-ofthings/hyperconnected-business/agriculture/index.html
Information The company offers connection solutions for efficient and improved
operations.
The food and agriculture cloud Akisai provide services to connect
distribution, region and consumers with the production site basedon the use of ICT. It is a cloud-based service that covers open field
cultivation, greenhouse farming, animal husbandry and supports
corporate agriculture management from production to
management and sales.

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Name

Daiwa Computer Corp.

HQ

36-18, Wakamatsu-cho, Takatsuki-shi, Osaka

Websitehttps://www.daiwa-computer.co.jp/en/

Information The company mainly focuses on the cultivation of melon andtomato based on hydroponic cultivation method.
Daiwa Computer established i-Nogyo to connect agriculture with IT
over its cloud network “EPICS”, monitoring the entire value anddistribution chain.

iv. Start-ups
There are several interesting start-ups engaging in smart agriculture related services/ products in Japan. Some
prominent examples are:Name

ZeRoAgriHQ1-chōme-1-1, Manpukuji, Asao Ward, Kawasaki, Kanagawa, 2150004

Websitehttps://www.zero-agri.jp/

Information One of the most famous start-ups in Japan’s smart farming sector.
Offers AI based on-point irrigation and fertilizer system software,
which calculates data about the plant’s condition from sensors inthe soil.
Name

Polar Star Space Co., Ltd

HQ〒001-0022 北海道札幌市北区北 22 条西 2 丁目 2-11

Websitehttp://polarstarspace.com/

Products

High-precision spectrum analysis data solution service

Information Start-up specializing in smartphone spectroscope and dronemounted multi-spectral camera and construct a highly accurate
bidirectional reflectance distribution function (BRDF) spectral
library for various crops. Information used for the discovery oflesions, optimization of fertilization and pesticide use.
Planned is high-precision remote sensing in a wide area in whichmicro satellites for harvest prediction, natural disaster prediction
and resource mapping.

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Name

Farmnote Holdings Inc.

HQ

1-3-14 Koenhigashimachi, Obihiro-shi, Hokkaido, 080-0847

Websitehttps://farmnote.jp/en/

Products

Cloud based herd management system,
cloud and AI based heat detection system

Information Start-up founded in 2013, that has developed a digital platform for
maintaining data related to livestock farms. Platform also features
the option for the user to search for ideal practices based on thespecific cattle breed.

d. Foreign Players
There are several prominent overseas companies engaging in smart agriculture related services/ products entering
the Japanese market:
NameJohn & Deere (USA)

Websitehttps://www.deere.com/en/agriculture/

Information

Data Management, Remote Management, Guidance(autonomous driving tractors), variable rate applications
producing displays and receiver “Precision AG Technology” forfield preparation, plant, application and harvest.

Distributor inJapane.g. Yanmar Corp.

Name

Agco Corporation (USA)

Websitehttps://www.agcocorp.com/

Information/
Product

Manufactures and distributes agricultural equipment worldwide.
The Company sells a wide range of agricultural equipment andrelated replacement parts, including tractors, combines, hay
tools, sprayers, and forage equipment.
Prominent manufacturer under the Agco Corporation isagricultural tractor and machinery company FENDT.

Distributor inJapan

MSK Farm Machinery Corp.

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Name

NEW HOLLAND (USA)

Websitehttps://agriculture.newholland.com/apac/en

Information

New Holland Tractor Ltd. NV designs and retails agricultural
machinery. The Company offers a range of tractors, combines,
hay balers, shedder loaders, telescopic lifters, utility vehicles,
spare parts, and accessories.

Distributor inJapan

New Holland HFT Japan Inc.: www.nh-hft.co.jp

Name

CLAAS (Germany)

Websitehttps://www.claas-group.com/

Information

Agricultural engineering equipment with tractors, agriculturalbalers and green harvesting machinery. European market leader
in combine harvesters and world leader in self-propelled forage
harvesters. CLAAS is also a top performer in world-wide
agricultural engineering. The CLAAS product portfolio also
includes state-of-the-art farming information technology

Distributor

MSK Farm Machinery Corp.,
Lemken Marketing of Japane. Customers
End users or customers for smart farming machinery and solutions in Japan are:

61
62

•

Farmers: In 2018, 1.22 million unit engaged in agricultural business on an economically active basis. They are
divided into two different sections in Japan:
o 35,500 "Organized Management Entities", of which 25.500 are registered companies
o 1.19 million units registered as family businesses ("Family Management Entities"), implying personallymanaged farm households or individual households. Of those, 1.16 million are commercially active
but only 252.000 are full-time while the rest are only part-time or on a spare-time basis61•

Community-based farm cooperatives, as already mentioned in chapter 4b, are made up of cooperating farmhouseholds that build up their relationship through the basis of a shared local community or other geographic
reasons. The aim is to enhance the agricultural production. This form of cooperation takes on a large range offorms from sharing parts of agricultural equipment/machinery to closed farm management as a company.
Thus, the fixed costs can be reduced for the individual farmer through sharing models.62 In 2018 there werearound 15,100 such agricultural cooperatives registered in Japan and they are a frequent and growing businessmodel. Those cooperatives are usually linked and supported by JA and their local offices, who for example also

MAFF (2020): “The 93rd statistical yearbook of Ministry of Agriculture, Forestry and Fisheries”.
Bundesministerium für Ernährung und Landwirtschaft (2020): „Der Markt für Landtechnik in Japan“.
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organize agricultural machines and smart farming solution sales or renting, which makes JA a powerfulbottleneck to reach the end consumer.63•

Machine Rings, also known as “machinery banks”, are rather poorly developed in practice in Japan. But
especially for the mostly still very small-scale agriculture in Japan, renting instead of owning agricultural
vehicles and equipment is a solution to reducing production costs. There are some isolated machine rings oncity or island level (such as in Nankoku City in Shikoku or Iki island). Manufacturer sales offices, agricultural
engineering dealers and agricultural cooperatives also offer equipment for rent. 64 JA Mitsui Leasing Ltd. forexample is selling agricultural machinery on a leasing basis and offering used vehicles and has now set up the
new “Noki Share Lease”65 program, which enables several agricultural producers to share access to agricultural
machinery.

•

Agricultural Contractors and agricultural outsourcing have not been frequently used yet. The most popular
way of outsourcing is contracts with recruitment agencies for workers in farmlands. These companies usually
do not deal with renting agricultural machineries or provide ICT systems. However, if smart farming will be
widely adopted, outsourcing business for farmers will be also more divers and this kind of service is expected
to grow in this context.

f. Research Institutions
National Institutions•

National Agriculture and Food Research Organization (NARO)
Website: http://www.naro.affrc.go.jp/english/index.html
o National Institute associated with the MAFF, with HQ in Tsukuba; Around 3,400 employees of which
1,800 are researchers in 19 different research centres; NARO coordinates the smart farming pilot
projects initiated by MAFF in 2019o Prominent NARO Research Centres in the focus of smart agriculture include:§ Research Center for Agricultural Information Technology (RCAIT)• Involved in creation of data platform WAGRI§ Institute of Agricultural Machinery (IAM)• Focus on applying robotics and ICT to agriculture

Universities•

Hokkaido University – Faculty of Agriculture
Website: https://www.agr.hokudai.ac.jp/en
Located in Sapporo, has among others, the current research activities:o Vehicle Robotics Studies
Focus: Intelligent systems; remote sensing; GPS/GIS; biomass energy
More Details under: https://www.agr.hokudai.ac.jp/en/r/lab/vehicle-robotics?from=us
o Applied Bioproduction Engineering Studies
Focus: Remote sensing, communication systems for farm use and vehicle robotics

63

MAFF (2020): “The 93rd statistical yearbook of Ministry of Agriculture, Forestry and Fisheries”.
Bundesministerium für Ernährung und Landwirtschaft (2020): „Der Markt für Landtechnik in Japan“.
65
ＪＡ三井リース: 農機シェアリース（大型コンバイン）
64

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More details: https://www.agr.hokudai.ac.jp/en/r/lab/applied-bioproduction-engineering?from=us•

Tokyo University of Agriculture and Technology (TUAT)
Website: https://www.tuat.ac.jp/en/o The TUAT “WISE”-Program supports the collaboration between agriculture and engineering. The
program leverages high engineering technology in the production of food, introduces AI, robotics andself-driving smart mobility technology for production and distribution.
Focus: New materials, advanced measurement, energy control, biotechnology and the environment
http://www.wise.tuat.ac.jp/en/•

Other prominent Universities in Japan engaging into research of smart agriculture technology include:o Kyoto University: https://www.kais.kyoto-u.ac.jp/english/o Tokyo University of Agriculture: https://www.nodai.ac.jp/english/o Osaka Prefecture University: https://www.osakafu-u.ac.jp/

Private Research Entities in the Field of Smart Farming•

Yano Research Institute Ltd.
Website: www.yanoresearch.com
o Yano Research is a private research institute; They frequently publish comprehensive market reports
about smart agriculture and latest market developments in Japan•

Japanese Society of Agricultural Informatics
Website: https://www.jsai.or.jp/ (Japanese only)
o The purpose of the Society is to promote the research, development and practice of information
science and technology in the fields of agriculture, forestry and fisheries, as well as in the food industry.

•

Iseki Yumearu Total Agriculture Research InstituteWebsite: https://www.iseki.co.jp/yume/ (Japanese only)o Iseki’s research institute for smart farming is one example for a private company institute. It
collaborates with other enterprises, universities, JAs and municipalities. Pilot projects and research on
cultivation, robot use, ICT utilization and information analysis are being carried out. They also provide
consulting and seminars for farmers.

5. Distribution Channels
Japanese manufactures make up about three quarters of the whole Japanese domestic agricultural machinery market.
The most prominent players, the so-called “full-liners”, are e. g. Kubota, Yanmar, Iseki, Mitsubishi Mahindra. Approx.
20% of the market volume is covered by foreign companies such as John Deere, Fendt, Claas, etc. The four main
Japanese manufacturers are also functioning as distributors with an approx. volume of 200 billion JPY and are often
not only distributing their own products but also acting as a distribution channel for foreign companies. Through theirsales branches or other machinery shops, they sell or rent out new and second-hand products as well as providing
maintenance services for farmers.
As Figure 4 shows, another big distribution part with a wholesale volume of about 100 billion JPY is Zen-noh, theNational Federation of Agricultural Cooperative Association, which is responsible for marketing and supply businessof JA Groups and Keizairen, the Prefectural Economic Federation of the JA organization. The 652 regional JA entities

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lease machinery through specific leasing companies or rent/sell agricultural machinery and maintenance services tothe farmers. It is estimated that 50-60% of the machinery is distributed via those Agricultural Associations. 66
Foreign agricultural machinery providers can either choose the above-mentioned distribution channels or decide to
distribute their products through domestic agents who at the same time are trained for maintenance of the products.

Figure 4: Distribution structure of agricultural machinery 67*Zennoh means the national Federation of Agricultural Cooperative Association, which is responsible for marketing and supply business of JA Groups.
*Keizairen means Prefectural economic federation of JA

This classical distribution chain especially reflects the hardware agricultural machinery market, but also basicallyapplies to the new services, as a new segment in this field. The new services, however, also use new distribution
channels, and possibilities for market entry is more diverse. The following two sections list up several distributors fordifferent segments of agricultural machinery (“hardware”). The point b “Services” describes some case examples of
new smart farming services and how a market entry can also work in those new segments.

a. Hardware
For smart agricultural machinery, the classical distribution paths described above are basically applicable, as the
distributors are starting to expand their portfolio into smart farming technology in addition to their “classical” line-up.
Some of the most well-known distributors that are also importing machinery for foreign countries to Japan are listed
below.

66

67

Bundesministerium für Ernährung und Landwirtschaft (2020): „Der Markt für Landtechnik in Japan“.
Based on 農林水産省 (平成 28 年): 米の生産コストに係る日韓比較. 農業機械をめぐる情勢
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Agri Forest Machine
Websitehttps://agf-machine.com/countdown/

Product

Tractors

Information

Agriforest Machine Co., Ltd. imports and sells all kinds of machinery and parts for agricultural
machinery, such as tractors and forestry machinery, such as choppers to individual parts andattachments.

Cornes AG Corp.
Websitehttps://www.cornesag.com/

Product

Milking machines, tractors, harrows, ploughs, harvesters, fertilisers, working machines for
cattle feed and cattle stalls, machines for the detection of oestrus for cattle

Information

In addition to agricultural machinery of all kinds, the large agricultural machinery dealer from
Hokkaido specialises primarily in dairy farming and imports state-of-the-art automatedsystems from Europe. The headquarters in Hokkaido is accompanied by 17 branches in all
agricultural regions of Japan.

EZOX Corporation
Websitehttp://ezox.co.jp/

Products

Potato harvesters, ploughs, mowers

Information

The company founded in 2011, specialises in the import and sale of agricultural machinery(especially for potato and beet harvesting), machine parts, machine control systems. In
addition to providing advice on the foreign trade of agricultural machinery as a whole, it isalso active in the export of Japanese machinery.

FORCUM Co., Ltd.
Websitehttp://www.forcum.jp/

Products

Various agricultural machinery

Information

The company, which was only founded in 2014, deals with the import and sale of machine
tools, construction machinery, excavation machinery and agricultural machinery.

Honda Manufacturing Co., Ltd
Websitehttp://www.hondass.com/

Products

Dairy machinery (milking parlours, milking robots, feeding robots, large-scale coolers),
Manure processing equipment

Information

The range includes a variety of different devices and systems that are designed to improve
work efficiency and save labour by means of the latest technologies. Foreign parts or
systems are also imported and partnerships with European manufacturers are already inplace.

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Honda Manufacturing Co., Ltd. has its headquarters in Kanazawa, Ishikawa and otherbranches throughout Japan. Customers include Mitsubishi Mahindra Agricultural Machinery,
Dongdong Honda Dairy Machine and the Hokkaido Economic and Agricultural Cooperative
Federation.
IDEC Co., Ltd.
Websitehttps://www.idec-jpn.com/

Product

Harvesting machines (hay tedders, roller balers, bale wrappers), compost spreaders, seeders,ploughs, levellers, dairy machines, mowers, mixers

Information

The company specifically imports American, but primarily European agricultural technology
products from various manufacturers, ranging from harvesting and compost spreadingmachines to sowing machines, soil cultivation technology and dairy machines.

Matsui Co., Ltd.
Websitehttp://www.matsui-corp.co.jp/english/

Product

Various agricultural machinery

Information

The Tokyo-based trading company for all kinds of machinery specialises primarily in
automotive and hydraulic machinery, but also sells industrial machinery for agriculture,among other things.

MSK Farm Machinery Corporation
Websitehttps://www.mskfm.co.jp

Product

Tractors, combines, harvesters, calf feeders

Information

MSK Farm Machinery Corporation, whose shareholder is Mitsubishi Corporation, imports
and sells tractors and other economic machinery from overseas. In particular, the latest
agricultural machinery from CLAAS, Massey Ferguson and Kuhn. In addition to the assembly
and repair of agricultural machinery and the sale of raw petrol, individual parts ofagricultural machinery are also sold.

Nomura Trading Co., Ltd.
Websitehttps://www.nomuratrading.co.jp/en

Product

Various agricultural machinery

Information

Based in Tokyo and Osaka the foreign trade company specialises in three business areas:
Food, consumer goods and services, and industrial goods. The latter includes imported
agricultural machinery.

Vicon Japan Co., Ltd.
Websitehttp://www.viconjapan.com/

Product

Pesticide distributors, seed drills, combine harvesters, ploughs, mowers, balers, Forage
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Information

General distributor of agricultural equipment based in Tokyo: Import and sale of the world's
most innovative agricultural machinery and systems that support efficient and labour-saving
agricultural management. Distribution of imported machines to various local manufacturersof agricultural technology - Kubota Ltd., Japan New Holland Co. Ltd., Matsuyama Co. Ltd.,
Mitsubishi Agricultural Machinery Co. Ltd., Yanmar Agri Japan Co. Ltd. who use the machines
to supplement their product ranges.

b. Services
A sector that is relatively new in Japan is the provision of new services related to smart farming. Also, many companies
formerly not at home in agriculture have expanded their business into this field. For example, the telecom-giants NTT
and Softbank or energy provider TEPCO, who built a gigantic vertical farm with artificial lighting in Shizuoka, that can
produce up to 5t lettuce per day.68 This area of new smart farming services is therefore very diverse and there is no
standard channel or way to distribute or market them in the Japanese market.
A good example for a successful expansion to Japan with a new service in the field of smart agriculture is the company“InFarm” from Berlin. InFarm has developed a vertical indoor farming system including a cloud management system
to control and constantly optimize watering, PH-level, temperature lighting and other factors. InFarm set up an own
subsidiary in Tokyo and engaged a Japanese manager for their subsidiary. They partnered up with JR East-owned
Kinokuniya supermarket chain and are now providing indoor farming systems to Kinokuniya, so customers can harvest
their own fresh vegetables directly from the vertical “fields” inside the supermarket.69
This example showcases very well how such a market entry can work. Another example is the German company Bosch,
who launched “Plantect” in June 2017 which can monitor the status of crops in a hothouse in real time and is equippedwith the disease prediction system based on algorithm utilizing artificial intelligence (AI). Based on accumulation of
measured data in the cloud with the help of sensors, user can confirm the status inside a hothouse and carry out
suitable crop control 70. Bosch is in a little different position as most SME, as they already have their own subsidiary
and a well-established brand in Japan.
Interesting however is, that Bosch often partners with interesting start-ups or SME and supports their business efforts.
A major foreign (European) company such as Bosch, with an established based in Japan is therefore another windowthat can be used to enter the Japanese market. SME could use existing business contacts to larger companies for thispurpose. In addition, Bosch’ system is mainly software, so that a remote service and maintenance is feasible. For purely
software products, the entry conditions are potentially much lower than for physical products.
Another example is the Dutch company Philips Lighting, who partnered with CCS Inc., a Japanese company known for
LED lighting. They provide lighting with optimum wavelengths of blue, red and white for each plant type for optimal
growth as well as pesticide-free crop-growth solution. The partnership with a Japanese company from a similar field
as a sales and inspection agent eased the market entry and reduced the effort they had to spend on training for
maintenance. 70

Agrigate Global (2020): „TEPCO launches huge vertical farm reliant on artificial light in Japan“.
JETRO (2020): “Infarm, a Berlin indoor vegetables vertical farming start-up established a subsidiary in Tokyo”
70
JETRO (2017): “Market Report: Smart agriculture”
68

69

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The examples show that ways of market entry in this segment are manyfold and very much depend on the businessfield. A Japanese partner or a foreign partner that has a presence and a name in Japan is recommendable in any case.
Some interesting Japanese companies active in the field of smart farming, especially support solutions, are forexample:•Fujitsu launched the new cloud service “Akisai” for food and agriculture in 2012. It provides comprehensive
support to all aspects of agricultural management, such as for administration, production, and sales in open
field cultivation of rice and vegetables, horticulture, and in animal husbandry. The service aims to connect
distributors, agricultural regions, and consumers through an enhanced value chain.71•

AEON Group is a commercial and financial service provider. In the retail sector, the company strives to
produce its own goods such as vegetables and rice. Therefore, the group runs with Aeon Agri Create 20
farms (AEON Farms) across Japan under direct management. 72

6. Regulations
Japan does not impose import duties on agricultural machinery. EU countries that export agricultural machinery toJapan are treated according to WTO standards and to the EU and Japan Economic Partnership Agreement (EU-JapanEPA). There is no import duty in the Japanese law for the main categories of the agricultural machinery industry orother agricultural technology.73, 74

a. Export and Sales to Japan
When it comes to importing agricultural machinery into Japan, the importing company wishing to distribute foreign
agricultural machinery in Japan does not require any specific licenses or operating permits. For the European company
that wants to export to Japan, it is recommended to register with the respective European Commission customs office
as a registered exporter (REX): https://customs.ec.europa.eu/rex-pa-ui/#/create-preapplication/.
In this way, the declaration of origin for the biogas plant components can be drawn up, if it meets the original. In theagreement between the EU and Japan on an economic partnership (EU-Japan-EPA), a declaration of the origin of aregistered exporter is provided as proof of preference when exporting from the EU.75 It is recommended to check thecurrent export regulations and procedures at the German customs office research.76 More information and a list ofcustom brokers available depending on the arrival port/airport in Japan can be obtained from the Japan Customs
Brokers Association (JCBA): http://www.tsukangyo.or.jp/profile/english.html
The EU-Japan EPA Helpdesk can also provide further information: https://www.eu-japan.eu/epa-helpdesk

b. Technical Approval
The Japan Industrial Standard (JIS) is issued by the Japanese Industrial Standards Committee (JISC) which underlies
the jurisdiction of METI. JISC is in close cooperation with the International Organization for Standardization (ISO) and71

Fujitsu (2012): “Fujitsu Launches New "Akisai" Cloud for the Food and Agricultural Industries”.

72

イオン農場: 農場紹介.
日本関税 (2020a): 輸入統計品目表（実行関税率表）実行関税率表、第 16 部第 87 類.
74
日本関税 (2020b): 輸入統計品目表（実行関税率表）実行関税率表、第 17 部第 84 類.
73

75
76

Zoll (2019): “Das Freihandelsabkommen mit Japan tritt am 1. Februar 2019 in Kraft”
Zoll: “Unternehmen”, refer to: https://www.zoll.de/DE/Unternehmen/unternehmen_node.html.
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the International Electronical Commission (IEC). As of March 31, 2019, there are 10,773 valid standards. Agricultural
machineries and related products are indicated through the letter B (Mechanical Engineering) in the classification.77
Although JIS is not mandatory and in many cases very close to ISO, Japanese customers prefer to stick to JIS-certified
products, as the certification process may include certain Japanese special regulations or specifications that only apply
to the Japanese market. While not very significant for agricultural machinery, one should also keep in mind that JIScertified products get a preferential treatment in tenders by public entities. This is regulated by law.
Especially for foreign companies the application process might be difficult due to specific regulations and language
barrier. However, there are entities in Japan that support foreign companies in this application process.
Application for JIS: https://www.jqa.jp/english/jis_a/application.html

7. Related Trade Fairs
Trade fairs in Japan cannot be compared in size with big shows in Europe such as AGRITECHNICA in Hanover or the
SALON INTERNATIONAL DE L'AGRICULTURE in Paris. However, they can be interesting to get an overview of themarket trends, available technologies and competitors and also a platform for presenting own innovations, get firsthand feed-back and make contacts. Some related trade shows in Japan are listed below.
AGRI WEEK
Organizer
Exhibits

Frequency
Venue: Osaka
Intex

Venue: Tokyo
Makuhari
Messe

77

Reed Exhibitions Japan Ltd- AGRITECH, International Agricultural Material & Technology Expo
- AGRINEXT, Next generation Agricultural Expo
- AGRIPROCESS, Farmers’ Processing & Sales support Expo
- LIVESTOCK, International Livestock Supply & Equipment Expo
twice a year in Tokyo & OsakaDate
24.-26. February 2021
Websitehttps://www.agriexpo-osaka.jp/en-gb.html
Exp.
- Visitors (25000)
Participants- Exhibitors (400)Date
13.-15. October 2021
Websitehttps://www.agriexpo-tokyo.jp/en-gb.html
Exp.
- Visitors (25000)
Participants- Exhibitors (400)Japanese Industrial Standards Committee (2017): “About JISC”.
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AGRO Innovation
Organizer
Exhibits

Frequency
Venue: Tokyo
Tokyo Big
Sight
Venue: Kyushu
Marine Messe
Fukuoka

Japan Management Association (JMA)- Wild Animal Management- Weed Solution World- Floral Innovation- Vegetable & Fruits World
twice a year in Tokyo & Kyushu
Date
24.-26- November 2021
Websitehttps://jma-agro.com/en/Exp.
- Visitors (15000)
Participants- Exhibitors (170)Date
16.-17. June 2021
Websitehttps://jma-agro.com/kyushu/en/Exp.
- Visitors (5000-20000)
Participants- Exhibitors (100-500)

FOOMA Japan
Organizer
Exhibits

Frequency
Venue:
Nagoya Aichi
Sky Expo

The Japan Food Machinery Manufacturers’ Association- Food materials processing- Engineering, robots, and IoT- Quality maintenance- Packaging and filling
AnnuallyDate
1.-4. June 2021
Websitehttps://www.foomajapan.jp/english/index.html
Exp.
- Visitors (100.000)
Participants- Exhibitors (400)International Agricultural Machinery Show
Organizer
Exhibits

Frequency
Venue:
Obihiro,Hokkaido

Hokuren Federation of Agricultural Cooperatives, Hokkaido Agricultural Machinery
Manufacturers Association, Tokachi Agricultural Machinery Association- Agricultural Machineries- Robotic, AI, IoT- Biotech innovations- Processing and Waste machineries
Every 4 years
Date
July 2022
Websitehttps://iams-obihiro.com/eng/Exp.
- Visitors (n/a)
Participants- Exhibitors (n/a)

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The Supporting Technology Exhibition and Seminar for Agriculture & Fishery Industries
Organizer
Exhibits

Frequency
Venue: Naha,
Okinawa,
Jichikaikan
Hall

Executive Committee of Supporting Technology Exhibition and Seminar for Agriculture andFishery Industries, Okinawa- soil conditioners, agricultural machines, pesticides,- wildlife damage control products,- aquaculture equipment, water quality management and measuring instruments, water
purification equipment,- food processing equipment, freshness preservation technology, packaging technology,
equipment for labour saving
AnnuallyDate
09. + 10. March 2021
Websitehttps://supportokinawa.com/
Exp.
- Visitors (1300)
Participants- Exhibitors (40)

8. Opportunities for European SME and Recommendations
a. Business Opportunities for European SME
Looking at market size and growth forecast (chapter 3b), it becomes clear that the decisive growth phase for thesmart farming market in Japan is currently underway for the next few years. This development is politically backed
by the comprehensive rollout plan of the MAFF for smart agriculture technology and services. Business opportunities
for European companies vary depending on the specific market segment:
The cultivation support segment, such as cloud support services or on-site environmental control, is already quite
mature and many products are on the market. The growth stalled since 2017 and the segment is not expected to growmuch more.
Management support solutions, such as software for accounting etc. are predicted to become growth areas, as they
are downstream segments. Interesting fields are e.g., solutions to share and manage farming information (resources,
terrain, borders, ownerships) or production management solutions that facilitate supply-chain management.
The same holds true for sales support solutions, which support the farmer in reducing and optimizing sales of products.
However, both of those segments require specific market knowledge of the Japanese agricultural market, its food
distribution channels and the accounting system. This segment is therefore rather difficult for foreign companies toaccess and requires a strong local partner with good knowledge on those topics to be successful.
Drones and precision farming are segments which are more promising, as this kind of technology is easier transferable.
Especially the very good infrastructure and regulatory framework for drones (e.g., chemical regulation law, civil
aeronautics act) and autonomous driving (advanced regulation on self-driving vehicles) is the ideal “playground”, also
for European companies, to test and market their products. This includes, among others, drone technology, e.g. for
precision fertilizer spraying or evaluation of landslide risks and other disaster prevention technologies. As many
applications are not quite market-ready, it might also make sense to partner with Japanese companies for technology
development. Especially due to the specific infrastructure standard on which many applications are based (WAGRIplatform, QZSS positioning system), a joint R&D project might make sense in these segments.
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Robotics is a little bit different from the previous segments as the market forecast predicts only small growth rates
until 2025. This coincides with the roll-out plan by MAFF, in which robotics have the longest time until actual largescale implementation. The priority fields in agriculture, forestry, and fishery and foods industries for introducing
robot technologies are:o Automation of operations using GPS guidance systemo Mechanization and automation of heavy labour currently being done manuallyo Labour-saving and high-quality production based on linking of robot and advance sensing technology

b. Challenges
Some challenges tied to the agricultural sector in general and the introduction of smart farming machinery andservices in Japan have already been introduced in chapter 3d. Specific challenges for European SMEs might be:•Market domination of domestic full liners
The Japanese market of agricultural machinery, especially in the fields of tractors, is dominated by the “bigfour” introduced in chapter 4c-i. Foreign companies successfully in the Japanese market are either wellknown international brands, such as John Deere, or offer niche products.

•

Trust in domestic companies
Japanese end-users in the agricultural machinery sector tend to trust in domestic companies. They favour
Japanese brands over foreign products, mainly due to high-quality customer service networks.

•

Advantageous treatment by the government
Economy and administration are often tightly interconnected in Japan. The extensive Ministerial
bureaucracy favours Japanese companies by giving support through strong political and administrative
guidance.

•

Adjustment to Japanese conditions
Adjustment of machinery to Japanese specifications, for example JIS, while not being mandatory, is one
hurdle to take. This process can be tedious, especially due to language barrier and possibly high costs foradjustments as well as application support. The technology might also need some adjustment to smallerscale farms and fields and difficult terrain compared with Europe. For Software, the regionalisation e.g. in
the form of Japanese language versions or adjusted interfaces according to Japanese demands and standards
must be made.

•Local partnership & language barrier
For market entry, especially for new services, finding a local Japanese partner/distributor or at least an
established foreign partner with an on-site presence, is one of the first challenges.

•

Customer service and training
The high demands especially regarding customer service in Japan are challenging. Either a very good trainingof the partner or remote support or an own presence with a Japanese-speaking manager might benecessary. New smart farming technologies are often not easy to handle and an appropriate support as wellas possibilities to train end customers to use the new technologies, e.g. via training seminars, must be
ensured.

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c. Key Success Factors
Key factors for the success of SMEs certainly lie in a thorough preparation of the market entry and in establishing atrustful relation with Japanese partners or costumers. This will be explained in detail in chapter 8d. Other main
success factors are:•Innovative technologies & appropriate target segment
Japan is a very innovation and technology-driven market, which applies for agricultural machinery as well as
services and software. There are many innovative companies and institutions active in this new field of smart
farming already. To have a chance, innovative technologies with unique sales points are key.
In some areas such as tractors or Japanese specialties such as rice machines or tea, Japanese brands are sodominant on the domestic market, that it is very difficult to compete. In other segments, such as animalhusbandry but also certain special harvesters e.g. for vegetables such as potatoes, European companies havea good reputation, as those are not (yet) a key market in Japan. Thus, choosing the right target segment isanother key factor.

•

Local partner(s) and good customer service
As previously explained, especially new smart farming technologies need explanation and also maintenancesupport. Thus, a suitable local partner is definitely an important success factor.

•

Localization
In many sectors, but especially in the agricultural sector, localization, meaning at least Japanese language
versions of manuals, interfaces etc., but on top of that also adjustments of interfaces or options to Japanesestandards and habits should be undertaken.

•

Contact to key players
When engaging in business of import of smart farming machinery and solutions, cooperation with key players
such as the Zen-Noh association on national level, as well as with their regional organizations such as JA Fukui
or JA Shizuoka, who act as regional distributors, or to specialized associations such as the JAISA (Japan
Agriculture Information System Association) or leading universities can be helpful to get access to the market.

d. Recommendations
Agriculture has its local specific culture and practices as well as geographic conditions, in Japan maybe even morethan in other countries due to unique circumstances. The choice and development of products suitable for theJapanese market should focus on the needs of the local farmers who are the costumers of the smart farming
technologies.
•

A thorough market research, including research for potential partners should be prepared as a first step which
can be done by specialized consultants who are familiar with the Japanese language and codes of business andhave networks in the target market segment. Much up-to-date information is often hidden behind thelanguage barrier and only at a later point accessible in English.

•

Distribution via trade houses or distribution companies might cut the revenues as every step in the distribution
chain causes a higher end-user price. Thus, a wise choice of distribution channel is crucial.
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78•

Furthermore, it is very difficult to enter the Japanese market with a new service or technology without an own
subsidiary on-site, a local representative with Japanese language skills or references. This is especially true for
SME, who often face tight funding constraints, and for whom a bigger risk is involved in expanding in a newmarket. Therefore, finding a suitable distributor or partner is crucial. The agriculture sector is very unique inmany ways, and knowledge about legislation or access to networks is, especially in Japan, often hidden behindlanguages barriers.

•

As a first step into the market, realizing pilot projects as first references can help to stimulate interest in themarket. It also helps to get to know the market environment and•Japan is, due to its affinity to new technologies (Society 5.0) and leading role in robotic research, also an ideal
testing ground for R&D cooperation. Incentives such as subsidies for R&D are however only applicable incertain sectors. The application period for subsidy or applicable conditions vary depending on the segment
and type of innovative agricultural technology. It is recommended that inquiries are made with the MAFF or
METI, together with a local partner (e.g. university).78•

A very important, often forgotten chance also lies in the partnerships for third-country activities. Japanesecompanies often have very good market access to Southeast Asian countries. Japan is very active in supporting
developing countries in the agricultural field and even has their own research institute dedicated tointernational agricultural research with focus on developing countries, the “Japan International ResearchCenter for Agricultural Sciences” (https://www.jircas.go.jp/en). Chances to distribute and access the Southeast
Asian markets together with a Japanese partner are very promising, especially as the domestic Japanese
agricultural market is not so big, compared to countries such as e.g. Vietnam or Indonesia.

JETRO (2017): “Market Report: Smart agriculture”.

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9. References
Agrigate Global (2020): “TEPCO launches huge vertical farm reliant on artificial light in Japan”,
https://agrigateglobal.com/reads/news/business/tepco-launches-huge-vertical-farm-reliant-on-artificial-light-injapan/, 14.12.2020.
Bundesministerium für Ernährung und Landwirtschaft (2020): „Der Markt für Landtechnik in Japan“,
https://www.agrarexportfoerderung.de/fileadmin/SITE_MASTER/content/files/Laenderberichte2020/Studie_Landtechnik_Japan-Endfassung__002_.pdf, 09.12.2020.
Cabinet Office (2019a): “Automated Driving for Universal Services”, Brochure SIP,
https://www8.cao.go.jp/cstp/panhu/sip_english/p46-47.pdf, 04.01.2021.
Cabinet Office (2019b): “Technologies for smart bio-industry and agriculture”, Brochure SIP,
https://www8.cao.go.jp/cstp/panhu/sip_english/p58-59.pdf, 04.01.2021.
Cabinet Office, QZSS: “Highly precise positioning achieves more efficient work”,
https://qzss.go.jp/en/usage/useimage/us06_construct.html, 14.12.2020.
Fuji Keizai Group (2019): “A survey of the growing market for "smart agriculture"”,https://www.fuji-keizai.co.jp/market/detail.html?cid=19052&view_type=2, 14.12.2020.
Fujitsu (2012): “Fujitsu Launches New "Akisai" Cloud for the Food and Agricultural Industries”,
https://www.fujitsu.com/global/about/resources/news/press-releases/2012/0718-01.html, 04.01.2021.
Godo Y (2014): “The Japanese Agricultural Cooperative System: An Outline”, FFTC Agricultural Policy Platform,
https://ap.fftc.org.tw/article/678, 04.01.2021
Government of Canada (2020): “Sector Trends Analysis – Meat trends in Japan”,
https://www.agr.gc.ca/eng/international-trade/market-intelligence/reports/sector-trend-analysis-meat-trendsin-japan/?id=1592829025428, 14.12.2020.
HSF (2019): “Japan allows Level 3 automated vehicles on public roads”,
https://hsfnotes.com/cav/2019/06/06/japan-allows-level-3-automated-vehicles-on-public-roads/, 14.12.2020.
Invest Japan (2017): “Abenomics”,
https://www.japan.go.jp/abenomics/_userdata/abenomics/pdf/170508_abenomics.pdf, 14.12.2020.
JA Zen-Noh (2019): „ZEN-NOH Report 2019“,
https://www.zennoh.or.jp/english/book/report/2019.pdf, 14.12.2020.
Japan Property Central (2019): “Japan has 98,000 hectares of unused farmland”,
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Japan Science and Technology Agency (2018): “What SIP (Cross-ministerial Strategic Innovation Promotion Program)is”,
https://www.jst.go.jp/sip/k03/sm4i/en/outline/about.html, 04.01.2021.
Japanese Industrial Standards Committee (2017): “About JISC”,
https://www.jisc.go.jp/eng/index.html, 04.01.2021.
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JETRO (2017): “Market Report: Smart agriculture”,
https://www.jetro.go.jp/ext_images/en/invest/attract/pdf/mr_smartagri_en.pdf, 14.12.2020.
JETRO (2020): “Infarm, a Berlin indoor vegetables vertical farming startup established a subsidiary in Tokyo”,
https://www.jetro.go.jp/en/invest/newsroom/2020/2813a45268b29e29.html, 04.01.2021.
LBBW Landesbank Baden-Württemberg – Research (2015): „Urbanisierung - Demographische Entwicklungen und
Auswirkungen im globalen Vergleich“,
https://www.lbbw.de/public/research/blickpunkt/20150817_lbbw__blickpunkt_urbanisierung_demographische_entwicklungen_und_auswirkungen_7x7zfd8or_m.pdf, 15.12.2020.
MAFF (2020a): “Information on aerial spraying of agricultural chemicals by unmanned aircraft”,
https://www.maff.go.jp/j/syouan/syokubo/boujyo/120507_heri_mujin.html, 14.12.2020.
MAFF (2020b): “FY2019 Summary of the Annual Report on Food, Agriculture and Rural Areas in Japan”,
https://www.maff.go.jp/e/data/publish/attach/pdf/index-177.pdf, 14.12.2020.
MAFF (2020c): “The 93rd statistical yearbook of Ministry of Agriculture, Forestry and Fisheries”,
https://www.maff.go.jp/e/data/stat/93th/index.html, 04.01.2021.
MAFF (2018): “FY2017 Summary of the Annual Report on Food, Agriculture and Rural Areas in Japan”,
https://www.maff.go.jp/e/data/publish/attach/pdf/index-93.pdf, 01.12.2020.
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ＦＩＥＬＤ ＭＡＮＡＧＥ

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