The Journal The Authority on Global Business in Japan

The Fourth Industrial Revolution—a fusion of cloud-connected technologies, Big Data, and biotech—is changing the way we do business, travel, communicate, and even how we eat and produce food. The agriculture industry has already seen two revolutions of its own, with scientists and manufacturers dabbling in mechanization, plant breeding, and genetics. Now, this technological shift has sparked the rise of smart farms and what is being called the Third Green Revolution.

Although agritech—a broad collection of innovations and technologies that can be applied to farming—is not new, it is finding new life in Japan and abroad. As the world’s resources are stretched thin by population growth, and as environmental factors begin to impact our food supply, agritech is finding sure footing as a possible solution.

This is particularly true in Japan. Following the devastating Great East Japan Earthquake and Tsunami of March 11, 2011, the demand for untainted food swelled. The declining population of farmers has caused further production problems, making technologies that can improve yield, profit, and provide clean produce more important than ever.

More companies are looking for ways to invest, whether through venture capital funds, public equities, or direct investment. In Japan, technology companies such as Toshiba Corporation and Panasonic Corporation are finding ways to support smart farming.
But how are these technologies progressing? What potential do self-contained farms have to become the new way to grow fruit and vegetables? What is the science behind the agritech movement?

According to Digital America: a tale of haves and have-mores, a 2015 report by consultants McKinsey & Company, agriculture and hunting remain the least-digitized industries in the United States.

But farmers have long been seeking the most efficient tools for their trade. Sensors that measure air and soil, livestock biometrics, and automated systems that use the Internet of Things (IoT) to control irrigation are just some of the tools already available. Precision equipment, geo-positioning systems, Big Data, unmanned aerial vehicles, drones, and even robotics are also leaving their mark on farming.

“The whole agritech sector is really interesting—it’s kind of like the healthcare sector, because it’s fundamentally important,” said Trista Bridges, founder and president of Vizane KK. “It’s very complex, very regulated, and there’s lots of different actors and stakeholders.”

The Journal also spoke with representatives from Japan’s Institute of Agricultural Machinery (IAM), part of the National Agriculture and Food Research Organization (NARO), about this growing sector.

“In smart agriculture,” they explained, “it is important for it to be cost-effective and have set rules and regulations, such as liability upon accidents.”

Bridges recently helped organize the AgriTech Summit (AG/SUM), which took place in Tokyo from May 23 to 25 and focused on how disruptive technology is helping to shape agriculture. She explained that many start-ups at the event provided a variety of solutions to meet a range of agriculture needs. Not one, however, delivered an end-to-end solution.

One of the main issues is understanding farmers’ needs, which differ from farm to farm. “The [return on investment] on a lot of these technologies is not proven at all,” she added. “It’s extremely complex to make a smart farm that is full-functioning, and indoor farming is probably a little easier because it’s self-contained.”

She also pointed out that the price of LED light bulbs is beginning to drop, an important change that will help many indoor farms.

Japan-based plant factory operations and vegetable production company Spread Co., Ltd. has created its own LED lighting for the soon-to-open Techno Farm Keihanna. Chief Executive Officer Shinji Inada said, “The lights are tailored to vegetables cultivated in indoor vertical farms.” He added that, compared with existing LED lighting, the system reduces energy consumption by 30 percent.

The number of self-contained farms is certainly increasing, helping the sector grow. They also provide a place for innovative technologies to be tested.

“I think it has a lot of potential, especially in a country where you have limited space and fewer people working on farmland,” Bridges said. But, she added, it is not yet clear in what situations equipping a farm with robotics and advanced technologies is the best option.

Inada added, “Although indoor farming comes with its fair share of challenges, its ability to control the environment not only allows for more stable production year round, but also for the cultivation of high-quality produce without the use of pesticides.”

Another aspect to consider is the cost of bringing in produce. “In Japan, you have substantial issues with importation of food,” Bridges explained. This means pressure is mounting for Japan to become more self-sustaining, especially as migration to the city increases. This is a concern shared by the United States.

Gotham Greens, an urban greenhouse opened its doors in Brooklyn in 2009. During the winter months, much of New York City’s produce was coming from places such as Mexico, California, and Israel, and CEO Viraj Puri saw a business opportunity. “We realized that by the time the produce made its way here, it was at least a week old and had changed hands multiple times. We also began to notice that consumer preferences were shifting toward more local and sustainably produced food.”

Gotham Greens, New York

The importance of agritech falls into two crucial areas undergoing change: climate and population. Rapid growth of urban areas, resulting in declining land availability for agriculture, is fueling the need to find farming alternatives.

According to the Food and Agriculture Organization of the United Nations report, Strategic Work of FAO for Sustainable Food and Agriculture, by 2050 there will be more than nine billion people on earth. That means we will need to produce 60 percent more food—an increase from 8.4 billion metric tons a year to almost 13.5 billion metric tons. This will require increased use of fertilizer, water, pesticides, and drugs, and the introduction of new crop varieties and animal breeds. Much of this production will come from already-cultivated land.

Unpredictable climate change also impacts the productivity of farms. The report states that sustainability relies on enhanced systems and “we must learn to produce more food with less resources and do so under much harsher conditions.” Smart farm alternatives could provide some respite.

One such smart farm is in Singapore. Sky Greens, a low-carbon, hydraulic-driven vertical farm, has found a way to create a sustainable business using minimal land, water, and energy. CEO Jack Ng explained how he saw an opportunity while working in the construction industry at a time when Indonesia had stopped exporting sand to Singapore. This heavily impacted the industry.

He knew that if something such as that happened in the agricultural sector, the impact would be much greater. “I realized that our country is very vulnerable due to our size and open economy,” he said.

Sky Urban Solutions—Sky Greens’s holding company—has patented its water-pulley system, which harnesses hydraulic power for irrigation. “This reduces the energy required to rotate the trays of crops upwards to get natural sunlight and down to the water tray for irrigation,” he explained.

Ng claims the system uses just five percent of the water used in conventional farming, and reduces energy consumption—each tower requires just 40W per hour to grow up to 2,500 plants.

Reduced labor is another key benefit. “The opportunity for our technology lies in the fact that it requires relatively few people to operate,” said Inada. “And it provides a comfortable and safe environment for its farm workers.”

The environmental benefits are also broad, with no agricultural runoff thanks to a scalable and flexible closed-loop irrigation system. Sky Greens has technology that can meet the unique needs of the local environment. Towers can also be built on non-arable land.

Gotham Greens, too, has found sustainable and environmentally friendly solutions that serve its inner-city communities all year round. “Our pesticide-free produce is grown using ecologically sustainable methods in 100 percent clean, electricity-powered greenhouses. We use advanced, recirculating hydroponic techniques to maintain precision plant nutrition.”

In addition, the greenhouse uses many of the technologies mentioned previously, including sensors, controls, and data science to create optimal conditions for the plants to grow. “Hydroponic farming, when practiced effectively, can be very efficient,” Puri said.

NARO-IAM has also developed a movable bench system for high-density cultivation of strawberries. This means workers do not have to move between cultivation benches, saving time and labor. The organization has also developed a robotic strawberry harvester.

Other projects to further develop agritech are now on NARO-IAM’s drawing board, including joining the Cross-ministerial Strategic Innovation Promotion Program (SIP) created by the Cabinet Office of the government of Japan. NARO-IAM works as the representative research body, looking at revolutionary technologies to boost rice production.

Of course, this all requires rules and regulations to ensure food safety. “In March 2017, the Ministry of Agriculture, Forestry and Fisheries of Japan announced safety measure guidelines for autopilot agricultural machinery, and this will be revised as autopilot in agriculture advances,” NARO-IAM experts explained.

Efforts in Japan to encourage smart farming businesses are strong. According to the Nikkei Asian Review on May 22, the government of Japan is moving to cut taxes for operators of high-tech indoor farms to encourage growth in this sector. Land that is paved over for indoor farms will be subject to the same taxes as agricultural land rather than higher property taxes.

Japanese technology companies are also taking an interest in the smart farming sector in Singapore. Panasonic Factory Solutions Asia Pacific, a subsidiary of Panasonic Corporation, opened an indoor vegetable farm in Singapore, and uses its LED lighting to grow Japanese vegetables that cannot withstand Singapore’s tropical climate.

Opening a smart farm is not all smooth sailing. Inada’s experience opening Spread’s Kameoka Plant in 2007 highlighted this. “It took us about six years to reach the point of stable cultivation in such a large environment.” He explained that there were also difficulties with conveying the concept to stores and the general public.

Ng said some farmers have misconceptions about the aim of his farm. “I am often misunderstood; [farmers think] that my innovation is built in order to replace them,” he said. “Farmers are also generally skeptical of modern methods of cultivation, and are therefore slow to embrace technology and engineering solutions.”

Even now, Ng admits that he is still learning in the rapidly growing agritech sector. “Any viable modern farming system is a synthesis of two main branches of science: engineering and horticulture.” Coming from the construction industry, for Ng this meant learning from scratch about plant science, crop behavior, pest control, and environmental factors.

Gotham Greens’ Puri, too, had to overcome obstacles when opening his greenhouse. “We initially faced some setbacks,” he said. “Challenges we faced included finding the right real estate and landlord, as well as logistics, regulatory challenges—zoning and permitting—and high upfront costs.”

Sky Greens uses a system of rotating tiers of growing troughs mounted in an aluminum frame.

One of Ng’s main concerns with the agricultural sector is that “many traditional farmers are giving up their trade, getting on in years, and are not likely to be succeeded by their children. The younger generations will not be attracted to agribusiness unless it pays more, requires much less work, and offers better prospects.”

However, the opportunity is there to further advance the smart farming sector, and having the right approach is crucial. Puri emphasized the need for perseverance and capital for any business looking to enter the market.

“For any vertical farm or businesses involving intensive cultivation, mixed or integrated farming, it is important to work backwards by identifying market demand to determine crop selection.”

Puri’s concerns for the industry goes further than just the pressures of the environment. “One of the problems with our current food system is over-industrialization, which has led to a huge disconnect between consumers and producers.”

“Long distance transport associated with trucking food across the country—and the food waste that results from it—are also significant issues.” he added. The idea that Gotham Greens can harvest daily and deliver food straight to supermarkets and restaurants within hours makes the self-contained greenhouse a viable option in any big city environment.

Japan’s smart farming sector is certainly growing, and Inada is looking to expand Spread’s operations. “Domestically, we will aim for a 10 percent share of the Japanese lettuce market by utilizing a franchise/ownership model to establish 20 facilities and a daily production capacity of 500,000 heads of lettuce.”

As technological innovation transforms agriculture, the smart farming sector is bound to go through the trials that other industries have experienced during such transitions. But we are sure to see more and more smart farms on the global scene, and the Third Green Revolution could ensure that each of the world’s soon-to-be-nine-billion people are fed.

Maxine Cheyney is a staff writer at The Journal.
The younger generations will not be attracted to agribusiness unless it pays more.