Melco Management Accounting Research
Discussion Paper Series
No.MDP2024-003

Examining the Management Controls Mechanisms between Farmers andSellers in Natural Farming

May 2024
Zhe Shang*
Assistant Professor, Faculty of Humanities and Social Sciences, Hirosaki University
1 Bunkyo-cho, Hirosaki City,Aomori 036-8560, Japane-mail: shang.zhe2022@hirosaki-u.ac.jp

Xiaochun Huang
Hirosaki University
Shuko Naito
Hirosaki University*Corresponding author

Maki Makoto Foundation
Nagoya, Japan
Discussion Paper Series of the Melco Management Accounting Research, in order to promote
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Examining the Management Controls Mechanisms between Farmers
and Sellers in Natural Farming

Zhe, Shang
Hirosaki University

Xiaochun, Huang
Hirosaki University

Shuko, Naito
Hirosaki University

Abstract
The purpose of this study is to clarify the impact and characteristics ofmanagement controls and cultural controls on the relationship between
farmers and sellers in natural farming. Earlier studies mainly focused on
management accounting techniques such as activity-based costing, classcosting, and direct costing applied in agriculture or discussed theimplementation of balanced scorecards. However, such techniques bythemselves cannot clarify the farmer–seller relationship, and researchers aregradually recognizing the importance of maintaining a shared philosophy
and trust-based relationship between farmers and sellers. In the natural
farming domain, a special community called Fukyukai, including both
farmers and sellers, has been established. The current study includes a casestudy on the relationship between farmers and sellers in natural farming,
surveys farmers and sellers to clarify their perspectives, and investigates thecharacteristics of management controls that affect the relationship. In thismanner, this study clarifies the significance of cultural controls and theestablishment of organizations to implement these controls. In addition,
results reveal the roles played by management controls in strengthening thefarmer–seller relationships, such as (1) protecting farmers from criticism byneighbors practicing conventional farming and mutual assistance based on
Fukyukai with farmers and sellers as members and (2) securing customers
and production and sales systems for farmers and sellers. In natural farming,
1unlike conventional farming, the role of cultural controls in establishing
relationships between farmers and sellers is more significant than that offinancial figures based on costs and profits. This study’s contribution to theresearch literature is that it clarifies a management method to strengthen therelationship between farmers and sellers in the natural farming domain andprovides a management model to be used by other farmers and sellers.

Keyword: Management Control; Cultural Control; Management Philosophy; Trust;
Case study2

1. Introduction
Research on management accounting examines the applicability of management
accounting techniques in agriculture (Inamoto, 1990; Seki, 2021; Tobita, 2018; Tobita &Ganbo, 2016). Some discussions focus on cost accounting and calculation techniques,
including the allocation of indirect costs (Iegushi, 2015, 2016; Ono, 1985; Takei, 1995;
Yasuda, 2017, 2018), as well. Furthermore, some researchers clarify the agricultural
corporations that unite multiple farmers and cite examples involving the use of thebalanced scorecard (Kato & Kosugi, 2019; Tobita, 2018; Tobita & Ganbo, 2016). Hence,researchers mostly focus on farmers or agricultural corporations and examine theapplication of double-entry bookkeeping, the design of cost accounting techniques, andmethods for calculating corporations’ business profitability.
On the other hand, research has also indicated that the agricultural products
produced by farmers and agricultural corporations are being sold through methods suchas “acquiring individual customers in the neighborhood” (Tobita & Ganbo, 2016) andpurchasing activities by cooperatives (Huang et al., 2017; Takei, 1995). However, theformer method does not provide stable sales and the latter involves strict purchasing
standards, and the products produced by some farming methods such as natural farming
may not be available for purchase. In the context of this study, natural farming indicatesa production system that does not use pesticides or fertilizers. It is different fromconventional farming, which is a production system that uses pesticides and fertilizers,
and organic farming, which uses less amounts of pesticides and fertilizers. This study
incorporates the ideas of interviewees and specifies a production system that does not use
pesticides or fertilizers similar to natural farming, unlike conventional farming.
Farmers who have adopted a natural farming production system find it difficult tosell their products. Hence, it is important to secure adequate sales routes and ensure astable supply of products to buyers, such as restaurants and supermarkets. Therefore, it isimportant to build and maintain relationships between buyers (sellers who sell
agricultural products to final consumers) and suppliers (farmers). Currently, diverse
distribution formats are available for agricultural products generated through natural
farming; whereas some methods promote general direct sales and purchases bycooperatives and supermarkets, others are centered on special communities focusing on
natural farming (Huang et al., 2017). For example, Okayama Prefecture established anatural farming executive committee that brought together farmers, sellers, and evenconsumers to enhance the production and sales of natural farming products (Huang et al.,2017; Kato et al., 2020, 2021). These cases highlight the importance of maintaining
relationships among the buyers (sellers), suppliers (farmers), and customers of natural
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farming products.
In addition, since health issues and environmental protection are importantconsiderations today, natural farming, which was developed independently by Japanese
farmers, is expected to have an advantage over conventional farming. Although theagricultural products of natural farming are inferior in shape to those of conventionalfarming, their costs are within affordable limits, their selling price is 2–3 times higher andtheir shelf life is longer compared to conventional farming products (Huang & Carpenter,
2016; National MOA Natural Farming Promotion Council, 2012, 2013; NPO MOA
Natural Farming Culture Foundation, 2011). Therefore, research on the production andsales of natural farming products is expected to have significant social benefits.
According to the field research conducted by the authors, farmers performing
natural farming build their own sales channels and expend interorganizational efforts.
Many implement unique initiatives, such as establishing special communities, enhancing
the cohesion between farmers and sellers, and engaging in production activities. The
special communities emphasize developing a shared philosophy between farmers andsellers. Accordingly, rather than developing cost accounting or profitability calculation
techniques (performed by conventional farmers), farmers involved in natural farming
largely adhere to cultural controls and emphasize the installation of a common philosophy
between farmers and sellers However, the construction and implementation of suchcontrols remain unclear.
Based on this discussion, the current study’s purpose is to examine the management
accounting activities of farmers and sellers in the natural farming domain and clarify thecharacteristics of the management controls implemented between farmers and sellers. By
realizing its research purpose, this study is expected to supplement current knowledge on
natural farming in agricultural management accounting research. The study provides amodel for agricultural management accounting across agricultural organizations for use,
as well. Furthermore, the development of natural farming is beneficial to human healthand the environment and, hence, has social significance. Therefore, this study is
considered to have both theoretical and practical significance.
In this study, Section 2 summarizes earlier studies and specifies research questions,and Section 3 discusses the case study. Subsequently, Section 4 discusses the results,
whereas Section 5 states the study’s conclusions, contributions to the research field, andlimitations.

2. Literature review
2.1 About the relationship between farmers and sellers
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Although no earlier study examines the relationship between farmers and sellers indetail, some studies focusing on farmers or sellers do mention this relationship. Tobita
and Ganbo (2012, 2016) introduced the case of Sadashige, which implemented reductions
in pesticide and fertilizer production. Originally, Sadashige was a farming group based ina village; however, to embody the village's philosophy of “protecting the land together,”they underwent rigorous reorganization (Tobita and Ganbo 2012, p. 76). After conducting
districtwide discussions and study sessions, as well as repeated inspections and debates,
the Sadashige farming group was reorganized into an agricultural cooperative corporationin November 2001. All agricultural product sales are carried out by the corporation.
In Sadashige, based on bookkeeping accounting, which had been practiced formany years, accounting information, including details regarding profits, losses, and fundmanagement, was used for intra-organizational communication and consensus building.
For example, the corporation is said to have improved its management efficiency by
avoiding rough calculations and realizing investment economic calculations related to thepurchase of agricultural machinery. Furthermore, following the introduction of thebalanced scorecard, farmers who were producers and cooperative members expended
efforts to realize strategic goals.
The Sadashige’s strategy was to address the regional survival issues caused by anaging population and a declining birthrate and consider the following key strategic
factors: “disseminating information to consumers” and “acquiring individual customers
in the neighborhood.” To unite farmers and implement the aforementioned strategy, thecorporation considered it important to promote communication among members andshare strategies and philosophies.
Subsequently, Tobita (2018, p. 417) examined Sadashige’s accounts, applied direct
costing, and explained the indicators “community return amount” and “community
agricultural income” for profit distribution to farmers. The term community returnamount indicates the sum of labor costs, land rent costs, work outsourcing fees, andexecutive compensation paid by the Sadashige corporation to farmers as expenses. The
sum of the community return amount and the Sadashige corporation’s ordinary income
is the community agricultural income, which is the agricultural income earned by farmers.
In this manner, a profit-sharing mechanism was established to maintain the relationshipbetween farmers and the corporation, and such profit information was shared among
members to increase the farmers’ sense of participation in management. A similar case
can also be confirmed in Tobita and Ganbo (2015).
In their study, Kato and Kosugi (2019) examined two organizations, the NPOOkayama Prefecture Kimura Style Natural Farming Executive Committee, and Yamashin
5

Shoten Co., Ltd. The natural farming executive committee has approximately 100 farmers.
Traditionally, farmers tended to develop their own sales routes. Therefore, to maintainrelationships with farmers, the committee buys and sells rice from these farmers. However,for sales, the committee makes use of its connections because it has a network of local
JAs (i.e., JA Okayama, JA Okayama Nishi, JA Kurashiki Kasaya, and JA Tsuyama, which
are organizations belonging to Japan Agricultural Cooperatives). Furthermore, thecommittee is currently working to establish a certification system and develop new
agricultural products using natural farming to expand the sales volume of farmers’
agricultural products.
The agricultural production corporation Midori no Sato is directly managed by
Yamashin Shoten Co., Ltd. The company sells natural farming products at lower prices
than ordinary agricultural products. The company was able to solve distribution issues
because it secured customers at low prices and established a production, sales, andconsumption cycle within its group. In addition, regarding production, the company
successfully achieves low prices by collaborating with welfare organizations. Moreover,by hiring people with disabilities, farmers and agricultural corporations were able tosecure the labor necessary for natural farming, produce crops, and make social
contributions (Kosugi & Kato, 2019).
Further, Kosugi (2021) addressed the relationship between farmers/agricultural
corporations and people with disabilities to ensure agriculture–welfare collaboration.
Kosugi (2021) focused on management controls and clarified that, often, controls basedon flexible culture are implemented between farmers/agricultural corporations and people
with disabilities. Farmers and agricultural corporations hire people with disabilities to dofarm work and emphasize placing the right person in the right place, enhancing
individuals’ sense of attachment to agriculture, and setting goals that consider individual
characteristics without setting clear rules. In this manner, the corporations controlled
people with disabilities. It is important to foster a sense of camaraderie among people
with disabilities, as well. Accordingly, farmers/agricultural corporations spread themessage “Let's all do agriculture together” through various activities. In this manner,
farmers, agricultural corporations, and people with disabilities worked together toimprove the quality of agricultural products. Further, cultural controls and personnel
controls (job setting according to individual characteristics) complemented theachievement of goals (Kosugi, 2021, p. 44).
2.2 Cultural controls
Based on the cases mentioned in section 2.1, it is necessary to implement controls6

to manage the relationship between farmers and sellers. Through the control processes,
attachment becomes stronger, and trust is formed between members, which contributes
to sales and costs. The implementation of culture-based controls, such as trust andphilosophy, is believed to contribute to the achievement of sales and cost targets. In otherwords, cultural controls are implemented to achieve accounting profits.
According to Malmi and Brown (2008), cultural controls are the collective values,
ideals, and beliefs of members that influence their actions and thoughts. Merchant andVan der Stede (2017) argue that culture exerts pressure on individuals who deviate fromthe group's values and ideals and promotes mutual monitoring among members. Basedon these arguments, in this study, culture refers to the common values, ideals, andphilosophies of members, and cultural controls mean building these common aspects andsharing them among members. In general, cultural controls complement results controls
or the achievement of accounting figures. For example, according to earlier research,
cultural controls are primarily carried out and clear financial figures are considered
unnecessary only in the early stages of an enterprise's founding. With the enterprise’s
growth, results controls become the main focus area and the achievement of financial
indicators becomes a necessity (Sandelin, 2008). However, in some countries, such as
Japan (Merchant & Van der Stede, 2017, p. 95), cultural controls are the main cause ofconcern. This study focuses on Japanese agricultural organizations, which can beinterpreted using cultural controls.
Grafton and Mundy (2017) provide several examples of cultural controls based ontrust and highlight several points of caution. When cultural controls are implemented andphilosophies and strategies are shared through the trust-based relationships formed among
members, individual members may sacrifice short-term profits for long-term ones
(Grafton & Mundy, 2017). When they rely solely on trust, members display opportunistic
behaviors based on their ingrained philosophies and others tend to anticipate and act onsuch behaviors (Grafton & Mundy, 2017). This is believed to strengthen the members’
mutual monitoring function and put pressure on the other members to not behave
opportunistically.
In summary, earlier research clarifies that to maintain the relationship between
farmers and sellers, financial figures such as cost reduction, community return amount,and community agricultural income should be emphasized. Moreover, it is necessary tocontrol members by culture, for instance, by cultivating a sense of camaraderie and trust
among them through various activities. Also, it is important to maintain well-developed
relationships between farmers and sellers. Further, to maintain such relationships, it isnecessary to implement cultural controls, build relationships based on trust, and share7philosophies among individuals.
Based on earlier research, the current study addresses the following researchquestions: (1) How are cultural controls implemented to maintain the relationshipbetween farmers and sellers? (2) Since it is difficult to secure profits and collect cost datain agriculture, and natural farming is highly dependent on nature, should we implement
cultural controls that complement the financial figures, such as general enterprises andconventional farming?

3. Research Method
This study used a qualitative research method based on interviews to clarify how
farmers and sellers spread their philosophy and how they think. In addition, since it isdifficult to quantify the philosophy and thoughts of farmers and sellers, this study was
conducted qualitatively. The interviewees were Enterprise N, a seller who sells natural
farming agricultural products to consumers, and Farmer A, who sells natural farming
agricultural products to Enterprise N.
Enterprise N sells natural farming agricultural products alone, and its president is
the chairman of the Natural Farming Promotion Association (NCPA), a special
community for natural farming. Further, the association is one of the biggest natural
farming communities in Japan. Farmer A has been engaged in natural farming for
approximately 40 years. This farmer has been observing the development of natural
farming over several years and clearly understands what its important aspects are. In thissense, by interviewing Enterprise N and Farmer A, the authors obtained meaningful
opinions on the management controls of the relationship between farmers and sellers.
These opinions were related to natural farming and reflected the essence of natural
farming from a long-term perspective.
Interviews were conducted twice in September 2022 (approx. 2 hours with thepresident of Enterprise N) and in December 2022 (approx. 6 hours with the president ofEnterprise N, the employees of Enterprise N, and Farmer A). Both the interviews weresemi-structured. In addition to conducting these interviews, the authors examined theconditions of fields and reviewed the internal documents collected by Farmer A andEnterprise N. Even after the interviews, the authors communicated several times with
Farmer A and Enterprise N through e-mail to confirm the collected information.

4. The Case
4.1 Background information
4.1.1 Enterprise N
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Enterprise N, which is located in Chiba, Japan, was founded in 1985. It primarily
handles various aspects of natural farming agricultural products. The enterprise’s capitalis 19 million yen, and it has approximately 80 employees (as recorded in an interview
dated December 2022). The sales for fiscal 2022 were approximately 900 million yen.
Enterprise N has the following objectives.
The essence of “living” can be learned from the natural world. Naturally growncrops that do not use pesticides or fertilizers teach us the laws of nature andthe rules by which life is nurtured. That’s why we want to spread the word
about natural farming. Learn from nature, surrender to what happens, and be
grateful for being alive.
Based on these values, I (the CEO) hope that we can move forward to asustainable society where all living things are naturally abundant.
We (enterprise N) are engaged in a business centered on natural farming. We
want as many people as possible to not only enjoy ingredients that are safe andsecure but also cherish the vitality of nature.
We want to provide a lifestyle that is in harmony with nature, as it should be.
(From enterprise N homepage, https://naturalharmony.co.jp/about/)
The business concept is to make social contributions through natural farming and provide
safe and secure agricultural products. To realize this idea, Enterprise N developed
businesses such as regular home delivery and store management.
Enterprise N's suppliers include many farmers engaged in natural farming. To
farmers producing agricultural products, enterprise N offers stable prices through acontract. To secure consumers and realize stable purchases from farmers, Enterprise N
provides production information (i.e., a wide range of information, including information
on seeds and harvesting methods) and personal photographs of farmers in its online store
to consumers. This also leads to stable customer purchasing.
4.1.2 Natural Farming Promotion Association
NCPA helps disseminate farmers' understanding of natural farming techniques. The
association was launched in November 2011, and the president of Enterprise N became
the chairman of the promotion group in October 2021. Further, the former chairman of
NCPA was Farmer A.
The following are the main aims of NCPA.

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The purpose of natural farming is to purify the soil so that the original potentialof the soil and crops can be demonstrated. We will realize this purpose throughthe activities of the association.
Based on the principles of respect for nature, adaptation to nature, and natural
norms, we actively engage with nature as part of nature while learning fromthe principles.
We have established the NCPA to ask aspiring farmers about this initiative,
facing head-on the contradictions between industry and agriculture, andquestioning agriculture in the region, Japan, and the world.
First, we will connect the producers who previously worked in rural areas toshare their information on and experiences with pioneers. Farmers, consumers,
and distributors will work together to study and disseminate technology. (fromthe NCPA homepage, https://www.jnhfa.com/about/index.html)
In this manner, NCPA helps connect farmers, sellers, and consumers and serves three
purposes for farmers: “Meet like-minded people,” “Use the experience of pioneers,” and“Understand the basics of technology.” In other words, the main purpose of NCPA is tobuild a network of farmers engaged in natural farming, share knowledge regarding natural
farming techniques, and make friends. Further, NCPA provides lectures popularizing
natural farming to customers. Finally, as mentioned on its homepage, NCPA serves as abridge connecting farmers, sellers, and customers.
4.1.3 Farmer A
Farmer A was the chairperson of NCPA until October 2021 and, subsequently,
became a consultant for NCPA. Farmer A, who has been farming naturally for
approximately 40 years, helps promote the establishment of natural farming techniques.
Moreover, Farmer A is a family business having a workforce comprising four people (asindicated by an interview in September 2022).
4.2 Natural farming philosophy and the law of nature
Farmer A clarifies that one must develop an understanding of the natural world tosuccessfully practice natural farming. Unlike conventional farming, natural farming
requires practitioners to follow the law of nature. This perspective of Farmer A ishighlighted by the following statements:
Among natural norms, this is written as a law. People haven't learned to follow
10the law of nature. Many farmers only learn techniques and do not learn the lawof nature. But without learning the law of nature, there will be no success.
Unless technology is inspired by nature, it will never work. (Farmer A)
Therefore, it is necessary for natural farmers to farm according to the laws of nature andunderstand the philosophy (law of nature). However, since it takes time for natural
farming to produce results, the question is whether it can be continued for a long time.
Many people value short-term profits and, hence, do not continue natural farming for long.
The following statements address this issue:
Generally, you need to be patient for 3 or 4 years. After that, income will
increase. When I tried it, it didn't get any better, no matter how many years
passed. People around me made fun of me, and even my parents told me toquit. However, I continued with natural farming. I didn't even return home.
Even though I have four children, I am not close to any of them. I left them tomy wife.
However, since she had no income, she spent her savings to send our children
to school. I managed to get through that. Generally, people would have given
up long ago.
Those people who want to do the nature farming came together; but they leftsaying, “I'm sorry, but I want to quit, I want to quit, I want to quit.”
Agriculture has become something that people cannot spend long hours on.
People only look at short-term profits.
However, even though it was not scientifically proven at the time, I believedin natural farming. (Farmer A)
As stated here, unless you understand and trust natural farming, you will not be able tocontinue it because of the high initial cost. In the olden days, when appropriate technology
had not yet been established, continuing to engage in natural farming would have placeda heavy burden on people. Those around you tended to oppose you, due to which those
who did not have strong beliefs could not continue. Therefore, to help each other, farmers
engaged in natural farming formed NCPA.
These farmers did not want to surrender to the voices of the opposition of thosearound them and, hence, created NCPA as an organization to protect people. The
opposition expressed by those around them and the experiences that they all practicenatural farming cause the members of NCPA to trust each other. In addition, they conduct
11

regular “assessment meetings” to share their experiences and assess the quality of natural
farming agricultural products before selling them.
Today, in the natural farming domain, appropriate technology has been established,
the relevant process has become easy, and profits can be secured. However, it will stilltake several years for new farmers to produce their products, as clarified by the following
statements:
Total income will be a little bit lower than conventional farming. Yields are
not as high as in conventional farming. But the net income will be the same.
The selling price is higher.
Fertilizer poison is important here. Due to this, the yield will not increase fora while. Eliminating fertilizer poison takes years. (Farmer A)
As mentioned in the aforementioned statements, new farmers must eliminate fertilizer
poison. Fertilizer poison indicates the degradation of soil resulting from the traditional
application of fertilizers. When fertilizer poison is present, the yield will not increase andthe number of insects will increase. To remove fertilizer poison, NCPA has come up witha “soil preparation plan” and provides support to farmers.
4.3 Natural farming based on the learn from nature philosophy
Natural farming techniques are being developed based on the philosophy oflearning from nature, respecting nature, adapting to environmental conditions, andfollowing natural norms. As mentioned in Section 4.2, an important natural farming
technique is soil preparation. The following statements explain the discovery of fertilizer
poison and preparation of the soil preparation plan:
It is said that if you are patient, all that is left is to increase the yield of crops.
Our yields steadily decreased, and insects and diseases never disappeared. I
thought it was a lie. After careful investigation, the NCPA found fertilizer
poison. After we (farmers) started the organization NCPA, we appointed atechnical development manager for the organization and asked him to conduct
a follow-up survey. The manager did it for 5 years. Because there is a paperthat says that it will disappear in 3 or 4 years, no one in the country has done
this. We asked the manager to dig 1 meter of soil and found the fertilizer poison.
(Farmer A)

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As mentioned earlier, when there was no increase in yield, farmers dug the soil andinvestigated it scientifically. They found the presence of fertilizer poison and took
measures to eliminate it. This was explained to every member by NCPA, as well. However,in the past, since there was no NCPA to support them, many people gave up natural
farming on experiencing the detrimental effects of fertilizer poison. Natural farming does
not involve the use of any fertilizers or pesticides. Hence, the only way to remove
fertilizer poison is to be prepared to wait for a long time and harness the power of nature.
These aspects are described in the following statements:
It is difficult to remove the fertilizer poison mechanically. Well, the first stepis to crush the chunks of the fertilizer poison into small pieces and leave thefarmland alone for about 3 years. Since the chunks of the fertilizer poison
occur deep in the land, it is important to choose the right machine. After that,
repeat the crushing process. Harness the power of nature to purify the land.
It takes a considerable amount of time to remove the fertilizer poison. In themeantime, some people add artificial substances like fertilizers. Such people
are idiots. They do not understand the philosophy of natural farming. They
won't get rid of the fertilizer poison.
If you can remove the fertilizer poison, the rest will be easy. Just drop the seeds.
Of course, seeds harvested from land with the fertilizer poison are poisonous;
so care must be taken.
Therefore, it is necessary to spend a long time removing the fertilizer poison
from the soil and seeds. Also, one must change his thoughts to understand thephilosophy of natural farming. Once that was in place, weeding became easier,and all I had to do was work 3 hours a day. (Farmer A)
In other words, it is necessary to understand the philosophy of natural farming and accept
that it takes a long time to remove fertilizer poison. The process of removal must be basedon the philosophy of natural farming. Once the soil is prepared and seeds are grown, thetime and effort required for farming is significantly reduced. Accordingly, if a farmer
continues to cultivate naturally from a long-term perspective, the burden on the farmer
will be heavy in the beginning but become lighter and less costly with time.
4.4 Selling of products to consumers
Farmers engaged in natural farming sell their products through NCPA. Since its
establishment, NCPA has considered the production, distribution and selling of13

agricultural products as a single process. The president of Enterprise N stated asfollowing:
Without distribution, farmers would not be able to survive. That's why fromthe beginning, we tried to work together on production, distribution, andselling. We have ensured distribution occurs close to the production area, sothat consumers can see the production area and its issues. If you are far awayfrom the production area and production, distribution, and products are not thesame, deception will occur due to communication problems. This will cause
everyone to suffer. (president of Enterprise N)
Therefore, NCPA conducts consumer seminars, for farmers and distributors, and conveys
the benefits of natural farming to consumers. As mentioned by a customer with a sensitivenose, “the smell of organic rice after cooking makes me feel sick. However, when I ate
farmer A's natural farming rice, I felt glad to be alive”. In this manner, natural farming
agricultural products are particularly popular among people with allergies, foodsensitivities, and so on. They taste better than organic produce, as well.
Enterprise N maintains a specific number of customers. In recent years, prices havebeen increasing due to the war in Ukraine; further, despite experiencing a reduction in thenumber of its customers, Enterprise N achieved sales of 900 million yen in 2022 and iscurrently making a profit. Accordingly, the president of Enterprise N recognizes that
NCPA’s future challenge will be to increase the number of customers through its activities
and Enterprise N's communication with its stakeholders.

5. Discussions
Based on interview data, the authors summarized the relationship among natural
farming farmers (farmer A), sellers (enterprise N), and customers, as shown in Figure 1.

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Figure 1 Summary of the relationship among farmers, sellers, and customers; NCPA,
Natural Farming Promotion Association(Source: Created by the authors)
As depicted in Figure 1, farmers provide natural farming agricultural products toEnterprise N, which has signed purchasing contracts with farmers and created a systemthat enables farmers to produce agricultural products with peace of mind. Enterprise N
provides information on and photographs of producers in its store to enable customers topurchase with confidence. In addition, although farmers have faced difficulties in
producing agricultural products in the past, technical challenges have been overcome by
NCPA. For example, research results on fertilizer poisoning, soil preparation, and seedproduction are shared with NCPA members, which makes production easier today than in
the past. The association helps farmers create the soil preparation plan, as well.
NCPA not only disseminates technology but also plays the more important role ofdisseminating the philosophy of natural farming. The spread of this philosophy can beconsidered a cultural control. It is important to involve producers, sellers, and evenconsumers in this philosophy to complete production, sales, and consumption and build
a stable business model. The benefit of establishing cultural controls through NCPA isthat even when an activity generates no income and creates a deficit, farmers will continue
to do it if it is useful to themselves, society, and nature, similar to Farmer A. Whileperforming such actions, individuals should believe in natural farming and understandthat it is good for society. As indicated by our interviews, people who are skeptical about
15

natural farming or just want short-term profits will not be able to continue farming. When
Farmer A first started natural farming, his wife took care of their children all by herself;
for at least the first 10 years of farming, he had no income and owed more money than heearned. He was criticized by those around him and his family. However, due to his belief
in natural farming, Farmer A continued to practice it. NCPA helps natural farmers meetlike-minded members and, on encountering difficult situations, members can help eachother and continue natural farming. In this sense, the association can be considered tofunction as a means of cultural control and protect its members.
Following the elimination of fertilizer poison and the establishment of a stableproduction system, natural farming requires less labor than conventional farming. Since
natural farming does not require the use of herbicides, fertilizers, or pesticides, it isbelieved that farmers can reduce costs and make profits more easily through natural thanconventional farming. However, as repeatedly emphasized by interviewees, natural
farming is not possible when farmers focus on short-term profits alone. Accordingly, innatural farming, the role of cultural controls is very different from that of increasing
farmers' motivation to work through profits, as described by earlier studies (Tobita, 2018;
Tobita & Ganbo, 2012, 2016). Overall, it is very important to have a strong belief innatural farming.
Furthermore, through NCPA, farmers and sellers can share this belief with theirconsumers and ensure stable purchasing, which naturally enables the former to makeprofits. The comments of farmers and the president of Enterprise N indicate their focus
on this aspect. Therefore, if farmers have a strong belief in natural farming; continue todo activities that benefit the environment, health, and society; and always do the rightthing, profits will come naturally.
Based on this discussion, The answer to the research question (1) is that it isimportant to create a special organization to implement cultural controls. To promotenatural farming, NCPA should bring together farmers, sellers, and consumers; share thephilosophy of natural farming; and make others believe in this philosophy. Furthermore,
it is important to not only jointly develop and share natural farming techniques among
farmers and sellers but also create a place where these people can forget their cares.
Further, NCPA protects farmers from the criticisms of their neighbors and family
members and creates trust-based relationships among farmers. In this manner, NCPA
plays a major role in implementing cultural controls.
For research question (2), the answer is that the management of natural farming isvery different from that of conventional farming and general profit-making enterprises.
Our interviews revealed that neither farmers nor Enterprise N thought about profits at the16start of natural farming; rather, they considered what was beneficial to society and theenvironment. Even later, they did not attribute much importance to profits. Theinterviewers themselves placed more emphasis on long-term than short-term profits. For
example, farmer A continued to pursue natural farming with strong conviction, despite
having experienced severe financial crises during the first 10 years of his natural farming
career. However, after the establishment of the appropriate natural farming technology
for his farmland and the adequate preparation of soil, profits came naturally, and work
became easy. As a seller, enterprise N discloses information on producers to consumers
and ensures the latter’s safety and security so that even if the selling price of natural
farming agricultural products is higher than that of conventional farming products,
consumers will continue to purchase them. Based on this discussion, it is important thatthe cultural controls of NCPA do not focus on financial aspects, such as profits and costs,
as depicted by earlier studies, but instill the philosophy of natural farming (i.e., good forthe environment, good for society, and good for health) among farmers, sellers, andconsumers.

6. Conclusion
This study analyzed the characteristics of management control specified by farmers
and sellers in the natural farming domain through interviews. This helped construct a
control system centered on cultural controls, which was unlike the control system focusedon controls based on financial figures depicted in earlier research. Whereas such culturalcontrols can be identified in the early stages of business establishment documented inearlier studies (Sandelin, 2008), the cultural controls in natural farming examined in thecurrent study have continued for several decades. The probable reason for thisphenomenon is that natural farming agricultural products are not supported byagricultural policy and this lack of support places natural farming farmers in a vulnerable
situation. Therefore, it is necessary to create among them a psychological trust–based
relationship and cultural control–based mutual support system. Furthermore, natural
farming is associated with the possibility of becoming less financially important during
periods of stable production, since its costs are low.
This study makes an important discovery. To implement cultural controls, NCPA isestablished as a separate organization, whose functions involve spreading the philosophy;
providing protection to farmers; sharing agricultural techniques; and managing therelationship among customers, sellers, and farmers. The creation of such a specializedorganization to implement cultural controls was not attempted by earlier studies. However,in this study, NCPA effectively implemented cultural controls, which suggests the17effectiveness of creating such an organization to establish controls. Finally, involving
consumers in popularizing the philosophy is considered important for securing sales, as
well.
The first contribution of this study to the research field is that it clarifies thecharacteristics of controls experienced by farmers and sellers engaged in natural farming.
Accordingly, natural farming has immense potential for growth since it emphasizes healthand addresses environmental issues. The clarification of its characteristics can help createa model for farmers planning to transition to natural farming. In terms of policy, it will
generate a need to provide preferential treatment to farmers engaged in natural farming.
The second contribution is that, in cases involving multiple players (including
farmers and sellers), this study found it effective to create a separate organization to
implement cultural controls. This finding has implications for not only conventionalfarming but also general commercial enterprises.
This study has the following limitations: First, although this study clarifies thecharacteristics of cultural controls among farmers and sellers, it does not clarify inadequate detail why cultural controls have become important today. Analysis from a
broader perspective, including policy and financial aspects, is necessary, as well.
Currently, the authors have only analyzed the thoughts of farmers and sellers; hence,
further analysis is required. Second, as clarified by earlier research, management controls
based on trust or culture may be delicate and may not be able to guarantee the loyalty ofmembers (Grafton & Mundy, 2017). In other words, there are limits to preventing people
from quitting NCPA with divergent philosophies on natural farming. Such aspects are
difficult for farmers and sellers to control, and more research is required to manage theseissues.

Acknowledgment
This article is part of the research results of the Maki Makoto Foundation
International Research Exchange Grant (Kokusai No. 2023002). The authors would also
like to thank those who agreed to interviews.

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