Japan’s Agricultural Market Trends

Published on October 31, 2025 and written by Cyril Jarnias

Agriculture in Japan, a country renowned for its technological advancements and centuries-old traditions, is undergoing a remarkable transformation driven by bold innovations and sustainable approaches, reshaping the agricultural market landscape. As the population ages and arable land decreases, Japanese farmers are adopting cutting-edge technologies such as robotics and AI to enhance efficiency, while implementing eco-friendly practices to address environmental challenges. In this article, we will explore how these trends are shaping the future of food production in Japan and their implications for the national and global economy.

Growth Opportunities in Japanese Agriculture

Overview and Challenges of the Japanese Agricultural Sector

Japanese agriculture faces serious challenges amid demographic decline and an aging population. The average age of agricultural workers has reached approximately 67 years, and the aging trend is intensifying. Additionally, abandoned farmland is increasing, and the area of arable land is shrinking. Furthermore, the predominance of small-scale farms makes it difficult to effectively improve productivity.

Improving Efficiency and Productivity Through New Technologies and Innovation

The introduction of cutting-edge technologies, such as precision agriculture and smart farming, holds transformative potential for Japanese agriculture. IoT sensors for soil monitoring, drone-based crop management, and autonomous tractors are being implemented, contributing to labor reduction and improved resource use efficiency. Moreover, vertical farming and automated systems are achieving high-yield, sustainable production models in urban environments.

Crop Diversification and Sustainable Initiatives

The growing demand for organic products and the introduction of exotic crops (e.g., quinoa) are opening new markets in Japan and internationally. Additionally, agroforestry, which combines forestry and agriculture, offers environmental conservation benefits and is recognized for its multifaceted value creation.

Government Policy Support

Through smart agriculture promotion programs, the government is deploying support policies for new farmers, personnel training, and incentives for transitioning to large-scale operations. Furthermore, as part of the Cool Japan strategy to promote exports of high-value-added products, Japanese brands such as premium rice and fruits are gaining appreciation in foreign markets.

Increased Demand in Foreign Markets and Export Promotion

Japanese products, particularly Wagyu beef, matcha, and fruits, are popular in foreign markets. This rising demand is driving export volume expansion through improved transportation infrastructure and unique distribution channels. The development of specific brands also serves to strengthen competitiveness.

Enhancement Through Public-Private Collaboration in Research and Infrastructure

Public-private partnership projects aim to strengthen investments in research and development of innovative technologies such as new irrigation systems, biodegradable materials, and automated sorting equipment. This collaboration also contributes to local economic development models.

Success Stories: Corporate and Cooperative Activities

For example, a company that introduced a large sorting machine successfully automated the selection of over 15 apples per second, thereby reducing production costs. On the other hand, a cooperative model that established a multi-purpose exchange ensures transparency in profit distribution and maintains local employment, receiving positive feedback.

The Impact of Agricultural Subsidies on the Japanese Market

Historical Evolution of Agricultural Subsidies

• Post-war, Japan implemented land reform, favoring individual farmers. This reform democratized rural society by supporting small-scale farms and laid the groundwork for modernization.
• The Basic Law on Agriculture enacted in 1961 aimed to correct productivity gaps and increase incomes compared to other industries. However, a price support policy focused on rice was adopted, leading to structural issues such as overproduction and acreage reduction policies introduced in 1969.
• Since 2007, direct payment systems, such as Cross-Commodity Management Stabilization Measures, have been introduced, providing ongoing financial support to small and medium-sized farms.

Main Beneficiary Sectors

In Japan, rice farming receives the most subsidies. Specifically, compensation is provided for fallowing rice paddies and cultivating alternative crops under the acreage reduction policy.

Certain commodities, such as rice for export, also receive direct export subsidies, stimulating producer motivation. However, these export subsidies are controversial due to their alleged violation of WTO agreements.

Impact on Domestic Market and Exports

Subsidy policies contribute to stabilizing domestic market prices. However, the high level of protection has led to insufficient competitiveness of Japanese products in the international market, increasing pressure for market opening.

Recently, export promotion measures have been strengthened to address shrinking domestic demand due to population decline. However, this poses challenges such as the risk of overproduction and distortion of domestic prices.

Impact on Small and Large Farms

Farm Type	Benefits	Challenges
Small Farms	Stabilizing effect on income	Lack of market competitiveness
Large Farms	Improved international competitiveness	Widening regional disparities

Current Criticism Points and Adjustment Possibilities

• Criticism Points:
  1. Protectionist policy leading to high burden on consumers (food cost)
  2. Risk of violating WTO rules
  3. Environmental impact (e.g., reliance on monoculture)
• Adjustment Proposals:
  1. Introduction of environmentally friendly subsidy conditions
  2. Transition to reduced tax burden (from consumers to government resources)
  3. Development of diverse export products

Positioning Within the WTO Framework

In various negotiations such as the WTO Doha Round, Japan has asserted its position within the framework of domestic support measures. However, some aspects require increased transparency and enhanced rule compliance. For example, there is doubt regarding measures for export rice qualifying as prohibited red box measures.

Japan’s agricultural subsidy system has both advantages and disadvantages. Depending on the adjustments made, there remains potential for development that enhances environmental and economic sustainability.

Export of Local Agricultural Products: An Untapped Potential

Main Local Agricultural Products of Japan and Export Potential

Product	Characteristics	Target Markets
Wagyu	High marbling quality	Asian and Western markets
Fruits and Vegetables	High sugar content and attractive appearance	China, Hong Kong (luxury gifts)
Alcoholic Beverages	Japanese culinary culture	Southeast Asia
Green Tea	Global health trend	Global markets

Current Obstacles

• Tariff and Non-Tariff Barriers: Need to comply with each country’s regulations (plant quarantine, pesticide residue standards). High tariff rates in some markets are also a problem.
• Logistics Infrastructure: For perishable goods, the high cost of air transport and the risk of deterioration after customs clearance.
• Price Competitiveness: The price difference compared to products from other countries limits penetration among general consumers.

Government Initiatives

1. Selection of 27 to 28 priority export products and setting numerical targets (e.g., Wagyu 160 billion yen).
2. Improving productivity through the introduction of smart technologies and developing freshness preservation technologies (e.g., flights for fresh fish).
3. Strengthening regulatory compliance and supporting local marketing abroad (using JETRO, etc.).

Success Examples and Economic Impact

For example:

• Wagyu: Steady growth with an increase of over 20 billion yen compared to the previous year in 2021, resulting from targeted marketing and the development of certified facilities abroad.
• Fruits: Apples and strawberries are popular as gifts for the Mid-Autumn Festival in China. This trend also contributes to the regional economy.

Strategy to Maximize Untapped Potential

1. Targeted Product Development: Encourage the supply of products tailored to regional needs, such as small apples.
2. Local Production Model: Reduce distribution costs and make products affordable through the transfer of Japanese know-how (Made with Japan Model).
3. Sustainable Initiatives: Promote the use of low-environmental-impact packaging materials, establish health-focused brands for new affluent classes.

Through these multidimensional strategies, Japanese agricultural products can gain enhanced international competitiveness.