A study on the characteristics of Japanese new farm businesses from an international point of view
2000
Yagi, H. (Tokyo Univ. (Japan))
New, big farms that have some marked characteristics that are different from conventional family farms are coming to the fore in contemporary Japan. These farms: a) have not only expanded horizontally, but also have exhibited vertical enterprise diversification, b) additionally acquire and effectively utilize management resources such as land, labor and capital, c) intend to incorporate and to form affiliations with other companies, d) are strategically oriented and have long-range objectives, e) develop their business based on marketing activities, f) are fully commercialized farms, and g) have as a crucial factor in their success the manager's ability. However, the present situation of Japanese agriculture does not reach to be same level as in the US and the UK where big farms account for more than half of farm production. Vertical diversification, such as processing and direct marketing of farm products, is the main factor in the growth of these farms, since expansion of farm size is a little bit difficult for those in a small country. Moreover, as the size of the food market in Japan is almost as big as that of the US market, and as there are many farms located a short distance from residential areas, conditions are favorable for the business expansion of Japanese farms. Farm businesses are essentially those wherein capital efficiency is relatively low in comparison to other businesses because of the large sums laid out in farm assets. This fact was identified in the financial data of the US and UK farms. New farms in Japan avoid this problem by leasing land. However, this causes new financial problems such as a collateral security and borrowed cash flow over the course of their business growth. Some countermeasures are needed for solving those problems
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