Aeon Adds Rice Paddies to Farming Ventures

Aeon Co., Japan’s largest supermarket chain that sells everything from fresh food to bicycles across 424 stores, plans to add rice fields to its farming portfolio, possibly making it the nation’s biggest corporate grower of the grain.

Starting with 11 hectares (27 acres) of rice paddies leased from local farmers, its Aeon Agri Create Co. farming subsidiary will start producing the grain north of Tokyo next year, said Aeon spokesman Norihito Ikkai. Chiba-based Aeon aims to lease 100 hectares -- almost 50 times the average farmer’s plot -- by 2020. That would make it the biggest rice-producing company in the country, according to Arihiro Muroya, chief economist at Norinchukin Research Institute. There are larger areas farmed by cooperatives.

Prime Minister Shinzo Abe’s government is creating land banks in each of the 47 prefectures by renting paddies from farmers and consolidating them into larger areas for leasing to farming corporations. The government wants 80 percent of farmland to be cultivated by large-scale farms to make it competitive as Japan joined U.S.-led trade liberalization talks to revitalize its economy.

“We want to supply rice and vegetables to consumers at more affordable prices and in a stable way,” Ikkai said by phone. “As Japanese farmers are aging and retiring, we can take over production through our farming subsidiary.”

Convenience store chains Lawson Inc. and Seven & I Holdings Co. are also investing in cropland and training young people to work the fields as Abe cuts subsidy payments to food-rice growers and older farmers put down their plows.

‘Inefficient Farmers’

“Abe’s reform plan is making progress,” said Nobuyuki Chino, the president of Continental Rice Corp., a grain trader in Tokyo. “As rice prices are falling this year due to oversupply, the exit of small and inefficient farmers from rice production will accelerate, increasing land leasing to farming corporations.”

Aeon entered agricultural production in 2009 through the subsidiary, and operates 15 farms across the nation, growing vegetables and fruits on 230 hectares of land. Its entry into rice farming follows the decision last month by Sumitomo Chemical Co., Tokyo-based maker of agrochemicals, to start rice production and sales in Japan.

Corporate Farming

The country is the world’s 10th largest rice producer, according to the U.S. Department of Agriculture. Rice planting has halved from a record 3.2 million hectares in 1969 and production will be 7.9 million metric tons this year, according to Japan’s agriculture ministry.

Japan’s ruling party is taking steps to increase corporate participation in agriculture as pressure increases from the U.S. and other farm-exporting countries to cut import tariffs.

Abe’s Liberal Democratic Party proposed law revisions to allow non-food companies to own almost 50 percent stakes in farming entities from the current 25 percent, and to streamline approvals of land sales by individuals to farming corporations.

The rule changes would increase the number of agricultural ventures between farmers and companies and reduce the power of JA-Zenchu, the nation’s largest farm lobby and an opponent of the U.S.-led Trans-Pacific Partnership trade plan, said Chino at Continental Rice, who has traded grains for almost four decades.

(Corrects headline of Oct. 8 story to remove reference to scale of Aeon’s rice-farming ambitions, adds cooperative reference in second graph.)
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