Japan’s agro-food sector would benefit greatly from policies to boost innovation, entrepreneurship and sustainable resource use

Meguro River, Matsuno, Japan (Sora Sagano, Unsplash)

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Japan’s agriculture sector has traditionally been characterised by small-scale rice production, but has recently begun to respond to new market opportunities for higher value food products across a rapidly growing East Asia. Today, rice represents less than 20% of the value of agriculture production, and larger, more productive, and more profitable farm businesses now account for more than half of total agriculture output. As the agro-food sector becomes more technology and data intensive, Japan has great potential to expand its regional production networks for high value agro-food products, according to a new OECD report.

Innovation, Agricultural Productivity and Sustainability in Japan highlights that agriculture has long been treated differently from other parts of the Japanese economy, favouring very small-scale farms that were to a large extent isolated from markets. Past agriculture policies imposed a heavy cost on Japan’s economy, even as agriculture output decreased by more than 25%, and the number of farms and farm workers declined by more than 50%, since 1990. The report suggests Japan needs a new approach to farm policies, to provide an enabling environment in which farmers would have both the freedom to make their own business decisions and improved access to needed technologies to drive productivity growth and sustainable use of natural resources.

“Japanese food and food products enjoy a strong positive image on world markets, providing a solid base for the sector to shift its focus towards high value-added food products and services,” said Ken Ash, OECD Director of Trade and Agriculture, during presentation of the Review at the G20 Meeting of Agriculture Ministers in Niigata, Japan. “Future success will depend to a large extent on ensuring that Japanese agriculture can benefit from both Japan’s economy-wide innovation system and technology developments globally,” Mr Ash said.

The OECD Review says that innovation in agriculture increasingly depends on technologies developed outside the sector, including digital technologies, and that innovation will continue to underpin the global trend towards integrated domestic, regional and global value chains. Public policy in Japan, as in many other countries, will need to keep pace.