Farming in Japan: The challenges and potential

1 February 2024

Japanese version: 1 November 2023

Katsuya Hirano
Center for Policy and the Economy

Tsubasa Takekawa
Center for Policy and the Economy


  • Japan will need to be importing 2 million more tonnes of staple grains in 2040
  • Policymakers must set clear targets for the arable land and workforce needed to maintain food security
  • Business opportunities await in improving the country’s food-production infrastructure and repurposing surplus farmland

Production capacity could fall to 40% by 2050

The number of Japan’s agriculture management entities—a broad category* from the country’s statistics—fell below 1 million in 2022. Their numbers have been declining by between 300,000 and 350,000 entities every five years, so our estimates suggest that by 2050 there may be only 180,000 of them left. This could push agricultural production levels, by value, down to ¥4.3 trillion by 2050—less than half of 2020’s ¥8.9 trillion.

Looking at domestic demand and production for staple grains, including rice and wheat, we see that demand was 14 million tonnes in 2020 and this is on track to drop by around 30% to 10 million tonnes in 2050. Production may decline at a faster rate, falling by around 40% from 8.75 million tonnes in 2020 to 3.27 million tonnes in 2050.

*The Ministry of Agriculture, Forestry and Fisheries defines an agriculture management entity as an entity that either produces agriculture products or engages in agriculture under consignment agreements and that has 30 acres and over of cultivated land under management. This can include businesses run by an individual or family, or by a co-op, non- and for-profit association, or other incorporated and unincorporated organization

Supply–demand gap could be 2 million tonnes higher in 2040 than today

If our forecast comes to be, the gap between demand for staple grains and domestic production may peak in 2040 at 7.23 million tonnes, some 2 million tonnes higher than it is today (Figure).

Figure: Outlook for domestic demand and production of staple grains
Outlook for domestic demand and production of staple grains
Source: Mitsubishi Research Institute, Inc. from multiple data sources
We see minimal risk that Japan could suddenly become unable to import grains amid the current global trade climate*. However, looking 15 years into the future, the country needs to cautiously assess whether it will be able to increase imports by the 2 million tonnes it will need. Around 200 million tonnes of wheat is currently traded globally. Right now Indonesia is the biggest importer, but still buys only about 10 million tonnes. It is a graver situation for rice, which trades internationally in much smaller quantities than wheat.

*The US produces 50 million tonnes of wheat and exports over half, while Canada produces 35 million and exports 25 million tonnes. Japan imports most of its wheat from Australia and other friendly trading partners

1.13 million ha of land required in 2040

We have found that, assuming domestic supply and demand for staple grains continue along current trends, domestic production will not increase and Japan could find itself in an unsustainable position unless it increases imports. Factor in the climate crisis and other risks and we see that even over the next 15 years or so, at the very least Japan needs to define realistic targets to keep import volumes at around the same levels as today.

In terms of arable land, Japan currently has a total of about 3.2 million ha in cultivation. Of that, around 1.7 million ha are dedicated to rice and wheat. By our estimates, to keep imports of those grains in 2040 on a par with today’s levels, Japan will need to have 1.13 million ha under cultivation. But we foresee only 0.77 million ha under plough by then—a 0.36 million ha shortfall.

Develop medium-sized farms as well as large ones

Under the second Abe administration, agriculture was positioned as a growth industry and significant progress was made to scale up agricultural operations, particularly for livestock and dairy farming. Greater amounts of land have since been accumulated for rice and wheat, a mark that those products too have scaled up, and this has resulted in the emergence of large operations, some of over 100 ha.

Looking more closely at the situation on the ground around the country, we see that there is little scope for further farmland accumulation. On top of this, production costs are rising and rice prices are falling, making it harder for rice-paddy farmers working 10–30 ha in particular, to continue operating.

Today, as an extension of the Farmers and Farmland Plan that defines ideal scenarios for regional agriculture, legislation requires the development of local plans premised on accumulation of farmland, with communities tasked with developing agricultural visions for their own localities. Japan’s farmland is a patchwork of small plots, greatly encumbering accumulation toward large-scale agricultural operations. An agricultural business entity would need to accumulate at least 100 ha to be able to generate annual sales of ¥100 million, a threshold commonly used to differentiate self-employed farmers and agribusinesses based on corporate management systems. Most farmland in Japan, though, does not avail itself of accumulation that would enable the efficiencies required for farming it to make business sense.

There is, however, enough agricultural land that could be consolidated to allow family-run farms to generate sales of ¥20–30 million on 20–30 ha. Thus we think encouraging and helping develop medium-sized, independent farms should be an important part of future policies for maintaining agriculture and arable lands*.

*“Diverse agricultural human resources” were discussed in the Basic Law on Food, Agriculture, and Rural Areas, but there needs to be careful consideration if this means “protection of small/medium-sized subsistence farm households.” We use medium-sized farm households to mean local agricultural leaders with self-sustaining operations that can support local agriculture into the future, not “subsistence farm households needing protection.”

Japan needs a farmland vision with specifics

Even with our target of having and keeping available at least 1.13 million ha of arable land in 2040, about 500,000 ha of it would remain fallow. The crucial question then will be whether to keep it arable. And if Japan opts to keep it arable, we would need to think about how to fund the costs of doing so.

We took the following approach to estimate the costs involved in keeping 500,000 ha of land arable. Some 1 million tonnes of wheat is grown in Japan on around 230,000 ha. The government subsidizes wheat production to the tune of ¥100 billion, funded by a markup on imported wheat. This ¥100 billion from state coffers is roughly equivalent to keeping an arable reserve of 230,000 ha. On this same basis, it would cost around ¥220 billion to keep 500,000 ha arable.

Going forward we expect new uses for farmland to emerge, such using it for producing feedstock for biofuels and bioplastics and for renewable energy. With a focus on the cost-benefits, new business opportunities may emerge as Japan discards old assumptions and starts to use agricultural land in new ways. Japan needs to take a long view and develop a vision for how it uses its farmland—a vision that also posits specific target figures.

Author profile


Katsuya Hirano

Center for Policy and the Economy

Katsuya Hirano does consulting on solutions to societal issues concerning people and organizations, and issues between individuals and companies. He helps customers become the kind organization they want to be by providing them with effective ideas based on frank confrontation with the practical problems they face in the workplace and organization. He is also involved in surveys, research, and providing ideas on agriculture as a member of a farming family.


Tsubasa Takekawa

Center for Policy and the Economy

Tsubasa Takekawa provides private-sector enterprises with support for formulating and executing business and marketing strategies with focus on the agricultural and food sectors. He is also a keen observer and commentator on the future of farming in Japan and does assessments of government agricultural policy, activities he carries out as part of his in-house independent research. A salient feature of his approach is the importance he places on weighing both the direct opinions of those involved in farming and his own analysis of macro-level data.