A Comparison of The Conventionalisation Processes in The Japanese and Australian Organic Sectors

A Comparison of the Conventionalisation Processes
in the Japanese and Australian Organic Sectors

by
Sangeeta Jordan
Thesis
Submitted to Hokkaido University
for the degree of
Doctor of Philosophy
Supervisors: Professor Riichiro Iizawa and Professor Shuji Hisano
Faculty of Agriculture
February 18, 2010
Contents
Acknowledgements v
1 Introduction 1
1.1 Conventional agro- food chains . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Social movements and the agro-food system . . . . . . . . . . . . . . . . . . . 2
1.2.1 The teikei movements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.2.2 Local food and chisan-chiso movements . . . . . . . . . . . . . . . . . . 3
1.2.3 The organic movement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.3 Conventionalisation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.3.1 Organic standards and certification . . . . . . . . . . . . . . . . . . . . 7
1.3.2 Agribusiness capital and the organic sector . . . . . . . . . . . . . . . . 8
1.4 Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.5 Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.6 Outline of chapters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2 Rural Transformation in Japan 11

2.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.2 The mercantile-industrial food regime . . . . . . . . . . . . . . . . . . . . . . . 12
2.3 Japanese agriculture under the mercantile-industrial food regime . . . . . . . 13
2.4 The crisis of the mercantile-industrial food regime . . . . . . . . . . . . . . . . 15
2.5 Towards a green-capitalist food regime? . . . . . . . . . . . . . . . . . . . . . . 16
2.6 Corporate restructuring of Japanese domestic agricultural production . . . . . 17
2.6.1 Corporate farming bodies . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.6.2 Food service industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.6.3 Construction company interests in agriculture . . . . . . . . . . . . . . 23
2.7 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3 The Organic Sector in Japan 25

3.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.2 Sanshō teikei: a response to the crisis of the conventional agro-food system . 25
3.3 Third-party distributors and the displacement of sanshō teikei . . . . . . . . . 28
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Contents
3.4 Organic certification and standards . . . . . . . . . . . . . . . . . . . . . . . . . 29

3.5 Government promotion of organic agriculture . . . . . . . . . . . . . . . . . . 33
3.6 The current state of the organic sector in Japan . . . . . . . . . . . . . . . . . . 34
3.7 Case studies of organic farmers . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
3.7.1 Case study 1: Tsuchi to Midori no Kai and Na no Hana no Kai: The
Regressive Model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
3.7.2 Case Study 2: The Hayashi Farm . . . . . . . . . . . . . . . . . . . . . . 54
3.7.3 Case Study 3: Sanbu Yasai Network . . . . . . . . . . . . . . . . . . . . 58
3.8 Conclusion from case studies . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
4 Watami Co. Ltd and the Organic Sector 65

4.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
4.2 Watami food services business . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
4.3 Watami farming operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
4.3.1 Case study: Watami Farm, Setana town . . . . . . . . . . . . . . . . . . 70
4.3.2 Case study: Watami Farm Kyotango . . . . . . . . . . . . . . . . . . . . 73
4.3.3 Case study: Toma Green Life . . . . . . . . . . . . . . . . . . . . . . . . 74
4.3.4 Case Study: Watami Farm, Teshikaga town . . . . . . . . . . . . . . . . 75
4.4 Watami Farm and labour management . . . . . . . . . . . . . . . . . . . . . . . 76
4.5 Watami contract farmers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
4.5.1 Case study: Yuuki Seikatsu Aya . . . . . . . . . . . . . . . . . . . . . . 79
4.5.2 Case study: Organic Shin Shinotsu . . . . . . . . . . . . . . . . . . . . . 81
4.6 Watami farm and supply of organic certified farm inputs . . . . . . . . . . . . 87
4.7 Watami Farm relations with local governments . . . . . . . . . . . . . . . . . . 89
4.7.1 Case study: Chiba prefecture . . . . . . . . . . . . . . . . . . . . . . . . 89
4.7.2 Case Study: Setana town, Hokkaido . . . . . . . . . . . . . . . . . . . . 91
4.7.3 Case Study: Kyotango, Kyoto . . . . . . . . . . . . . . . . . . . . . . . . 91
4.8 Conclusion: Organic farming and agribusiness capital in Japan . . . . . . . . 93
5 Organic farming and agribusiness capital in the Darling Downs 97

5.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
5.2 Characteristics of Australian agriculture . . . . . . . . . . . . . . . . . . . . . . 97
5.3 The Australian organic industry . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
5.4 Agribusiness penetration of the organic sector: A case study of Kialla Pure
Foods Pty Ltd . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
5.4.1 The Darling Downs and Australian wheat production . . . . . . . . . 100
5.4.2 Processing and distribution . . . . . . . . . . . . . . . . . . . . . . . . . 102
5.5 Kialla Pure Foods expansion into organic livestock feed . . . . . . . . . . . . . 105
5.6 Producer contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
5.7 Case Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
5.7.1 Cited reasons for conversion to organic farming . . . . . . . . . . . . . 108
5.7.2 Agronomic practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
5.7.3 Labour practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
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Contents
5.7.4 Sharecropper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113

5.7.5 Marketing and distribution nodes . . . . . . . . . . . . . . . . . . . . . 114
5.7.6 Value adding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
5.8 Discussion: Role of off–farm capital . . . . . . . . . . . . . . . . . . . . . . . . 117
5.9 Evidence of Conventionalisation . . . . . . . . . . . . . . . . . . . . . . . . . . 118
6 Organic farming and agribusiness capital in Victoria 121

6.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
6.2 Case studies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
6.2.1 Case Study 1: Tomato Grower . . . . . . . . . . . . . . . . . . . . . . . 121
6.2.2 Case Study 2: Wombat Forest Organics . . . . . . . . . . . . . . . . . . 124
6.2.3 Case study 3: Keilor Valley Gardens . . . . . . . . . . . . . . . . . . . . 129
6.3 Conventionalisation in the Victorian organic horticultural sector . . . . . . . . 133
7 An assessment of surveyed organic farmers 135

7.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135
7.2 Assessment of surveyed farmers in Japan . . . . . . . . . . . . . . . . . . . . . 137
7.2.1 Farming history . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137
7.2.2 Farm size . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137
7.2.3 Agro-ecological practices . . . . . . . . . . . . . . . . . . . . . . . . . . 137
7.2.4 Livestock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140
7.2.6 Marketing practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141
7.2.7 Degree of corporate dependence . . . . . . . . . . . . . . . . . . . . . . 142
7.2.8 Gross income and production costs . . . . . . . . . . . . . . . . . . . . 142
7.2.9 Reasons for organic production . . . . . . . . . . . . . . . . . . . . . . . 142
7.2.10 Intention to increase farm size . . . . . . . . . . . . . . . . . . . . . . . 143
7.2.11 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143
7.3 Assessment of surveyed farmers in Australia . . . . . . . . . . . . . . . . . . . 143
7.3.1 Agro-ecological practices . . . . . . . . . . . . . . . . . . . . . . . . . . 145
7.3.3 Marketing practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148
7.3.4 Reasons for organic production . . . . . . . . . . . . . . . . . . . . . . . 149
7.3.5 Intention to increase farm size . . . . . . . . . . . . . . . . . . . . . . . 149
7.3.6 Summary of surveyed farmers in Australia . . . . . . . . . . . . . . . . 149
8 Discussion and conclusion 151

8.0.7 Implications of this study . . . . . . . . . . . . . . . . . . . . . . . . . . 154
Bibliography 155
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155
iii
Acknowledgments
First of all, I would like to thank my supervisors, Dr Shuji Hisano and Professor Riichiro
Iizawa, for their careful guidance and patience during my study years. Dr Shuji Hisano
played a very important role in shaping my thinking by exposing me to new ideas and pro-
viding detailed comments on my work. Without his support, encouragement, and feedback
I would not have been able to complete this thesis. I am also profoundly thankful to Profes-
sor Kazuaki Araki who assisted me in many ways including making arrangements for me
to meet farmers and explaining technical terms about Japanese agriculture to me. I would
also like to acknowledge the help of Dr Oyama, Dr Sakai, Dr Yokota , Dr Nakatsuka and Dr.
Akiyama who also kindly accompanied me to the farms of many growers.
I would not have been able to complete my studies without the help of the graduate
students at Kyoto University and Hokkaido University. In particular, Ikejima Yoshifumi and
Kae Sekine deserve special thanks for their friendship and help with my mostly last minute
translation tasks. I would also like to acknowledge the assistance of Naoshi Hashimoto
who helped me carry out case studies in Australia and provided me with moral support
particularly during the final stages of writing up my thesis.
I am deeply grateful to the many farmers in Australia and Japan who were open and
generous with their time in our interviews. I am particularly grateful to the many Japanese
farmers who were very patient with my often faltering Japanese. I feel deeply indebted to
Mr Koori, a farmer from Yuuki Seikatsu Aya who spent a lot of his valuable time talking to
me about organic farming despite being being very busy with farm work. I also sincerely
appreciate the cooperation of the CEOs of the corporations surveyed in this study who en-
gaged in email correspondence with me on many occasions.
Lastly I would like to thank my family and friends who provided me with support and
encouragement during the many years of study. I sincerely thank them for always having
confidence in me even when I was unsure of myself.
My years as a graduate student at Hokkaido University were funded by the Japanese
government.
Sangeeta Jordan
Sapporo
February 18, 2010
v
Chapter 1
Introduction
Introduction
T he present work is a comparative study of the evolution of the organic sectors in Japan
and Australia which seeks to delineate the transformation in the respective sectors and
the forces which are driving the transformation. A study of the organic sector in Australia
is provided to contrast a sector where social movements have actively tried to reshape the
farming system with a sector in which social movements have played a comparatively neg-
ligible role.
This paper identifies several transformative pressures operating on the Japanese organic
agricultural sector. Japanese organic farming has its origins in the sansho-teikei producer-
consumer cooperative movements in the 1960s and 1970s. Since the institutionalization of
organic standards by the Japanese Ministry of Agriculture Forestry and Fishery in 2001,
Japanese off farm capitals from the food services, supermarket, and food processing sectors
have established and expanded dedicated organic food supply chains based on company
farms and contract farming. The entry of off-farm capital into the Japanese organic sector
has been occasioned by stagnation and the growth of competition in off-farm sectors of the
Japanese economy, as actors in the food processing and retail sectors have turned to special-
ized agricultural production to create products that are competitively distinguished in mass
markets on the basis of health and safety, and to capture economic rents made available by
organic certification. The local and national governments have both promoted the corporate
restructuring of the domestic agricultural sector in response to the failure of long-standing
post-war attempts to reconstitute family based farming along productivist lines, and identi-
fied organic farming as a special value added production that will allow domestic producers
to compete with imports on bases besides cost. This paper interprets the conventionalisation
of the Japanese organic sector as a process through which the demands of social movements
associated with organic farming have been selectively appropriated and adapted by capi-
tal and the state in the furtherance of a corporate restructuring of the domestic agro-food
system.
1.1 Conventional agro- food chains

While capitalist transformation of non-farm industrial sectors has occurred with the demise
of artisanal petty commodity production, and the ongoing concentration of ownership and
control over production in the hands of a relatively few and ever larger financial and indus-
2 1. Introduction
trial capitalist corporations, the nature of the farming process itself is posited as impeding the
ability of capital to transform agricultural production in the manner of the industrial model.
Consequently, capital penetration of the farm sector is regarded as having taken place via the
reconfiguring of farm processes as inputs easily produced in the factory, a process referred to
as ‘appropriation’ and by the capture of profits in the processing, distributing and marketing
links of the agro-food system, ‘substitution’ in the lexicon of Goodman et al. (1987). In this
way, farms frequently retain formal independence as sites of petty commodity production,
while being integrated vertically into commodity chains where dominance is exercised by
non-farm agribusiness capital.
At the same time, as vertical integration of agro-food commodity chains has provided
a mechanism for off-farm capital to appropriate a growing share of the profits in the agri-
cultural sector, the scale of operations at each stage of the agro-food commodity chain has
grown, with trends towards increased farm sizes and the horizontal integration of the op-
erations of agribusiness firms within each non-farm link of an agro-food commodity chain
(Heffernan, 2000). Thus capital penetration of a particular agricultural commodity sector
may manifest itself directly through the industrialization of the off-farm links of the agro-
food chain in question, and somewhat more indirectly on the farm, through the adoption of
increasingly standardised farming practices reliant on capital and energy intensive material
inputs, including seeds, chemicals and machinery, the provision of which falls to off-farm
industrial capital.
Though the conventional agro-food system described in outline above has successfully
raised yields by comparison with the early or pre-capitalist eras when local social units effec-
tively exercised seed-to-plate control over their food systems, and has ensured an abundance
of low-cost food for the global North at least, the reliance of productivist agriculture on non-
renewable off farm inputs, and its alienation of the consumer of agro-food commodities from
the production process, has created significant social and environmental imbalances (Magd-
off, Foster, & Buttel, 2000). Following Marsden, Banks, and Bristow (2000), Lawrence (1996)
identifies critical aspects of the late capitalist penetration and transformation of the rural
economy; these include: Increased yields and productivity, corresponding to the adoption
of new technology by farmers, in the face of falling or stagnant effective demand, leading to
intensified competition among producers whose future viability depends on the adoption of
yet further capital intensive inputs supplied by off-farm capital, and where possible, an in-
crease in size of holdings. A growing polarisation between a relatively small number of large
farms - often linked to agribusiness processing networks through producer contracts - and
smaller farms which contribute little to the total output. A disparity between the stagnant or
falling market prices paid for farm produce relative to the environmental costs accrued by
input-intensive farming practices.
1.2 Social movements and the agro-food system

Questions about the extent to which social movements centred around politics of consump-
tion are able to effect social and political change in the face of increasing capitalist penetra-
1.2. Social movements and the agro-food system 3
tion and transformation have gained attention in the literature on agro-food studies. From
the perspective of mainstream social science, and traditional political economy in particular,
consumption has been regarded as being “relatively epiphenomenal compared to the role
played by the master institutions of the economy and production, states and politics, fam-
ily, education and culture,” while consumption practices and behaviours are considered as
“derivative of (rather than causal forces that shape) the core institutions of class and status,
political power and the state, and values and culture” (Buttel, 2000). At the same time, Buttel
(2000) observes that given the important role that consumer boycotts and various forms of
politically informed consumer choice have played in political activism around the agri-food
system, it is hardly surprising that many in the food studies community are comfortable
placing emphasis on consumption practices in spite of the taboo against “consumptionism”
in mainstream social science.
1.2.1 The teikei movements

The teikei movements represented the earliest and most radical crystallisation of a critique
of producer and consumer interests that perceived themselves to be economically and polit-
ically marginalised under the post–war food regime. The teikei movements coincided with
the passage of the Basic Agricultural Laws passed in 1961, 1967 and 1978 which McMichael
(2000) observes were “all designed to support Japan’s emerging export offensive through the
diversion of resources into industrialization and by liberalizing (’internationalizing’) farm
sectors.” In the typology of Buttel (1997), the teikei movements are an expression in an in-
dustrialised country of the indigenist or localising and anti–rationalist type of agricultural
movements, a type which is aimed at achieving ecologically stable, socially harmonious, de-
centralised communities a goal of which is the de-industrialisation of the relations between
consumption and production. These groups have particular concerns with food quality –
understood not only in the sense of being free of health-threatening micro-organisms, but
rather in terms of being produced under ’natural’ conditions and under non-exploitative so-
cial relations. In this schema, it will be argued here that the teikei movements represented
attempts by farmers and producers to substantially de-link from the post-war agricultural
economy which was consistently lowered to the benefit of the industrial economy.
1.2.2 Local food and chisan-chiso movements

Chisan-chiso, which is an abbreviation of jiba-seisan, jiba-shohi, meaning “locally produced, lo-
cally consumed,” is a slogan which was initially promoted in the 1990’s by non-governmental
organisations active in the food and agricultural sector, and then quickly taken up by local
and national governments, and JA (Japanese Agricultural cooperatives), in an attempt to
promote the local consumption of locally produced food (Kimura & Nishiyama, 2008). Al-
though, following the adoption of the slogan by the national government and the JA, the
majority of activities centred around chisan-chiso have come to be government and JA based,
Kimura and Nishiyama (2008) consider chisan-chiso to be a social movement analogous to
local food movements such as Community Supported Agriculture (CSA), farmers’ markets,
4 1. Introduction
food policy councils, community gardens, farm-to-school programs, and school gardens in
North America, the Slow Food movement in Italy, and local provisioning in the Brazilian city
of Belo Horizonte. In their survey of the activities of the chisan-chiso movements, Kimura and
Nishiyama (2008) categorise the activities of the movements into the themes around aware-
ness raising and education, and marketing. Against the backdrop of the decline of consumer
confidence in the quality and safety of conventional agro-food system, the chisan-chiso move-
ment promotes the locally produced food as assuredly safe, fresh and trustworthy, by con-
trasting the anonymity of the global food system with the traceability and “placedness” of
locally produced food. The consumption of locally produced food is promoted as a way
to improve the conditions of Japanese agriculture and farming communities by supporting
regional economies and raising domestic food self sufficiency and, further, chisan-chiso ra-
tionalises the consumption of locally produced food as less costly ecologically in terms of
lower transportation costs and greenhouse gas emissions, or as benefiting the environment
through the conservation of agricultural land. In supporting the preservation of regional
culinary traditions, chisan-chiso has also been framed as supporting healthy dietary patterns
and reversing the deleterious effects of fast food and “westernised food” on dietary habits
in Japan in the post-war era.
The adoption by various parties of the slogan chisan-chiso can be placed in the context of
the continuing decline of the Japanese agricultural sector in the 1990’s, and subsequent ef-
forts by JA and the different levels of government to be seen to be promoting alternative poli-
cies in an effort to revitalise agricultural economies. Given the de-localisation of food due to
Japanese government and JA policies that promoted regional and farm crop specialisation
and mass production (Kimura & Nishiyama, 2008), and the precipitous decline in domestic
food self-sufficiency, campaigns by the national and regional governments, often carried out
with the support of local farmers and sections of civil society, have sought to increase the
share of agricultural value captured by regionally based actors through “re-branding” pro-
grams and publicity campaigns celebrating the particular locality where food is produced
(Ikejima & Hisano, 2008). Thus, in their critical evaluation of the chisan-chiso movement,
Kimura and Nishiyama (2008) note that “while chisan-chiso is a concept with radical subver-
sive possibilities, it has increasingly been tamed by local and national governments and JA
units, which tend to see it as a mere marketing slogan.” Taking into account the widespread
concern about the health and safety of conventionally produced food, the public unease in
Japan about the falling rate of domestic food self-sufficiency, and awareness of the social and
environmental costs of elongated and agribusiness-dominated conventional food commod-
ity chains, chisan-chiso, and local food in general, has been able to gain currency as a panacea
to the ills of the modern food system. This has taken the form of a “local food” movement
which has become a locus of agro-food politics in many parts of the world.
1.2.3 The organic movement

The rise of the organic farming movement may be situated in a broader social context of at-
tempts to redress imbalances created by the conventional productivist model of agricultural
production: smaller or marginalised agricultural producers sought to attenuate the techno-
1.3. Conventionalisation 5
logical, financial and market linked dependencies that subordinate the farming sector to the
economic goals of agribusiness capital, as identified by Marsden et al. (2000) and Lawrence
(1996); a relatively small but growing and influential body of well to do consumers in the
global North with concerns about the quality and safety of conventionally farmed foodstuffs
and; the rise to prominence of the environment as an issue of public concern and political
importance. The organic farming movement thus envisioned alternate integrated socially
and environmentally sustainable agro–food production systems which would incorporate
such measures as:
• ”Localism,” whereby local products were produced for local consumption. One of
the values of organic food was attributed to the fact that it was locally produced and
consumed, that people knew where it came from and who produced it, and so could
trust that it was good to eat;
• The use of farm–derived renewable resources and the cycling of farm products and
by–products to reduce dependence on non–renewable and off–farm inputs;
• The use of loose and informal networks to sell harvested produce, enabling farmers to
operate independently from market structures.
Measures such as the above were frequently envisioned as allowing farmers to reassert con-
trol over commodity chain vis–à–vis off–farm capital and to redress the more egregious en-
vironmental imbalances associated with industrialised agro–food systems. At the heart of
the “conventionalisation debate” lies the question of how effectively these early expectations
for organic farming have been realised in practice.
1.3 Conventionalisation
The study by Buck, Getz, and Guthman (1997) and other contributions Clunies-Ross (1990),
Clunies-Ross and Cox (1994), Campbell (1996) and Tovey (1997) were among the first to con-
sider the organic sector from the point of view of agribusiness and off-fam capital on organic
production, in rule setting, inter sectoral dynamics and agronomic practices (Guthman,
2004a). The term conventionalisation is used to describe the processes by which an organic
farming sector reproduces the most salient features of the conventional modes of farming or
is to a degree subsumed into conventional agro–food commodity chains. Perhaps the most
detailed study of the conventionalisation processes has been provided by Buck et al. (1997)
who examined the evolution of organic vegetable production in Northern California. Their
study indicates a bifurcation in the industry between large operations specialised in the mass
production of a few high growth, high profit crops and artisanal producers who continue to
diversify their strategies, growing a variety of crops sold through direct marketing channels
such as farmers markets or by subscription farming 1 . Buck et al. (1997) found that it was
1
The categories describing the bifurcation of the organic industry have been called pragmatic versus ar-
tisanal; ”agribusiness” versus ”lifestyle” (Clunies-Ross, 1990); (Clunies-Ross & Cox, 1994) ”interdependent
lifestyle/domestic/small-scale” versus ”export/ commercialized” (Coombes & Campbell, 1998); chemical-lite
6 1. Introduction
in the marketing and distribution nodes of the commodity chain in which the organic sector
most closely resembled the conventional farming sector.
The ground–breaking study by Buck et al. (1997) of the production, distribution and
marketing nodes of the organic baby salad vegetable commodity–chain of Northern Cali-
fornia was the first to consider organic production from the point of view of the effect of
agribusiness and off farm capital penetration on organic sector, and particularly the impact
of agribusiness penetration on organic “rule–setting, inter–sectoral dynamics and agronomic
practices” (Guthman, 2004b). A major finding of the study by Buck et al. (1997) was that
agribusiness was successfully finding ways to capture surpluses in the sector by penetrating
its most profitable segments which become “industrialised” in the process, thus profoundly
influencing the environment in which non–agribusiness producers operate. The term “con-
ventionalisation” was first coined by Buck et al. (1997) to describe the industrialisation of the
organic sector under the impact of agribusiness penetration.
Following Buck et al. (1997), the term conventionalisation will be used here to describe
the transformation of a regional organic agro–food commodity sector, under the impact of
agribusiness penetration; specifically, borrowing from the lexicon of Goodman, Sorj, and
Wilkinson (1987) and Buck et al. (1997), conventionalisation encompasses:
1. “appropriationism,” whereby off–farm capital usurps farm processes and reconfigures

them as manufactured farm inputs;
2. “substitutionism,” where off–farm capital adds value and asserts control in the pro-
cessing, distribution, and retailing links of the commodity chain;
3. “agro–ecological enfeeblement” where organic agriculture ceases to be substantially

differentiated from the conventional sector, for instance, via certification standards and
procedures that emphasise inputs at the expense of farm processes and practices; and
4. “socio–political enfeeblement,” whereby social relations that are characteristic in con-

ventional capitalist agriculture, for example empowering off–farm capital at the ex-
pense of the farmer, or capital over wage labour, are reproduced in the organic sector,
for instance, by the adoption of practices such as sharecropping and contract farming.
Thus, the term conventionalisation is used here, as in Buck et al. (1997) and Guthman (2004a),
to describe the processes by which an organic farming sector is subsumed into agro–food
commodity chains where dominance is exercised by off–farm capital via appropriationism
or substitutionism, or reproduces the most salient agro–ecological or socio–political charac-
teristics of conventional modes of farming.
versus movement (Goodman, 2000); productivist/reductionist versus movement; ”productivist/reductionist”

versus ”holistic” (Vos, 2000); ”lifestyle” and ”conventional” (Campbell & Liepins, 2001); philosophical versus
pragmatic (Lockie, Lyons, & Lawrence, 2000); ”organic lite/shallow” versus ”deep organic” (Guthman, 2004b)
and ”old guard” versus ”new entrants” (Guthman, 2004b)
1.3. Conventionalisation 7
1.3.1 Organic standards and certification
A growing public perception that organic farming represents a more palatable social and en-
vironmental alternative to the conventional productivist modes of agricultural production
has resulted in an array of niche markets in which labelled organic produce is afforded sig-
nificant price premiums over conventionally farmed produce (Lockie et al., 2000). To overtly
distinguish organic from conventional products, thereby protecting consumers from spuri-
ous claims and maintaining the price premiums afforded to organic products in their bur-
geoning niche markets, organic producers were compelled to support the implementation
of certification regimes for organic produce and, with the passage of time, these early ad-hoc
organic certification regimes have increasingly become more institutionalised, through the
creation of third party certification bodies, and a degree of state involvement in the regula-
tory processes (Buck et al., 1997).
Organic standards and certification regimes have influenced the trajectory of the sector
in ways probably not expected at the outset. Firstly, when implemented, formal organic cer-
tification procedures and standards have generally taken the form of regulations delineating
prohibited and allowable farm inputs, and ensuring that organic produce is separated from
both conventional produce and proscribed materials at each point in the commodity chain
in question. This codification of organic standards is posited as having opened the door to
more reductionist definitions of organic produce in terms of input substitution, where or-
ganic produce is differentiated from conventionally farmed produce largely, or even wholly,
in terms of the material inputs used, with diminished reference to the overall agro-ecological
sustainability of the organic agro-food commodity chain in question (Buck et al., 1997). Fur-
thermore as noted by Bird (1988) and subsequently Allen and Kovach (2000), the dominant
conventional agro-food system is biased towards the more reductionist definitions of ‘or-
ganic’ in terms of input-substitution, for such definitions present opportunities for an array
of new and expensive and commodifiable ‘organic’ off-farm inputs including bio pesticides,
compost, beneficial insects and soil amendments. Thus solutions which can be profitably
manufactured and sold are the ones most likely to be developed, marketed and used (Bird,
1988).
Secondly, the regulatory regime imposes significant costs on farmers during the period
of conversion from conventional to organic farming. Our field survey of organic wheat
and legume producers in the Darling Downs region of Australia suggests that farmers with
higher capitalisation are more likely to be in a position to carry the cost imposed by the mini-
mum three year conversion period stipulated by the certification regime, during which time
the farm yield is reduced but the price premium afforded to certified organic produce is not
available to the farmer (see also Buck, Getz and Guthman, 1997). Thirdly, as noted by Buck,
Getz and Guthman (1997), “the legal right to market produce as organic has become a form
of economic rent itself, which is reflected in higher prices”. The price premium afforded to
certified organic produce is much like a brand name, frequently value added rather than
demonstrably cost based.
8 1. Introduction
1.3.2 Agribusiness capital and the organic sector

Certification standards, which first arose in response to the need of the early, largely arti-
sanal organic producers to differentiate their products from conventionally farmed produce,
have created conditions which tend to favour entry into the sector by more highly capitalised
and large scale producers, and lead to greater opportunities for agribusiness capital to con-
vert organic off-farm inputs into marketable commodities (Hisano, 2008). As suggested by
Magdoff, Foster, and Buttel (2000), once the niche markets are developed and grow into
large scale operations, organic producers can increasingly expect to face new pressures from
agribusiness which tends to penetrate and then monopolize all large scale lucrative markets.
Thus segments of the organic sector are likely to become increasingly embedded into verti-
cally integrated commodity chains parallel to the existing conventional agro-food chains.
As noted by Buck and colleagues, although organic farming was first envisioned as pro-
viding local produce for local markets, the geographical reach of the sector is quite exten-
sive, with a large spatial separation between the farm and the sources of off–farm inputs
and between the farm and the final consumers of farm products. Our field study of Aus-
tralian organic grain and legume farming shows that this sector reproduces to a great degree
the spatial dislocations which are a prevalent feature of conventional agro–food commodity
chains.
1.4 Objectives
In the paper we will examine the conventionalisation and bifurcation theses in Japan and
Australia through a a series of case studies of producers in the Japanese and Australian
organic sectors. We will examine
1. whether there is a division in the organic sector, between farmers involved in small
scale production under teikei arrangements and CSA arrangements on the one hand,
and specialised large production for mainstream marketing outlets on the other.
2. whether the agro-ecological practices on organic farms correlate with either the scale
of production or the type of marketing arrangement under which production is carried
out.
3. whether the labour practices on organic farms correlate with either the scale of pro-
duction or the type of marketing arrangement under which production is carried out.
4. the effect of national standards on the conventionalisation of the organic sector.
1.5 Methodology
The qualitative part of this paper was primarily based on interviews with organic producers,
attendance at industry conferences, and interviews with technical experts and local govern-
ment officials. Interviews of growers and corporations engaged in organic farming in Japan
1.6. Outline of chapters 9
took place mainly between 2006 and 2008. Interviews were carried out with farmers who
shipped produce directly to a consumer group, known as teikei farmers and with non teikei
organic farmers.
Interviews were also carried out with the CEO of Watami Farm and the farm managers
of Watami Farm in Setana town, Kyotango and Toma town. Interviews were carried out in
Japanese and generally lasted for two hours. Email correspondence followed the interviews
with the CEO of Watami Farm and the farm manager of Watami Farm in Setana town. The
interviews with the farm managers mentioned above took place on the farms of each man-
ager. The interview with the CEO of Watami Farm took place in the office of Watami Farm
located in Sanbu town. The interviews carried out with the two organic farming groups pro-
ducing under contract to Watami were carried out on the farms of each group respectively.
Email correspondence with the representatives of each group followed these interviews.
Interviews of growers and industry advocates in Australia took place in 2005 and 2007.
Producer interviews were not taken from random samples but were chosen according to re-
gion and crop. Only full time commercial farmers were selected for this study. In depth case
studies of organic grain and legume growers producing under contract to Kialla Pure Foods
in the Darling Downs Region and organic horticultural growers in Victoria were carried out.
1.6 Outline of chapters

The organization of this thesis is as follows:
Chapter 2 provides an overview of the post-war trajectory of Japanese agriculture, which
is interpreted in terms of the integration of Japan into the mercantile-industrial food regime, the
decline of this regime, and its possible suppersession by the green capitalist food regime.
Chapter 3 begins with a brief overview of the development of organic farming in Japan
and the ensuing regulations governing organic production. Then three case studies of teikei
organic farmers are presented. The agro-ecological practices, labour practices and marketing
practices are examined within the context of the conventionalisation thesis.
Chapter 4 provides a case study of an off-farm corporate entity engaged in organic farm-
ing in Japan. In addition we also present case studies of three organic farmers who farm un-
der contract to the aforementioned corporation. The agro-ecological practices, labour prac-
tices and marketing practices on the farms controlled by the off-farm entity as well as on the
farms operated by the contract farmers are examined within the context of the convention-
alisation thesis. The chapter will show how agribusiness and off farm capital have, through
contract farming, company farming and the creation of corporate controlled organic food
commodity chains, had significant effects on the dynamics of the Japanese organic sector.
Chapter 5 presents an investigation of the conventionalisation of the Australian organic
sector, based on studies of ten organic grain and legume production in the Darling Downs
region of Queensland. The farmer’s agro-ecological practices, labour practices and market-
ing practices are examined within the context of the conventionalisation thesis.
Chapter 6 presents an investigation into organic horticultural production in Victoria is
an effort to determine whether the earlier findings on conventionalisation in the Darling
10 1. Introduction
Downs region are peculiar to the Australian grains and legumes sector that has historically
been integrated into circuits of long-distance and global trade. The study investigated the
agro-ecological, labour and marketing practices of the individual farming operations, in an
effort to understand the possible interrelationships between these on-farm practices, farm
scale and capitalisation, and the modalities of the interactions between organic horticultural
producers and off-farm circuits of distribution and consumption.
Chapter 7 identifies criteria to assess conventionalisation. We examine for evidence of
conventionalisation by assessing the data collected in our case studies of organic farmers in
the organic sector in Japan and Australia.
Chapter 8 provides discussion and conclusion to context the Japanese and Australian
cases within the larger discussion on conventionalistaion.
Organic farming in Japan provides us with an interesting study given the fact that the or-
ganic sector does not have an export component and is based on comparatively small scale
operations. The latter may suggest that organic farming in Japan is untouched by conven-
tionalisation. However this paper will show how, notwithstanding the comparatively small
scale of the Japanese organic sector, that the institutionalisation of organic farming via JAS
organic standards, and the ongoing deregulation of organic farming have created the oppor-
tunity for corporate expansion into the sector. The paper will show how agribusiness and off
farm capital have through contract farming, company farming and the creation of corporate
controlled organic food commodity chains, had significant effects on the dynamics of the
Japanese organic sector.
In contrast to the Japanese organic sector, in which examples could be found of organic
producer and consumer organisations able to maintain relationships that are de-linked from
commodity chains mediated by off-farm capital, our results suggest that organic grain and
legume farming in the Darling Downs region and horticultural farming in Victoria occurs
within the confines of agribusiness dominated circuits of processing and distribution. And,
in contrast with the bifurcation observed by Buck (1997) in the Californian organic sector, it
was the large scale and more heavily capitalised of farmers in our study of Victorian hor-
ticultural producers who were found to have the latitude to practice diversified cropping
patterns that included the use of green manure crops, and the fallowing of land. This may
suggest that scale is not an important criteria in assessing conventionalisation in the Aus-
tralian context.
Our study of the Japanese and Australia organic sectors provide an important contribu-
tion to the ongoing conventionalisation debate. Our research of the organic sector in Japan
is our unique contribution to the literature on conventionalisation.
Chapter 2
Rural Transformation in Japan
2.1 Introduction
The evolution of the post-war Japanese food system has been shaped by contradictory forces
arising from government policy, the exigencies of the export-led industrial development un-
dertaken in the context of the subordinate position of Japan in the cold war alliance, and
the subjective actions of farmers and consumers. Post-war government policy encouraged
the “modernisation” of agricultural production via a reduction in rural labour through the
reconstitution of Japanese family based farming on a large-scale, input-intensive and mech-
anised productivist model of farming. The freeing of agricultural labour allowed the recon-
struction of the Japanese economy with an export-based industrial sector at its core, while
raising the productivity of Japanese domestic agriculture would ostensibly allow domestic
producers to compete with the US farm sector which had gained access to domestic markets
under the terms of the Japanese alliance with the US. Measured against the goal of construct-
ing an agricultural sector able to compete with large scale producers in North America, the
post-war policy of encouraging small-scale and part-time farmers to leave the sector, and the
creation of consolidated ”viable farm units” has achieved a rather modest success. In 2005,
abandoned cultivated land in Japan amounted to 386 thousand hectares, or 8% of the cul-
tivated land area (Japanese Ministry of Agriculture, Forestry and Fisheries [MAFF], 2006),
while the Japanese calorie-based food self-sufficiency fell from 79% in 1960 to 40% in 2003
(MAFF, n.d.). In the year 2000, only 20% of farming households received more than half
their income from farm activities.
The modernisation of the Japanese farm sector has been accompanied by a transforma-
tion of the off-farm nodes of the food-system. As regional production-consumption net-
works have gone into accelerated decline, a food-industrial complex of international . Be-
sides involvement in the production of farm inputs such as machinery and chemicals, the
largest companies in the Japanese food sector are involved in ventures as varied as produc-
tion of pigs and poultry in East and South-East Asia, cattle farming and beef processing in
Australia, banana plantations in the Philippines, the production and procuring of durable
grains and legumes in the Americas and Australia, and in the processing and worldwide
distribution and marketing of an array of agricultural products.
In what follows, the post-war trajectory of Japanese agriculture outlined in brief above
is interpreted in terms of the integration of Japan into the mercantile-industrial food regime,
the decline of this regime, and its possible suppersession by the green capitalist food regime
envisaged by Friedmann (2005).
12 2. Rural Transformation in Japan
2.2 The mercantile-industrial food regime

The concept of a food regime was introduced by Friedmann (2005) to describe the configura-
tion of social and political forces around which the production, distribution and consump-
tion of agro-food commodities is organised at a given historical moment. The mercantile-
industrial food regime, which emerged with the establishment of US hegemony over the global
capitalist system in 1945 and entered into crisis in the early 1970’s, was constructed around
the disposal of US agricultural surpluses through the mechanism of ”food aid” and the dif-
fusion of the US model of agricultural production as a cornerstone of ”development” and
state-building outside the Soviet sphere (Friedmann, 2005). Accumulation of US agricul-
tural surpluses after WWII were an outcome of the US government commitment to main-
tain agricultural prices following the Depression through purchases of ”excess production”
at prices above “market” prices. The system of price supports instituted by the US, as a
corollary, necessitated the protection of the US agricultural markets behind tariff barriers,
while the accumulation of government agricultural stockpiles exerted further downward
pressure on ”market” prices. Friedmann (2005) identifies the stable phase of the mercantile-
industrial food regime as being the period from 1945 to 1970, during which the disposal
of these surpluses was successfully managed through a set of implicit rules that allowed
US dumping of surpluses to be characterised as “aid”. In this period, US food aid sup-
ported the strategic objective of the US state and political objective of elites in Europe and
the third world, by effectively legitimating containment-driven state building outside the
Soviet sphere through ”development” that was universally interpreted to mean industrial
growth (McMichael, 2005). Diffusion and adaptation to local conditions of the US model of
agricultural production to the recipients of US aid, allowed for a “modern” industrialised
agricultural sector which supported industrialisation by allowing small scale farmers to be
absorbed into industry and supplying the growing population of urban industrial work-
ers. Dependence on food imports was not seen as a problem as they supported the goal of
industrial development (Friedmann, 2005).
In the 1970s, the successful adaptation of US farm policies by the European Community,
including high subsidies, to import substitution created conditions for competitive agro ex-
port dumping on agricultural markets that undermined the extant food regime’s system of
stable prices and managed disposal of food surpluses (McMichael, 2005). Competition in
agricultural markets was intensified by the emergence in the 1980’s of new agro-exporters
from the ranks of the third world, most emblematically Brazil which had adapted a mod-
ernised version the US model of agriculture focusing on the production of value-added ex-
ports by state and private national or transnational corporations (Friedmann, 1993). Beyond
simply ending US dominance in global markets for agricultural commodities, the success-
ful replication of the US model of farming in Europe and Brazil allowed for the creation
of integrated supply chains for specific agro-food commodities across national boundaries.
Friedmann (2005) notes that these transnational supply chains created conditions which ul-
timately undermined the mercantile-industrial food regime. First, transnational sectors with
profits concentrated initially in industrial and then retail links emerged, which increasingly
sourced substitutable products for ingredients; second, corporate reorganisation of com-
2.3. Japanese agriculture under the mercantile-industrial food regime 13
modity chains accelerated the declining numbers and political resources of farmers at the
moment when agro-food industries began to perceive the mercantile framework restrictive;
finally, the disempowerment of farmers and the peasantry worldwide (McMichael, 2006),
and the new health, safety and environmental problems associated with intensive industrial
farming brought forth new challenges to the structures of the extant food regime from social
movements.
By the 1990’s, the fissures within the mercantile-industrial food regime came to be ex-
pressed through the inability of Europe and the US to sustain competitive mercantile trade
policies in agriculture, particularly in the context of the rise of agro-exporting nations in the
South. Additionally, the very success of the mercantile-industrial food regime in promoting
concentration by rewarding, through subsidies, the largest farms, and in enabling the inte-
gration by agricultural input and food processing firms of agro-food sectors across national
boundaries, diminished the political role of farm organisations which had been a pillar of
the mercantile-industrial food regime; with integration and industrialisation of the agro-
food sectors, agro-food capitals began to experience the mercantile framework as restrictive
and to support the replacement of the framework with a neo-liberal. The deleterious envi-
ronmental effects of industrial agriculture, with its dependence on mono-cropping and agro-
chemical inputs, and the association of industrially produced foodstuffs with a range of both
“lifestyle” and infectious diseases, brought into question the legitimacy of the patterns of
production, distribution and consumption established under the mercantile-industrial food
regime.
2.3 Japanese agriculture under the mercantile-industrial food regime

Post-war transformation of Japanese agriculture commenced with the abolition through land
reforms instigated by the occupation in 1946-7, of the system of tenant farming which had
predominated since the 1890’s. The land reforms placed strict upper limits on the size of
land holdings, established a “land to the tillers” policy, and strictly regulated remaining
instances of tenancy to the advantage of tenants. The land reforms, which resulted in the
redistribution of 80% of tenant land to tenant farmers and the virtual abolition of absentee
landlordism, were crafted to create a class of proprietor farmers with a vested interest in
the preservation of private property (Moore, 1990, p. 88) as a prop to US objectives in East
Asia. Though the land reform was effective in terms of its immediate social and political
goals, it further entrenched the small-scale of Japanese farming and increased the fragmen-
tation of the land holdings of Japanese farmers, “inefficiencies” that would bedevil later
Japanese governments and hamper their attempts at agricultural “rationalisation” as agri-
culture shifted from a managed to free trade regime.
Placing a priority on agriculture in the immediate post-war years, the government sought
to use the proprietor-farmers created under the land reforms to increase production and re-
establish self-sufficiency in important food categories like rice, wheat and livestock products
(Teruoka, 2008, p. 188). Under a “food control system,” the government supported rice pro-
duction by buying at a price high enough to ‘ensure the reproduction of rice’ and reselling
at a price low enough to ‘maintain stability in household budgets’. However, over the long
run, the government’s stated policy of supporting rice farming were to prove incompatible
with policies that fostered dependence on foreign imports of other bulk grains and cereals.
Liberalisation of corn for feed-grain occurred in 1950-54, allowing the integration of Japanese
livestock sector with the US feed-grain industry (Teruoka, 2008, p. 190). As in the European
context (Friedmann, 1993), promotion of both meat-intensive diets and intensive livestock
production allowed the linking of an apparently national agriculture to imported inputs.
By 1953, US grain surpluses meant that import prices for grain had fallen below domestic
prices in Japan, and the revision of the Mutual Security act 1953 and passage of Public Law
480 in 1954 created food “aid” schemes under which the dollar-poor Japanese government
purchased surplus US grains in domestic currency. The greater portion of the counterpart
funds obtained by the US government in this way were returned to the Japanese govern-
ment as loans to be employed in part for the “modernisation” of agricultural infrastructure
and a transition by the populace to a wheat based diet. In 1954, the availability of subsidised
exports of US grain allowed the Japanese government to lower budget allocations to agricul-
ture and to revise targeted production of rice and grains downwards (Teruoka, 2008, p. 196).
While price supports for rice continued to result in increased production in the 1960s, do-
mestic demand for rice would eventually decline with the “modernisation” of the Japanese
diet that began during the period of high economic growth of 1955-73 and was enabled
by the availability of subsidised US grain and animal feeds. During the era of high eco-
nomic growth, price supports and the increased productivity of agricultural land and labour
through mechanisation and the use of inputs such as pesticides, herbicides and chemical fer-
tilisers, and the abandonment of mixed farming systems, had allowed the production of rice
to increase, despite falls in the farmed area and the transfer of labour from agriculture to
urban industry. The displacement of rice by meat products and imported grains in Japanese
diets, and the growth of government rice stockpiles, actualised the contradiction between
government support for rice production and the gradual but accelerating liberalisation of
edible and feed grain imports which began with the absorbtion of US surpluses (McMichael,
2000, p. 412). The appearance of rice surpluses in 1967 and the subsequent growth of gov-
ernment held rice stockpiles would later rationalise a long term transition from a policy
supporting rice production to a policy that curtailed and restricted rice production.
Reflecting the dependence of its industrial sector on access to international markets,
Japan formally acceded to GATT in 1955. However, the post-war policy of agricultural self-
sufficiency was not formally ended until the passage of the Basic Agricultural Law in 1961,
under which agriculture would be subject to “selective expansion” and “rationalisation”.
Price supports allowed cattle farming, fruits and vegetables, and dairy farming to expand,
while the consolidation of farms and the elimination of small producers would create “vi-
able farm units”. On the other hand, wheat, barley, rapeseed and soybean farming, which
had entered into decline after the first installments of US aid in the 1950s, were targeted for
“selective reduction” and experienced an accelerated decline in the 1960s (Teruoka, 2008,
p. 228).
Japan’s policy of agricultural self sufficiency was formally brought to an end by the acces-
2.4. The crisis of the mercantile-industrial food regime 15
sion of Japan to GATT in 1960, necessitated by the export orientation of Japanese industry,
and the passage of the Basic Agricultural Law in 1961. The Basic Agricultural Law estab-
lished that instead of maintaining production across agriculture as a whole, the government
would identify particular sectors for “selective expansion” and “rationalisation” (Moore,
1990, p. 291), whereas sectors targeted for “selective expansion” such as vegetable and live-
stock products benefited from price supports and tariff protection to enable them to maintain
levels of production.
2.4 The crisis of the mercantile-industrial food regime

The instability in the mercantile food regime indicated by the US export embargoes of the
1970’s prompted Japan to diversify its supplies of agricultural imports through large scale
investment undertaken with government support by Japanese agribusiness in agricultural
production and processing in NACs. This investment by Japanese capital further under-
mined the US centred mercantile-industrial food regime when the NACs began to cut into
the previous US export monopolies (Friedmann, 1993). Investment by Japanese agribusiness
in NACs can be situated within the global restructuring of agriculture under which the regu-
lated bilateral arrangements that characterised offshore food sourcing under the mercantile-
industrial food regime were replaced by competitive global sourcing operations by vertically
integrated corporate food complexes (McMichael, 2000).
Under the neoliberal response to the secular downturn in capital accumulation that be-
gan in the early 1970s (Harvey, 2005), state-based institutions such as statutory authorities
and commodity boards that had regulated national food sectors of welfare and develop-
mental states were undermined or dismantled, facilitating the privatisation of the state and
its regulatory functions, and the dissolution of the barriers that defined the former national
agro-food systems. Thus the global restructuring of agriculture has been accompanied by
“a new regulatory regime that is fashioned to remove barriers to trade and to promote self-
regulation by the corporate sector” (Campbell, Lawrence, & Smith, 2006). A key moment
in the emergence of the new agri-food regulatory order was the establishment of minimal
inter-governmental food standards as part of a compromise to secure a WTO Agreement on
Agriculture. Weaker than the state-based regulations they displaced, the inter-governmental
agri-food standards heightened public disquiet about the effects of the industrialisation of
agriculture on human health and the environment and allowed private agri-food capitals
to create “their own carefully regulated supply chains containing just those standards that
are abandoned in international negotiations” (Friedmann, 2005). In the view of Friedmann
(2005), the divergence between the public sector standards and the corporate standards is
suggestive of an emergent corporate-environmental food regime that is based on two dis-
tinct global agri-food supply chains which, respectively, incorporate the industrial dimen-
sion of the defunct mercantile food regime, and selectively appropriate environmental de-
mands of social movements. On the one hand, the enfeeblement of public standards has en-
abled transnational agri-food capital to provide increasing numbers of the global poor with
“standard edible commodities” that embody the productivist paradigm of the mercantile-
industrial food regime, and on the other, higher private standards have allowed transna-
tional agri-food capital to provide privileged Northern consumers with globally sourced
products that respond to the demands for ‘healthy’ and ‘natural’ foods produced using ‘en-
vironmentally sustainable’ processes (Friedmann, 2005). Research by Burch and Lawrence
(2005) and Campbell et al. (2006) has emphasised the role of the retail sector, and supermar-
kets in particular, in the establishment of “a new regulatory framework governing standards
and quality” as a response to public disquiet about technology-intensive and ‘factory’ farm-
ing associated with the defunct mercantile-industrial food regime (Burch & Lawrence, 2005).
The global restructuring of agriculture accelerated and deepened tendencies that first
became evident in the Japanese agricultural sector following the importation of US surpluses
in the 1950s, and the passage of the first Basic Law in 1961.
2.5 Towards a green-capitalist food regime?

According to Sandler, an environmental regime summarises the complex of natural, cul-
tural, political, and economic processes relating to environmentalism as they relate to the
construction of class relations, and into the extraction of profit (Sandler, 1994). Friedmann
(2005) notes that capitalism always operates within an environmental regime, even when the
regime works to promote ignorance of environmental costs or to repress social opposition
to damaging practices. A green capitalist environmental regime would be an environmental
regime within which capital accumulation is reshaped to reduce the environmental impacts
of production processes or to meet social demands for “green” commodities.
Friedmann (2005) notes that a green environmental regime, and thus green capitalism,
arises in response to pressures by social movements, though the demands of the social move-
ments are eventually appropriated by capital to initiate new rounds of capital accumulation.
In the case of agriculture, this process is illustrated by the rise of the grassroots producer and
consumer teikei movement in Japan in the 1960s and 1970s in response to concerns about the
effects of industrial farming on human and environmental health, and the selective appro-
priation of its principles by agribusiness capital in the furtherance of its own objectives. At
a time of rapid industrialisation of Japanese agriculture, and its integration into newly lib-
eralised global markets for agri-food commodities, the teikei movement attempted to both
delink farmers and producers from capitalist markets through production of use rather than
exchange values, and to shift to sustainable farming methods with lower dependence on in-
dustrial inputs. The success of teikei in establishing alternative production and distribution
networks for farm produce, was followed by the emergence in the 1980s of third party dis-
tributors and consumer cooperatives which each established independent agro-food supply
and distribution chains based on contract farming and subscription membership. While the
third party distributors and consumer cooperatives initially espoused many of same values
as the teikei movements (moen-1999), data collected in this study indicate that the activities
of third party distributors and consumer cooperatives have become increasingly directed to-
wards capital accumulation and the extraction of surplus from the agricultural sector. With
the codification of organic production in terms of a set of inputs based standards (the JAS or-
2.6. Corporate restructuring of Japanese domestic agricultural production 17
ganic standard) by the Japanese Ministry of Agriculture Forestry and Fishery in 2001, there
appeared the opportunity for agribusiness capital to diversify into the production of organic
commodities, thus completing the appropriation by capital of the social demands for safe
and healthy food, while marginalising the social movements’ attempt to delink consumers
and producers from the circuits of capital accumulation.
Friedmann (2005) notes how the demands of social movements played a role in under-
mining the stability of the post-war mercantile-industrial food regime, and describes the
emergent food regime that is based on the selective appropriation of the demands of the
social movements, as a corporate-environmental food regime. Where the mercantile indus-
trial food regime was based on the production and distribution of uniform and standardised
commodities, and the more or less overt externalisation of environmental costs of agricul-
tural processes, the corporate-environmental food regime is based on the production of niche
green” commodities, such as organics, for consumers with sufficient market power, and the
continued production of standardised commodities for consumers with low market power.
This differentiation of food supply chains is achieved through two distinct levels of regula-
tion; increasingly loose public standards are applied to the production of mass commodities,
while corporations establish dedicated agri-food supply chains meeting strict private stan-
dards to produce green and safe products for niche markets.
2.6 Corporate restructuring of Japanese domestic agricultural pro-

duction
McMichael (2000, p. 418) remarks that Japanese government policies of economic rationalisa-
tion have always been hampered by the cap on farm size and stringent tenancy regulations.
Beginning with the first Basic Agricultural Law, governments have progressively overturned
the provisions of the land reform laws that placed upper limits on the size of landholdings
and regulated tenancy (Moore, 1990, p. 103). In reversing the “land to the tillers” provisions
that were contained in the Agricultural Land Act of 1952, the Ministry of Agriculture Fish-
eries and Foresty (MAFF) has gradually relaxed restrictions on investment in nougyou houjin
(corporate farming bodies) under the premise that corporate investment will result in “ra-
tional” management of the sector. MAFF in a series of white papers has continued to call
for the number of small and part–time agricultural producers to be reduced so as to allow
further consolidation of production farmland in the hands of the “more efficient” large–scale
producers. While pushing for a reduction in the number of small producers, MAFF has en-
couraged the merger of individual farms into jointly held nōgyō hōjin while modifying the
Agricultural Law to permit the use of farm land for agricultural production by off–farm cap-
ital in zones designated by local governments. As of February 2009, 414 corporations from
non-agricultural sectors were engaged in farming operations, on a total of 1131 ha of farm-
land, which is approximately an eight fold growth in the number of corporations and the
acreage under corporate farming since the onset of corporate expansion into farming in 2004
(Table 2.2). However whether the projections by MAFF of the involvement of as many as
500 corporations from non agricultural sectors in agriculture by 2010 will be met remains to
be seen.
Since the removal of restrictions on the use of land for agricultural production by corpo-
rations, off-farm capital from the supermarket and retail sector, the food services industry,
food processing, and the construction industry have established corporate farming bodies
that are engaged in farming, both directly and through contract producers, and in off-farm
activities such as the supply of agricultural inputs, and processing and distribution. This
process has been lead by major Japanese supermarkets and the domestic food services in-
dustry which have increasingly turned to procuring raw materials through dedicated agri-
food chains meeting private food safety and environmental standards that are touted as
being stricter than the official public regulations. By contrast with European retailers and
supermarkets which have established regulated international supply chains meeting a uni-
form standard defined by EurepGAP (Campbell et al., 2006), the Japanese supermarkets and
food services industry have thus far relied on in-house standards to regulate their domestic
and international supply chains. Thus, for example the major supermarket chain Aeon Co.,
reports that
We have formulated a set of strict self-imposed standards aimed at minimising
food safety risks. In our pursuit of quality, safety and sustainability in our food
products, cooperation from our partner producers and manufacturers in meeting
our stringent criteria is crucial (Aeon, 2008).
Aeon Co. was the first supermarket to introduce in-house standards to regulate organic
and tokubestu saibai, based on MAFF labelling guidelines for organic produce. Since 1993,
produce grown according to the supermarket’s in house standards has been labelled with
the TopValue Green Eye brand. Sales of the company’s Green Eye products reached 100 billion
yen in 2001, in which Organic JAS certified produce accounted for ten per cent of the Green
Eye sales (Ogawa & Sakai, 2007). As of 2008, in a further attempt to respond to consumer
demand for safe rice at an affordable priced, the supermarket plans to enter the business of
growing rice with fewer pesticides, starting with the commissioned production of 1,000 tons
on 170 hectares of paddies operated by a farming corporation in Akita Prefecture (Anon.,
n.d.). Aeon Co. plans to sell the rice under the TopValu Green Eye brand for 20% less than
the market price. Likewise another major supermarket Ito Yokado has plans to establish in
partnership with JA a corporate farming body in Chiba prefecture to start the production of
vegetables for sale at an Ito Yokado co-unit. The supermarket plans to put up ten per cent of
the new company’s capital (Kyoto Shinbun, 2008) and plans to expand the number of such
farming corporate bodies to around ten. Similarly, Hankyuu Department store established a
farming subsidiary in 2003 to produce organic vegetables on 7 hectares of farmland in Osaka
Prefecture for retail in the Hankyuu Department store. The expansion of supermarkets and
department stores into farming is designed to secure high quality products amid increasing
concern among Japanese consumers about the quality of food.
Not without irony, corporations involved in the use of land for agricultural production
have capitalised on the concern of Japanese consumers with the health and safety ramifi-
cations of industrialised farming, particularly in association with imported food products,
and the widespread preference for domestic produce (kokusan) as more assuredly safe than
imported produce. Thus corporate farming domestically is variously distinguished from

international agri-food sourcing operations by its emphasis on “product traceability” and
“special production” which employs “low chemical” farming methods, and, increasingly,
by the use of the Organic JAS label.
2.6.1 Corporate farming bodies

With the inability of small–scale family farming to compete in increasingly ’liberalised’ inter-
national markets for agricultural products, and given the scarcity of farm labour, the short-
age of farm heirs, the ageing of the farming population (Table 2.6) and the increasing acreage
of abandoned farmland (Table 2.7), MAFF policy, under amendments to the Agricultural
Land Law passed in 2000, has been to encourage the corporatisation of agriculture. In the
first instance MAFF sought to induce farmers to increase their scale, capitalisation and effi-
ciency through mergers of the holdings of groups of individual farmers under nougyou seisan
houjin (agricultural production corporations)1 In the second instance the policy allows ordi-
nary joint–stock companies to hold up to 50 per cent of the total share issue in agricultural
production corporation, therein giving joint stock companies a greater voice in the man-
agement in the agricultural production corporation. However restrictions on the executive
membership of the agricultural production corporation stipulate that 25 per cent of perma-
nent executive directors have to be full time farmers, who are employed in agriculture more
than 150 days per year. These restrictions on the ownership, together with additional restric-
tions on the transferability of stock of agricultural production corporations were ostensibly
put in place by MAFF to prevent non–farm investors from acquiring majority holdings and
“gaining ownership of agricultural land through the back door” (Mulgan, 2006).
The corporatisation of agriculture was further abetted with the passing of the Structural
Reform Special Zone Law in 2002 which allowed for the establishment of special economic
zones where provisions of the Agricultural Land Law restricting the role of private compa-
nies in agriculture were weakened. In these special zones, of which 11 were subsequently
established, private joint–stock companies wishing to engage in farming activities would be
able to do so through land leasing agreements with local governments. In December 2004,
though so far unwilling to countenance the outright ownership of agricultural land by or-
dinary joint–stock companies, under further pressure from ’reform’ oriented interests and
pressure groups, MAFF agreed to “allow municipal governments to designate additional
deregulation zones at their own discretion, in which ordinary joint–stock companies could
lease agricultural land” (Mulgan, 2006). Additionally, a farmland trust system was estab-
lished to broker the leasing of farmland, and in come cases prefectural governors were em-
powered to order compulsory leasing by agricultural landowners who left thier land idle.
According to the latest MAFF data, out of the 750 municipalities to have designated their
own deregulated zones, corporations from non agricultural sectors have established farm-
ing operations in 135 municipalities (Table 2.3).
1
Nougyou seisan houjin can also be translated as agricultural production legal person, or agricultural production
corporate body or agricultural production incorporated entity, or incorporated group farm, or incorporated farm organisa-
tion, which are legal entities permitted to engage in agricultural production employing farmland.
Table 2.1: Examples of large corporations that have diversified into agricultural production
Corporation Agricultural Sphere Outline
Kagome High quality tomatoes 10 to 49 per cent stake in
agricultural production
corporations throughout
Japan.
Hydropronic cultivation in
high tech glass houses.
Kewpie High quality, no pesticide Production of salad
salad vegetables vegetables in a high tech
vegetable plant in Kyoto and
Fukui.
Kyusai Organic JAS certified kale Establishment of agricultural
production corporations in 3
prefectures.
Cultivation of kale for health
drink.
Mercian High quality grapes Establishment of agricultural
production corporation.
Cultivation of grapes for
wine.
Saizeria Organic produce Establishment of agricultural
production corporations.
Secom Herbs Hydroponic production by
subsidiary.
Monteroza Salad and green leaf Plan to obtain Organic JAS
vegetables certification. Cultivation of 2
hectares of farmland.
JR Toukai Leaf vegetables Production of leaf vegetables
for lunch boxes sold at
stations and also for usage in
group restaurants.
Mos Burgers High quality tomatoes Establishment of agricultural
production corporation, Sun
Glass to cultivate 600 tonnes
of large tomatoes that are
sweet and acidic per annum.
Production carried out in high
tech green houses on 3 farms
in Gunma and Shizuoka.
Total 3.8 hectares.
Hankyuu Department Organic JAS certified salad Established agricultural
vegetables production corporation in
Sennan city,
Store Osaka. Production of
approximately 80 tonnes of
salad vegetables in
green houses.
Table 2.2: Expansion into agriculture by corporations from non agricultural sectors
Year Construction Food Manu- NPOs and Total Farmland
Firms facturing others (ha)
Companies
2004 24 21 26 71 132.4
2005 37 29 43 109 371.6
2006 59 46 68 173 528.7
2007 76 46 84 206 595.9
2008 104 65 144 320 857
2009 125 72 148 349 1,131
Source: Japanese Ministry of Agriculture, Forestry and Fisheries [MAFF] (2009b).
Table 2.3: Types of business operation and corporations engaged in agriculture

Year Joint stock Special NPO and others No. of
Proprietary Ltd
Company municipalities
2006 80 41 35 80
2007 110 54 42 102
2008 144 80 57 135
2009 191 89 69 173
Source: MAFF (2009b).
However, discussion with parties involved with the process at the municipal level indi-
cates that local governments are generally unwilling or unable to lease agricultural land to
Table 2.4: Number of off-farm corporations engaged in each agricultural sphere

Year Grains Vegetables Fruit Livestock Flowers Industrial Mixed
livestock
and crop
crops
2004 15 31 11 3 1 1 9
2005 22 37 20 5 3 3 23
2006 30 65 24 6 3 5 23
2007 38 84 30 6 5 8 35
2008 52 109 49 7 6 9 49
2009 62 131 53 7 10 13 73
Table 2.5: Farmland area leased to corporations (ha)

Year Total farmland (ha) Uncultivated farmland Strong likelihood of
(ha) farmland
left uncultivated (ha)
2009 1,131.3 295.5 379.5
2008 857.3 267.7 222.9
2007 595.9 192.7 173.5
2006 471.9 135.3 133.0
Table 2.6: Number of farmers over 65

Year 2003 2004 2005 2006 2007 2008
Population engaged (000) 3,684 3,622 3,353 3,205 3,119 2,986
in agriculture
Farmers over 65 (000) 2,067 2,064 1,951 1,854 1,850 1,803
1 Source: MAFF (2009b).
ordinary joint companies on a scale that would be attractive to companies seeking to estab-
lish land intensive farming, and that much of the farmland made available for corporations
to lease under such schemes consists of either marginal land or non–contiguous plots left
idle by small scale farmers (Nozawa, 2005). As a result of these restrictions, the interests
of ordinary joint–stock companies in agricultural production have therefore largely taken
the form of shares in nougyou seisan houjin in which a controlling stake is held, nominally
or otherwise, by registered full–time farmers who retain ownership of the land provided to
the houjin (corporation) on a lease basis, or through nougyou houjin which are legally prohib-
ited from the use of farmland for agricultural production. In conclusion, despite pressure
on MAFF to allow for the wholesale corporatisation of agriculture by the removal of restric-
tions, contained in the Agricultural Land Law, on farming operations by ordinary private
companies, significant practical barriers to the leasing of farmland by corporations with core
profit making activities outside agriculture remain.
The results of a survey carried out by the MAFF in January 2006 of corporate bodies that
had newly entered the agricultural sector showed that only 10 per cent of corporate bod-
Table 2.7: Increase in agricultural land on which farming has been abandoned
Year 1995 2000 2005
Abandoned 2.4 million 3.4 million 3.9 million
Farmland (ha)
Source: (MAFF, 2009b).
ies found farming operations to be profitable, and 79 out of 100 corporate bodies surveyed
stated dissatisfaction with farm land (Hachimine, 2007).
Examples of corporations with core holdings outside agriculture, that have established
interests in agricultural production are given in (Table 2.1). Vegetable production is the main
agricultural sphere in which corporations are engaged in (Table 2.4). The impetus for the
growth in farm holdings by non–farm sectors of capital are identified as follows:
1. large scale enterprises with a core profit making division in the food processing sector,
or the food services industry, have sought to add value to or increase the scale of their
existing operations in these sectors;
2. a range of large scale enterprises with core profit making divisions outside the agro–
food industry have sought outlets in the agricultural sector for investment of existing
surplus;
3. regionally based companies financially dependent on government spending for public

works and adversely affected by the cutbacks in public works spending since the late
1990’s, have sought to diversify into agricultural production to compensate for the
decline in their traditional businesses in the construction sector.
2.6.2 Food service industry
Various food service corporations have adopted stategies of using high quality raw materials
and using ”safety” and ”health” as well as ”traceability” as selling points to differentiate
themselves from their competitors. Out of 81 respondents in a survey conducted by MAFF
in 2004 of 300 companies registered with the Japanese Food Service Industry, 74 per cent
stated that they use organic produce in their restaurant menus to differentiate their menus
based on the premise of health. Additionally 54 per cent of the respondents replied that they
plan to either start using organic produce or increase the number of dishes using organic
produce on their menus (Japanese Ministry of Agriculture, Forestry and Fisheries [MAFF],
2005a).
2.6.3 Construction company interests in agriculture
Table 2.2 shows the growth in construction company interests in the agricultural sector in
the years 2004–2007. Typically, construction companies have sought to establish interests in
the farming sector in those regional areas such as Hokkaido, Tohoku, the Japan Sea area, and
Kyushu, that have historically had high dependence on both public works and agriculture.
In each region, the role of construction companies in the farming economies is circumscribed
by the patterns of already existing agriculture. In Hokkaido, where agriculture is mecha-
nised and the scale of farms is relatively large, there is scope for construction companies to
employ strategies that rely on economies of scale, whereas in areas where farmland available
to corporations is mountainous or non–contiguous, making mechanisation and economies of
scale difficult to achieve, construction companies rely on value–added agriculture to secure

profitability. 2
2.7 Summary
This chapter provided an outline of the transformation undergone by Japanese agriculture in
the post World War II era. The expansion of corporate entities into farming has been abetted
by a series of government policies to deregulate the industry in an attempt to alleviate many
of the problems facing Japanese agriculture. Involvement of corporations from the food ser-
vices, food processing and retail sectors in farming represents a trend towards the creation by
off-farm capital, of dedicated agri-food supply chains that meet health and safety standards
specified by either in-house or by the JAS organic standard. Friedmann has made the case
that the mercantile- industrial food regime that was centered on the disposal of US agricul-
tural surpluses, and the adaptation by recipient countries of modes of agri-food production
and consumption that first appeared in the US in the post war period, including the food
commodity complexes based on mass produced and undifferentiated durable products, is
being replaced by a bifurcated green capitalist food regime, which selectively appropriates
demands of the various social movements which mobilized around issues of environmen-
tal and food health and safety during the mercantile industrial regime. The bifurcation in
the emergent food regime corresponds to the continued production, of standardized food
commodities are a legacy of the mercantile industrial food regime, and the establishment of
corporate controlled agri-food supply chains regulated according to privatize quality stan-
dards in excess of the minimal public standards.
2
The ongoing deregulation of agriculture in Japan has resulted not only in the increasing involvement of
off-farm capital in agricultural production and the consolidation of agricultural farmland but has also provided
the opportunity for financial capital to expand into the farming sector. Up until 2002, only financial institutions
belonging to JA such as Nochu and Kouko could extend loans to farmers, however currently, banks including
Sumitomo Mitsui Banking Corporation and Tokyo Star Bank have entered the farming sector to provide loans to
farmers, who in the coarse of expanding farming operations, require additional capital for investment in machin-
ery, fertilizers and computerized tracking systems. Furthermore, in October 2003, JA, the Agriculture, Forestry
and Fisheries Finance Corporation (Noringyogou Kinyuu Kouko) established the Agribusiness Investment Co.,
Ltd., a new company with capital of 1.8 billion yen, whose purpose was to foster agricultural corporations.
Amongst other things, the new company would provide assistance to agricultural corporations that requested it
by supplying capital to help stabilize their finances.
Corporations have also seen the shortage of farmers as an opportunity to increase profit by establishing a
system to train and dispatch workers to work on farms run by farming corporations. In 2003, Pasona, a ma-
jor temporary recruitment agency established a showcase farm in the basement of a 17 storey building in the
business district of Tokyo. In addition to the showcase farm, the corporation has established a 6 month intern-
ship program to train people from non farming backgrounds in agricultural farming practices. Participants can
receive a monthly allowance of 20 thousand yen from local governments to undertake the internship and un-
like other programs which require recipients to return financial support received from local government bodies
if recipients do not continue farming for five years, participants in the Pasona internships are not under any
obligation to become farmers (R. Nishimura, 2005).
Chapter 3
The Organic Sector in Japan
3.1 Introduction
The purpose of this chapter is to examine for evidence of conventionalisation by providing
three case studies of organic farmers in Japan. We begin by providing some background to
the present day organic industry. Organic farming in Japan commenced in the late 1960’s
and early 1970’s as a social movement. As consumer demand for organic produce grew
steadily, the Ministry of Agriculture, Forestry and Fisheries regulated the industry via the
implementation of standards referred to as Organic JAS (Japanese Agricultural Standards)
in 2001. These standards have facilitated the transformation of organic produce into mass
market commodities and paved the way for the entry of agribusiness into multiple nodes of
the organic commodity chains. The first two case studies provided in this study are of teikei
farmers who have been farming using organic farming methods prior to the implementation
of Organic JAS standards and who market their produce directly to a consumer group. By
contrast the third case study is of group of organic farmers who market their produce out-
side these farmer consumer arrangements. We will examine the agronomic practices, labour
practices and marketing methods of farmers in this study.
3.2 Sanshō teikei: a response to the crisis of the conventional agro-

food system
Japanese organic farming has its origins in the sanshō-teikei producer-consumer cooperative
movements. The increasingly tenuous economic position of farmers within the agribusiness
dominated post-war food system, and growing concern among both farmers and urban con-
sumers of the effects on environmental and human health of the industrialisation of food
production provided the basis for the producer-consumer alliances which, beginning in the
1960’s and 1970’s, established sanshō teikei, or producer-consumer cooperation, systems as lo-
calised alternatives to existing mainstream food production and distribution networks. On
the one hand agricultural producers responding to the health risks and soil damage associ-
ated with the rapid increase in use of agricultural chemicals sought safer farming methods,
and to increasingly subordinate position in the agro-food system; on the other, a critical mass
of consumers with concerns about the quality and safety of conventionally farmed food-
stuffs, sought safer and healthier food (Masugata & Kubota, 1992). The Japanese Organic
Agriculture Association (JOAA), an umbrella organisation for teikei groups in Japan was
founded in 1971. Current JOAA membership is comprised of organic producers, consumers
26 3. The Organic Sector in Japan
and activists around issues of food safety. JOAA reports that organic producers make up 20
per cent of JOAA membership (Japan Organic Agriculture Association [JOAA], n.d.). It is
generally considered that the teikei movement was at its peak in 1983 when membership of
the JOAA reached 6000 (Nakashima, 1998), after which JOAA membership began to decline.
Current estimates of JOAA memembership report approximately 4000 JOAA members. The
organisation publishes a monthly newsletter and holds monthly seminars on agriculture and
organic farming for its members.
The early Japanese organic farming movement was a response to the subordinate po-
sition of farmers in the agro-food system where by constraining farmers to methods that
require inputs produced by off-farm capital, and to growing products tailored to the re-
quirements of a relatively small number of buyers, off-farm capital had asserted an indirect
control over farm processes and labour. The founder of JOAA, Ichiraku envisioned that
organic farming would enable farmers to
return to the time when farmers had control of production and distribution....that
is going back to around the 1950‘s when capital had not displayed its overwhelm-
ing power. (Kubota, 2008)
Although consumer and producer concern about health and environmental effects of chem-
icals and fertilisers that came into heavy use in Japan in the post-war decades was of im-
portance in the early organic farming movement, Ichiraku states clearly that ”the essence of
organic farming surpasses the question of the usage of pesticides and chemicals. It is about
restoring control to the farmers” (Kubota, 2008). JOAA refrained from explicitly defining
organic farming until 1999 when JOAA stated the objectives of organic farming as follows:
(i) The production of good quality and safe food.
(ii) Protection of the environment.
(iii) Co-existence with nature (the utilization of nature’s productivity through the recycling
of local resources and energy).
(iv) Local self sufficiency and local circulation.
(v) Building healthy soil matter.
(vi) Preservation of the bio-diversity of nature.
(vii) Guarantee of the rights of labour.
(viii) To advance organic farming through amicable relationships between producers.
(ix) The diffusion of agricultural values and the construction of a society that respects life.
In as much as it is possible to generalise, the archetypal teikei consisted of a farmer, or

group of farmers, in a region close to a major urban area, who delivered produce to a dis-
tribution point, from which further distribution among the consumer members of the teikei
was undertaken by the consumers themselves. Since produce was generally sourced from
3.2. Sanshō teikei: a response to the crisis of the conventional agro-food system 27
farmers in the locality or region in which it was distributed, neither the teikei system nor the
grass-roots movement that gave rise to it were ever more than local or regional in scope. Al-
though the consequent informal and heterogeneous nature of the teikei means there is a lack
of precise data about the system, it is still possible to describe in outline several important
features of the system, based on the ten principles formulated by JOAA in 1978. 1
The teikei system aimed to involve consumers in the production process, for which they
provided labour, and in the organization of the distribution and delivery to consumer house-
holds. Direct transactions and close relations between farmers and consumers, provided the
basis for confidence in the integrity and safety of the organic food produced and distributed
via teikei networks. Rather than focusing on stringent requirements defining how organic
products were to be produced, the emphasis in teikei was on consumer collaboration with
the producer in efforts to assure food safety and reliability, and the protection of the envi-
ronment through sustainable farming practices. By directly supplying consumers and by
being substantially de-linked from agribusiness supply and distribution chains, operating
under teikei allowed farmers to in principle retain the greater share of the value they pro-
duced which would otherwise have been captured by off-farm capital in the off-farm nodes
of conventional agro-food chains. Consumer members of the teikei committed to taking the
produce supplied by the farmer and to share in the risk of farming by accepting smaller de-
liveries in periods of low yields. Further, since produce was delivered to the members of the
teikei at prices set after negotiation with consumers, farmers producing for teikei were to an
extent insulated from the downward pressures on prices exerted by agribusiness on its sup-
pliers in conventional food-commodity chains, and from the day-to-day price fluctuations
in wholesale markets.
As well as striving for the protection of the environment through sustainable farming
practices, the creation of alternative distribution routes which gave a fairer price to the pro-
ducer, and the assurance of safe and healthy food for the consumer, most teikei groups saw
themselves as part of a larger movement that aimed to redress the problems in society. Teikei
groups formed alliances with other citizen groups to campaign against nuclear energy sta-
tions and the construction of golf courses and resorts, and also grappled with problems such
as clean water, sewage, aerial spraying and the quality of school lunches (Masugata & Kub-
ota, 1992) 2 . Tabeta (1981) notes the necessity of teikei groups taking the formation of a social
1
The 10 teikei principles formulated by JOAA are: (1) Building a friendly and creative relationship between
farmers and consumers, not limited to the relationship as trading partners; (2) Production of crops in accor-
dance with pre-negotiated agreements between farmers and consumers; (3) Acceptance by the consumer of all
the produce delivered by the farmers; (4) Negotiation of prices in a mutually beneficial manner; (5) Creating
rapport necessary to gain the mutual respect and trust required for a successful continuation of the relationship
between consumers and farmers; (6) Management of the self-distribution of produce, either by the farmers or
by the consumers, not by a third party; (7) The participatory involvement of all members, based on democratic
principles; (8) The emphasis on activities that encourage learning within each teikei group so that teikei does
not end only with the supply and acquisition of safe food; (9) Maintaining an appropriate number of members
in the teikei group and ensure that the geographical reach of a teikei group is not over extended. It is desirable
that that the number of teikei groups increase and form a network. (10) Persevering with the ultimate goal of
attaining a balance with nature and a relationship of equality between humans based on organic agriculture and
the organic link between farmers and consumers.
2
Hashimoto Shinji reports that the teikei he is part of played an important role in preventing aerial spraying
movement:
Teikei strives for the self management of agriculture and food, and the self man-
agement of life, that is that teikei endeavours to supersede [capitalist] economic
rationality and therefore it needs to be carried out in the form of a movement
p. 61
and JOAA states that the goals of the teikei movement could not be considered in isolation
from the goals of a broader social movement:
Since pesticide and chemical fertilizer based farming is a structural problem of
society, teikei would have to tie up with various groups that criticise structural
problems in society.
3.3 Third-party distributors and the displacement of sanshō teikei

The third party distributors which arose in the mid-1970’s to 1980’s, supply groups of house-
holds with produce through subscription and acted as intermediaries between farmers. Re-
flecting concern of urban residents with the conventional food supply chains in the mid-
1970’s to 1980’s, distributors such as Daichi wo Mamoru Kai, Polan Hiroba, Radish Boya, JAC
and Ninjin Kurabu specialising in organic produce emerged (Honjoh, 2004). The first organ-
ised distributor of organic food to operate outside the sanshō teikei system was Daichi wo
Mamoru Kai (Association to Preserve the Earth), which was founded in 1975 by a group of
three men and one woman who had been strongly influenced by Ariyoshi Sawako’s work,
Fukugou Osen (Compound Pollution), on the affects of pesticides on the environment (Moen,
2000). The founders of Daichi wo Mamoru Kai initially used hand carts and bicycles to supply
household groups in the Tokyo area with organic produce that had been obtained from 20
local organic farmers in the early morning. The group’s consumer base expanded rapidly
and sales amounted to 10 million yen within two years of the group’s inception. Following
a stagnation in their subscriber base in 1985, Daichi wo Mamoru Kai commenced deliveries to
individual households using company trucks as well postal services. As a result, member-
ship of Daichi wo Mamoru Kai grew from 2000 in 1985 to 31,000 in 1993 (Masugata & Kubota,
1992) and at the same time, the farmers and processors producing under contract to Daichi
wo Mamoru Kai increased to over 2000 in 1993. As of March 2008, the company’s total sales
amounted to 143 billion yen and consumer membership totaled 85,000 (Ohno, n.d.). Daichi
wo Mamoru Kai has strengthened its agribusiness arm by establishing 9 joint stock companies
involved in the processing, retail and wholesale of organic produce, meat, fisheries and dairy
to its members as well as to supermarkets, health shops, food processors and the food re-
tail industry and by expanding into the production of organic fruit and vegetables on Daichi
Sanbu Noujuo, a company operated farm. 3
of herbicides in Ishijima town in 1984 and also in halting the construction of a golf course in the Takeda district.
The farmers in the teikei provided food and water for the teikei consumers during the 1994 Hanshin Earthquake
(Hashimoto, 2009)
3
Daichi Ltd, Daichi Bussan, Daichi Bokujo, Daichi Fruit Basket, Daichi Sanbu Noujyou Ltd, Restaurant Daichi
Ltd, Daichi Suisan Ltd, Daichi Foods and Daichi Ecology.
3.4. Organic certification and standards 29
With the advent of the third-party distributors, consumers were able to obtain deliveries
of organic produce without necessarily being involved in the neighborhood and community
groups which directly linked farmers and consumers under the sanshō teikei systems, while
producers could now sell their produce to third-party distributors without the significant
effort entailed in establishing a direct partnership with consumers in an urban area. The rel-
ative ease with which urban residents could obtain alternatively farmed produce following
the rise of the third party distributors accelerated the growth in the consumer base for such
produce in urban centres. There is an abundance of data showing a several-fold rise in the
number of households affiliated with third-party distributors following the introduction of
household deliveries, but fragmentary evidence obtained from farmers producing for sanshō
teikei networks suggests that, in the same period, the number of sanshō teikei networks and
the number of households participating in sanshō teikei networks, has either stagnated or
undergone an absolute decline in the same period. It is estimated that there are currently
between 800 to 1000 teikei groups in Japan (JOAA, n.d.). The largest teikei group in the
Tokyo Metropolitan area, Anshin na Tabemono wo Tsukutte Taberu Kai (Association to Eat and
Produce Trustworthy Food) reported that membership in 1999 was three quarters of what
it was when the group was at its peak in the late 1980s (Anzen na Tabemono wo Tsukutte
Taberu Kai, 1999). At the same time, notwithstanding the stated commitment of the third-
party distributors to many of the social and environmental objectives embodied in the sanshō
teikei movement, the producers and consumers outside the sanshō teikei were in fact linked
by intermediaries extracting value at the distribution and processing nodes.
3.4 Organic certification and standards

The institutionalisation of organic standards by MAFF criticised by organic producers as-
sociated with the sanshō teikei movement who argued that the new standards represented a
fundamental dilution of the principles upon which organic agriculture in Japan was based
in the first instance:
1. the principle of domestic and local food self-sufficiency;
2. the agro-ecological principle of integrated farms based on poly-cropping;
3. utilisation of local and and on-farm resources;
4. restoration and maintainance of regional biodiversity;
5. repudiation of recombinant DNA technology;
6. reassessment of traditional farming techniques;
7. realisation of independent and cooperative labour in agriculture;
8. teikei or cooperation between consumers and producers.

JOAA emphasises that the principles of sanshō teikei are counterposed to the market orien-
tation of agricultural production in post-war Japan; the development of sanshō teikei as a
social movement was necessitated by the fact that farmers could not establish any degree
of independence from the market mechanisms without the creation of alternative forms of
social production in which the market is not predominant. These systems of production em-
bodied in the sanshō teikei were established basis of informal networks of relations between
consumers and farmers, in which production methods were determined by mutual agree-
ment between the consumer groups and producers, and which implied a degree of direct
involvement of the consumers in the production and distribution process.
In studies on agro food chains in Japan, the term sanchoku is often used to describe the di-
rect sales of products between producers or a production area and consumer cooperatives or
JA (Nomiyama, 1996). Sanchoku originated in the same period as sanshō teikei and expanded
in the 1980s. Similar to sanshō teikei, surplus value is not extracted from each node of the
commodity chain due to the absence of middlemen in a sanchoku sales. However Kubota
and Adachi distinguish sanshō teikei from sanchoku stating that the systems of production
embodied in sanshō teikei are not central to sanchoku, and that sanchoku is merely based on
the transaction of commodities between the producer or a production area and consumers
(Adachi, 1989). Oyama has attributed the decline in teikei to the success of sanchoku in ap-
pealing to consumer anxiety about health and quality of food (Parker, 2005).
The expansion of the organic sector and the displacement, initially by third party distrib-
utors and subsequently by consumer cooperatives, supermarkets and department stores, of
the consumer-producer coalitions from their previous pivotal role in the construction of al-
ternative agro-food systems, lead to the creation of formal and more technical definitions
of organic produce. This process of formalisation of organic certification and standards be-
gan with the creation and adoption, by the third party distributors, of in house standards,
so as to assure their consumers that the produce they received met certain production and
quality criteria. Unlike the produce that was purchased by consumers in a teikei arrange-
ment, the produce made available to consumers via third party distributors included pro-
duce that had been cultivated using pesticides, albeit less pesticides than conventional pro-
duce (Nakashima, 1998). Third party distributors selected producers based on their in house
standards, and provided so called production management sheets for producers to fill out,
in order to confirm their production processes. The third party distributors argued that
their certification processes maintained, in a more formalised framework, the teikei philos-
ophy which was based on the mutual acceptance of responsibilities by contracted parties
(Moen, 1997), although some JOAA leaders have been sceptical of the third party distribu-
tors, likening them to ”commercial middlemen” . Nomiyama (1996) and Masugata (1992)
have also been critical of the emphasis the third party distributors place on supplying safe
foods conveniently to the consumer without paying sufficient regard to the producers nor to
the impact that expanding business contracts have on farming practices.
The adoption of organic farming by local governments as a strategy to revitalize local
areas from the 1980s, referred to as machi okoshi in Japanese, contributed to the further pro-
liferation of low input produce. Organic farming initiated by the local governments empha-
3.4. Organic certification and standards 31
sized the building of soil matter on the one hand, but did not prohibit the use of chemical
fertilizers or chemicals. Although the use of chemical fertilisers and pesticides was expected
to be less than inputs used in the cultivation of conventional produce, the organic farming
initiated by the local governments was a dilution of the organic farming practised by teikei
farmers. In the 1995 Agriculture Census, 364 municipalities, or 19 per cent of municipalities
in Japan, sponsored low input farming (Nakashima, 1998). Additionally in a MAFF white
paper on agriculture in 1987, organic farming was officially recognised as a form of value
added farming, a description that was strongly criticized by JOAA on the grounds that or-
ganic farming was a movement and unrelated to the economic rationale that underlies value
adding farming. As commented by the senior director of JOAA in 1991, if MAFF are calling for
more farmers to convert to organic farming, it’s because they smell money to be made, and
most of the money will be made by the corporations that control the distribution, processing,
and marketing of food. That they are interested in the economic aspect of organically grown
commodities and their potential for operating profits is made obvious by their choice to call
organic farming value added farming (Moen, 1997).
In 1992, the Japanese Ministry of Agriculture, Forestry and Fisheries (MAFF) established
non-binding Guidelines for the Labelling of Specially Grown Agricultural Products. Sub-
sequently, in 2001, with the growth in low input produce, demand for safe and traceable
agricultural products on the domestic market, and following a number of incidents of false
labelling of produce as organic, MAFF established the Organic Japan Agricultural Standards
(JAS) system to regulate the production, importation and distribution of organic produce.
In establishing the Organic JAS regulations, the Codex guidelines were grafted onto the
Japanese Agricultural Law in a way which provided little opportunity for consultation with
the existing Japanese organic producers and consumers. The initial response to the Organic
JAS regulations by Japanese producers and the grass roots organisations was not favorable.
JOAA had envisioned a system that was substantially de-linked from the market, and ar-
gued that Organic JAS certification would re-embed organic farming into capitalist markets,
resulting in a distancing of the close producer consumer relations formed under the teikei
system, and also result in a process of reductivism by which organic produce would be re-
duced to mere commodities and organic farming reduced to value added farming (Honjoh,
2004). Production standards would transform the organic sector from an ecologically and
politically innovative social movement to a sub sector of the food industry regulated by
standards. The Organic JAS Law was seen to refer only to the labelling of organic produce
and not to enhance organic agriculture per se. Specific technical criticisms of the Organic
JAS standards regime by farmers and grass roots organisations include the following:
1. The high cost to the farmer of producer certification favour large scale and converting
producers while making it difficult for existing, frequently small scale, producers to
obtain official certification (Yazaki, 2003; Honjoh, 2001); for instance organic farmers
are required to maintain a buffer zone on plots adjoining conventionally farmed land,
which imposes disproportionate burdens on smaller farmers (Honjoh, 2004);
2. The list of substances allowed and prohibited for organic production under the Or-
ganic JAS scheme is designed to be compatible with European and American standards
and does not take into account Japanese climatic conditions and organic farming prac-
tices; for instance mokusaku, or wood vinegar, which has been traditionally used as
a pesticide in Japanese agriculture is prohibited, whereas Derris, an insecticide which
contains rotenone, a substance with fish killing properties and the use of which was
discouraged among Japanese organic farmers prior to the enactment of Organic JAS,
is allowed for organic production under Organic JAS (Honjoh, 2004);
3. The Organic JAS standards allow the use of manure sourced from livestock feedlots ir-
respective of the conditions under which the livestock is reared and with no assurance
that the manure is properly decomposed to ensure that soil nitrate levels do not rise to
unsafe levels after application of the manure;
4. The Organic JAS standards allow organic farming that simply depends on purchased
animal manure without building up soil;
5. In spite of the risks of bovine spongiform encephalopathy (BSE), the Organic JAS stan-
dards were modified to allow the use of heat-treated bonemeal fertiliser under pressure
from agricultural groups who argued that there was no cheap substitute for bonemeal
source of phosphorus; on this question, JOAA took the position that farmers could use
rice bran to build up soil and so render bonemeal unnecessary;
6. Since a farmer seeking to produce Organic JAS certified produce on non-contiguous

plots is required to certify each plot separately, and to maintain documentation for each
certified plot, the regulations favor farmers with consolidated plots at the expense of
farmers with discontinuous plots who face higher certification costs; this is particularly
a concern in mountainous areas where the same farmer will tend to have a number of
non-contiguous plots (Honjoh, 2004).
7. Inspections and auditing regulate the organic producer at the expense of reforming the
practices that lead to the problems in the first place, such as aerial pesticide drift.
Critics such as Nakashima (2009) also argue that the MAFF imposed industry standards
which are designed to provide a Japanese legal framework for a global trade in organic com-
modities, where Japanese and overseas agribusiness source bulk raw materials from Aus-
tralia, China and the US to process in Japan for sale on the Japanese domestic market, or
import high value processed and niche products for the domestic Japanese market (Jordan,
Hisano, & Iizawa, 2006). The observations of Buck et al. (1997) and Guthman (1998), in
their study of Californian organic farming, on the agnosticism of inputs based standards for
organic farming towards agribusiness penetration, and towards the wider issues of sustain-
ability of agriculture such as the teikei system had sought to address in the Japanese setting,
are equally applicable to the Organic JAS standards.
Evidence presented below suggests that the implementation of Organic JAS standards in
2001 facilitated the transformation of organic produce into mass market commodities and
paved the way for the entry of agribusiness into multiple nodes of the organic commodity
chains; facing competitive pressures in conventional markets, agribusiness has sought to
3.5. Government promotion of organic agriculture 33
realise the opportunities for expansion presented by the as yet immature markets in organic
food commodities, as well the potential economic rents attached to the JAS certified organic
label.
3.5 Government promotion of organic agriculture
A major difficulty facing Japanese agriculture, and the regional economies which depend
on it, is the ageing of the rural population and the migration of the working age popula-
tion from the rural to urban areas. The demographic difficulties of Japanese agriculture
have been exacerbated by the influx of cheap imports of food products which have, in the
post world war two era, altered the traditional Japanese diet and diminished the demand
for domestic farm products. Simultaneously, post-war government policies which sought
to re–establish Japanese agriculture on a large–scale and input–intensive model to allow
Japanese farmers to compete with low–cost North American and Australian producers have
not reversed the ongoing long term decline in Japanese agricultural production and food
self–sufficiency. Faced with these deep structural problems in the agriculture-based rural
economies, Japanese governments at the local, prefectural and national level have identified
organic agriculture as potentially providing Japanese farmers with niche products which
will be substantially differentiated, in the eyes of health and safety conscious Japanese con-
sumers, from imported produce. As of July 2008, there are 11 prefectures and more than
50 municipalities that have implemented, or are in various stages of drafting policies to
promote organic farming (Japanese Ministry of Agriculture, Forestry and Fisheries [MAFF],
n.d.-a). At the national level, a law to promote organic farming Yuuki Nougyou Suishin Hou
was enacted in December 2006, to provide official support for the production, distribution,
retail and consumption of organic produce. Additionally, in April 2007, a five year plan was
formulated for the comprehensive and systematic promotion of organic farming. The four
main strategies outlined in the plan are listed below:
1. The provision of financial assistance to certified organic farmers and farmers in con-
version. Under the guidelines, all prefectural governments are required by 2011 to
have concrete plans to promote organic farming, and also to have established training
programs with designated instructors to teach organic farming techniques.
2. The facilitation of the production, distribution, and sale of organic farm products by
improving outlets for direct transactions between producers and consumers, providing
information to distributors, retail outlets and food service companies and changing
regulations so that wholesalers are permitted to obtain farm products directly from
organic farmers without intermediaries.
3. The improvement of consumer access to organic farm products and the provision of
accurate information on the production, distribution, sales and consumption of organic
products.
4. The establishment of education programs and support for urban and rural exchange
facilities, farm studies and exchanges between urban and rural areas. (Iwamoto, 2008),
(Nakashima, 2007)
Additional plans to further promote organic farming include the assistance for the pri-
vate sector to engage in organic farming, research to develop new organic farming tech-
niques and technologies and the development of model towns for organic farming. In total
457 million yen has been allocated for the program of comprehensive support for organic
farming in 2008.
Generally, the law to promote organic farming has been regarded favorably by all sectors
of the organic industry, although in a gathering organized by the Hyogo chapter of JOAA
in December 2007 (Yuuki Nougyou Suishin Hou Seiritsu Shuunen Kinen), a small group of
farmers stated that they were distrustful of government support and the promotion of or-
ganic farming, stating that organic farming has not only been neglected, but also that the
government had tried to distance itself from organic farming. Some farmers expressed con-
cerns that the law would encourage large scale organic farming by encouraging corporate
capital into organic farming and by the creation of organic model farms and towns. Further
Nakashima (2009) raises concerns over the compatibility of the Law to Promote Organic
Farming with the existing Organic JAS standards. 4 Nevertheless the establishment of this
law to promote organic farming and the subsequent program of support for organic farming
does represent a historical break from the pattern of government neglect of organic farming
and it also provides government recognition of organic farming as a ’legitimate’ farming
system within the context of capitalist agriculture.
3.6 The current state of the organic sector in Japan

According to statistics compiled by MAFF approximately 8,595 hectares, which is 0.19 per
cent of the total cultivated farming area in Japan, is under organic cultivation (Table 3.1).
The total output of organic produce cultivated in Japan in 2008 amounted to 55,928 tonnes
and accounted for 0.18 per cent of the total domestic agricultural output in the same year
(Table 3.4). Domestic organic production in 2008 represented a 43% increase over the 33,735
tonnes of domestic production in 2001, while, by comparison, total imports of JAS certified
organic commodities increased more than three-fold between 2001 and 2008 (Table 3.4). In
2008, domestic production of JAS certified organic vegetables amounted to 35,928 tonnes,
or 62% of total domestic organic production (Table 3.4). Although domestic production of
organic vegetables increased by more than 10,000 tonnes between 2001 to 2008 (Table 3.3),
there was, between 2001 and 2007, a four-fold increase in the volume of annual imports of
organic vegetables (Table 3.4). There has been an overall increase in the tonnage of organic
4
In order to understand the concerns of the author it is important to note that although produce may be
cultivated by methods which would meet the standards of Organic JAS, if the producer is not certified the
produce can not be sold with an organic label. Currently the volume of uncertified organic produce outweighs
the volume of certified Organic JAS products and it seems highly unlikely that this trend will change under the
new law.
3.6. The current state of the organic sector in Japan 35
Table 3.1: Area under certified organic cultivation

Total Rice Field Orchard Grazing Other
Field
Total (ha) 8,595 2,810 4,416 998 362 9
Percentage (%) 100 32.7 51.4 11.6 4.2 0.1
Source: Japanese Ministry of Agriculture, Forestry and Fisheries [MAFF] (2009a).
commodities produced in Japan from 2001 to 2008 under the JAS Organic label, however
over the same period, there has been an overall decrease in the self sufficiency of domestic
Organic JAS certified products (Table 3.8). The overall decrease in the self sufficiency of
Organic JAS produce cultivated in Japan represents a far cry from the original objectives of
self sufficiency stated by JOAA.
A report on the Japanese organic sector by MAFF (2005a) records a total of 3,639 domestic
JAS certified organic producers in 2002, and 5,104 domestic JAS certified organic producers
in 2006, while Nakatsuka cites 5,000 and 20,000 offshore producers with Organic JAS certifi-
cation in 2001 and 2005 respectively 5 . The available data on the levels of organic production
and the number of producers with Organic JAS certification suggests that the domestic por-
tion of agricultural production taking place under the Organic JAS label has grown only
marginally in comparison with the off-shore component of Organic JAS production.
Similarly the domestic certified organic JAS production has grown only marginally in
comparison with the production of ”low input”(specially produced) products. The market
for low input products is estimated at 2.5 billion US dollars, whereas the value of sales of
certified organic products is estimated at 300 million US dollars (Global Agriculture Infor-
mation Network, 2009). The increase in the number of Eco farmers producing green products
from 12 in 2000 to 191,846 in 2009 (Table 3.13) suggests that farmers have chosen to become
Eco farmers rather than certified organic farmers due to the various incentives offered to Eco
farmers by the government and also since low input farming only requires a decrease in agro-
chemicals not a commitment to farming without chemicals. Similarly a 2004 IFOAM reports
suggests that consumers in Japan are more likely to purchase low input produce rather than
certified organic foodstuff (IFOAM, 2004).
Commenting on the relatively slow growth in domestic organic production, Nakatsuka
(2009) observes that in domestic markets that offer an abundance of variations on the an-
shin anzen label, consumers, frequently have difficulty distinguishing between Organic JAS
certified produce and other value added produce that claim to be superior to conventional
produce but are grown or processed under standards less rigid than required by the Organic
JAS standard (Table 3.10). Nakatsuka (2009) suggests that consumers need to be educated
about organic farming and JAS certification, and at the same time, the Organic JAS system
needs to become more transparent by providing consumers with more information about
5
According to MAFF statistics as of May 2009, there are are currently 5514 operators certified in Japan of
which 3821 are certified producers
inputs and the farming methods employed. Unlike other value added produce, which fre-
quently include a photograph of the producer and state whether or not pesticides or chemi-
cal inputs have been used in production, certified organic produce usually only bears a JAS
mark (Table 3.10). This conclusion is reinforced by a MAFF survey of consumer awareness
of organic foodstuff labels which showed that only 19 per cent of the 779 respondents were
able to define organic rice accurately (Table 3.11). Additionally, Hatano (2008) argues that
consumers in Japan perceive the organic market as part of a health food or anshin anzen mar-
ket, and rather than associating organic produce with a commitment to social or ecological
values regard it as simply another addition to the range of commodities available.
We note that while domestic Organic JAS produce is possibly perceived as just one of
many forms of produce bearing an anshin anzen label, imported foodstuffs that bear the
Organic JAS mark do not have to compete with a wide range of imported foodstuffs distin-
guished from conventional produce by private standards or certification regimes than Or-
ganic JAS. Additionally, aside from the growth in imported Organic JAS vegetables, much
of the growth in Organic JAS certified imports may be accounted for by bulk commodities,
that are subject to further processing and packaging prior to distribution in Japan, and cer-
tain high value niche products that are not produced in significant quantities domestically
(Table 3.6).
Results from a survey conducted by MAFF in 2007, suggest that the number of certified
organic farmers may increase. Out of the 1023 responses from a survey of 2000 producers,
49.4 per cent of the respondents stated that they would convert to organic farming if market-
ing outlets guaranteed reasonable prices for organic produce and technologies could ensure
stable yields of high quality produce (Japanese Ministry of Agriculture, Forestry and Fish-
eries [MAFF], 2007). However Nakashima is less optimistic about the growth of Organic JAS
certified farmers stating that there is a high level of dissatisfaction amongst organic farmers
with the Organic JAS regulations. Further, Nakashima reports that farmers who practice
organic farming without acquiring certification are large in number and that those farmers
who have acquired certification are de-certifying citing dissatisfaction with the Organic JAS
system (Nakatsuka, 2009).
In respect to the price of organic vegetables, based on surveys carried out by MAFF on
the price of organic and conventional produce from 2003 to 2005, Ogawa and Sakai (2007)
observed that the price premiums afforded to organic horticultural produce are decreasing.
Taking for comparative purposes, the retail price of a conventional radish to be 100 yen, they
found the retail price for an organic radish to be 154 yen in 2003, 144 yen in 2004 and 122
yen in 2005. Although the study does not explore why there has been a decrease in price
afforded to this organic commodity, Table 3.9 shows that there has been a steady increase in
the output of certified organic vegetables in Japan between 2001 and 2007. The data indicat-
ing that increases in production of organic vegetables have been accompanied by decreases
in the price premiums afforded to organic producers is consistent with the results of stud-
ies carried out on California and Darling Downs in Australia which showed that as more
farmers convert to organic farming to capture high premiums, oversupply of the organic
commodity results in a drop in the premium value of the organic commodity.
Table 3.2: A comparison of the price index for organic produce when conventional produce is 100
yen
Radish Carrots Cabbage Spinach Cucumbers Tomatoes
2003 154 150 158 167 174 149
2004 144 167 150 141 187 160
2005 122 166 153 139 131 119
Source: Ogawa and Sakai (2007).
Table 3.3: Total domestic organic agricultural output and imported organic agricultural output in
2001
Category Domestic Domestic Imported Proportion of
Output (t) Organic Organic domestic
Output (t) Produce (t) organic
produce to
domestic
output
Vegetables 17,595,000 19,675 23,818 0.11
Fruit 4,126,000 1,391 4,085 0.03
Rice 9,057,000 7,777 1,785 0.09
Wheat 1,011,000 722 2,058 0.07
Soybeans 229,000 1,162 46,534 0.5
Green Tea 91,800 927 72 1.00
Other Produce 138,000 2,081 15,834 1.5
Total 32,186,500 33,735 94, 186 0.10
Source: Ministry of Agriculture, Forestry and Fisheries (n.d.-a).
38
Table 3.4: Total domestic agricultural output, domestic organic agricultural output and imported organic agricultural output, 2008
Category Domestic output (t) Domestic organic output Imported organic output Proportion of domestic
(t) (t) organic produce to total
domestic agricultural
produce (%)
Vegetables 16,405,000 35,928 173,819 0.22
Fruit 3,411,000 2,050 156,764 0.06
Rice 8,823,000 11,278 2,851 0.13
Wheat 1,098,000 883 10,170 0.08
Soybeans 262,000 1,318 94,574 0.50
Green tea 141,100 2,716 N/A 1.84
Other produce 141,000 2,716 43,509 1.93
Total 30,235,500 55,928 2,001,584 0.18
3. The Organic Sector in Japan
Table 3.5: Increase in total tonnage of certified domestic organic produce and the number of certified
organic farmers between 2001 and 2008
2001 2002 2003 2004 2005 2006 2007 2008
Tonnage (t) 33,735 43,759 46,192 47,428 48,172 48,596 55,928
Number of 3,639 4,273 4,453 4,664 5,104
certified
farmers
Table 3.6: Organic processed foodstuff 2007

Category Domestic organic Imported organic
processed products (t) processed products (t)
Frozen vegetables 348 4,725
Bottled and canned vegetables 21 4,510
Cooked vegetables 635 6,002
Other processed vegetables 1,082 5,361
Fruit juice 4,401 11,686
Other processed fruit 869 4,629
Vegetable juice 1,051 401
Tea 3,490 137
Coffee 10,472 35
Soybean milk 18,832 30
Tofu 55,181 0
Natto 5,244 141
Miso 3,004 856
Soysauce 5,444 0
Peanuts 1,333 1,475
Other legumes 5,186 1,362
Dried noodles 139 249
Green tea 1,231 230
Coffee beans 3,058 293
Nuts 1,068 3,476
Konyaku 2,949 993
Sugar 22 85,804
Milk 430 2,308
Other processed foodstuff 5,944 28,888
Total 133,909 164,804
Table 3.7: Organic processed foodstuff 2001

Category Domestic Organic Imported Organic
Processed Products (t) Processed Products (t)
Frozen vegetables 1,128 11,862
Canned vegetables 13 532
Other processed vegetables 802 239
Drink 4,739 912
Tofu 44,034 0
Natto 10,154 0
Miso 1,887 237
Soysauce 3,093 0
Dried noodles 103 823
Green tea 1,270 0
Other processed foodstuff 9,532 19,715
Total 76,755 34,356
Table 3.8: Self sufficiency in Organic JAS certified produce from 2001 to 2008
Category 2001 2002 2003 2004 2005 2006 2007 2008
Vegetables (%) 45.2 65.3 51.0 32.0 26 22 39 17.1
Fruit (%) 25.4 15.5 10.3 15.3 13.2 1.3 1.4 2.2
Rice (%) 81.3 85.9 80.6 69.8 78.2 33 79 44.9
Wheat (%) 26.0 34.0 28.4 23.6 15.3 6.9 6.6 1.1
Soybeans (%) 2.4 2.1 0.6 0.9 2.4 1.5 1.0 1.4
Green tea (%) 92.8 50.4 60.7 47.0 83.1 77 95 87
Total (%) 36.4 26.4 33.0 13.5 9.6 3.8 2.7 2.7
Source: Compiled from MAFF statistics.
Table 3.9: Increase in domestic organic vegetable output from 2002 to 2008
Category 2002 2003 2004 2005 2006 2007 2008
Vegetables (t) 24,545 28,444 29,674 29,107 29,949 32,780 35,928
Table 3.10: Examples of guidelines for value added produce
Organic Produce Specially Cultivated Eco Farmer Hyogo Anshin
Produce (MAFF Brand
guidelines)
Pesticides In principle prohibited. Less than half the Reduced Reduced as much as
possible
Minimal usage of 30 number of times
types of
pesticides permitted of conventional
production
Chemical Fertilizers In principle prohibited Nitrogen to Reduced Reduced as much as
possible
be halved
3.6. The current state of the organic sector in Japan
Building of soil 39 soil amendments None Usage of inputs Building of healthy soils
allowed
matter from organic matter
Inspection None None None Less than one tenth of
of residual national standards
pesticides
Traceability None Information provided None Cultivation methods,
about
pesticides, chemical Inspection result
disclosed
fertilizers
Neighbouring farms Necessary to prevent None None None
prohibited materials
from neighbouring
farms
41
Seeds/seedlings In principle organic None None None

GMOs Prohibited in principle None None None
Source: Nakatsuka (2009).
Table 3.11: Characteristics of organic rice

No. of respondents Per cent (%)
Production carried out with 779 78.1
organic fertilizers instead
of chemical fertilizers
Production carried out in 190 19.0
principle without pesticides
nor chemical fertilizers
Production carried out with less 8 0.8
than half the amount of pesticides
chemical fertilizers as
conventional produce
Rice without residual pesticides 4 0.4
Production without pesticides 8 0.8
Don’t know, no answer 9 0.9
Total 998 100.0
Source: Japanese Ministry of Agriculture, Forestry and Fisheries [MAFF] (2005b).
Table 3.12: Reasons for purchasing organic produce

Reasons Per cent (%)
It’s safe 87.8
It’s superior in flavour and nutrition 29.4
It contributes to environmental conservation 28.8
It’s healthy 24.6
Other/ No response 17.5
Source: Nakatsuka (2009).
3.7 Case studies of organic farmers
Our case study included one individual organic farmer and two organic farming groups.
The farms studied are located in Hyogo prefecture and Chiba prefecture. These three farms
were selected for this study since farmers on all three farms studied have been using or-
ganic farming methods since the 1980s and grow more than 60 crops each year. Shipment of
produce directly to consumers in a teikei arrangement is a major component for two of the
surveyed farms. The aim of this survey was to assess the agronomic, labour and marketing
practices of the surveyed farmers.
3.7. Case studies of organic farmers 43
Table 3.13: The increase in the number of Eco Farmers in comparison to certified organic farmers
Year Eco Farmer Certified Organic Farmer
2000 12
2001 9,226
2002 26,233 3,639
2003 47,766 4,273
2004 54,719 4,453
2006 98,874 4,664
2007 127, 266 5,104
2009 191,846, 5,514
Source: Japanese Ministry of Agriculture, Forestry and Fisheries [MAFF] (2008).
Table 3.14: The characteristics and classification of teikei groups

Model Principle Expansive Regressive Practical
Price setting Both parties Consumers Producers Producers
Price setting Production Comparison Conveniently Production
costs with
criterion market prices fixed costs and
costs of
workers
Administration Shared Greater Greater Paid workers
mutually producer consumer
burden burden
Establishment 1970s Early 1980s Late 1980s 1990s
Area of establishment Urban areas Regional All areas Urban areas
areas
Stage of development Formation Expansion Diversification New
develop-
ment
The organization of Structured Unstructured Structured, Structured
producers individuals
The structure of Only Producers Only Producers
consumers consumers
consumer groups and members and directors
Source: Hatano (1998a).
3.7.1 Case study 1: Tsuchi to Midori no Kai and Na no Hana no Kai: The Regres-
sive Model
The latest data shows that there are 13 teikei producer groups consisting of 131 produc-
ers, and 23 consumer groups with a total membership of 7000 located in Hyogo prefecture
Table 3.15: Fluctuation in the number of participants in teikei

Group Name Year of estab- Membership Current
lishment membership
at peak
Group that seeks safe food 1974 1,300 450
and investigates food
contamination
Cultivating Good Food Group 1976 430 340
The Group to Spread Organic 1980 530 280
Produce
Himeji Organic Vegetable 1983 280 150
Group
The Rape Blossom Group 1986 250 200
Kobe Consumer Club 1990 200 1,200
Network to Unite Towns and Villages 1995 300 700
Source: Hatano (1998a).
Table 3.16: A comparison of producer price for shipments made

to teikei and wholesale market, 2008
Produce Market Price Na no Hana kai
(yen/kg) (yen/kg)
Carrots 114.06 310
Capsicums 396.6 400
Leeks 294 490
Taro 302.35 300
Eggplant 268.11 300
Tomato 233.1 400
Source: Compiled from Ministry of Agriculture,
Forestry and Fisheries (n.d.-b) and case study.
(Hatano, 1998a). Hyogo prefecture was selected for this study since there are many teikei
groups in the prefecture, and some of these groups have been operating since the teikei
movement commenced in the 1970s. According to information published by the Hyogo
chapter of JOAA, there were 13 producer teikei groups and 21 consumer teikei groups oper-
ating in Hyogo prefecture in 1987 (Yasuda, 1988). The teikei movement in Hyogo prefecture
can be traced to the early 1970s, with the establishment of a local JOAA chapter in 1971
and the formation of a teikei alliance between a consumer group, The Group that Seeks Safe
Food and Investigates Food Contamination and the farmers group, Ichijima Organic Agriculture
Research Group. The teikei movement emerged in the urban areas of Hyogo Prefecture and
then spread thoughout the entire prefecture (Hatano, 1998a). In 1998 it was estimated that
Table 3.17: Farm-gate prices for vegetables shipped to Kobe wholesale market by month 2008,
yen/kg
Crop Carrots Chinese Cabbage Leeks Egg Tomatoes Cap-
Cabbage plants sicums
January 77.1 35.5 58.8 330 233.6 168.25 365.8
February 94.2 45.5 75.2 280 396.2 228.75 633.8
March 169.5 81.5 94 238 243.5 430 313.7
April 190.2 81.6 73.8 211.8 312 315.2 322.4
May 162.8 57.7 54.5 343.6 258.8 210.25 317.1
June 210.1 37.1 43 341.4 267.4 189.74 363.6
July 93.8 43.8 43. 5 263.2 264 220.75 274.7
August 55.3 31 36.7 271.2 150.8 159.75 167.2
September 53.4 40.3 44.2 245 217.8 253.5 212.9
October 57.5 51.7 45.4 230 283 360.8 281.3
November 92.8 40.4 55.8 215.2 360.4 219.5 257.2
Source: Ministry of Agriculture, Forestry and Fisheries (n.d.-b).
approximately ten thousand people purchase organic produce through a teikei arrangement
in Hyogo prefecture. Hatano classifies the teikei groups in Hyogo prefecture into four cat-
egories according to the period in which each teikei group was formed (Hatano, 1998a). In
short, Hatano’s typology of teikei groups is the following: teikei groups that were estab-
lished in the 1970s are referred to as the Principle Model, teikei groups that emerged in the
early 1980s as the Expanding Model, the formation of teikei groups in the late 1980s as the Re-
gressive Model and the establishment of teikei groups in the 1990s as the Practical Model. The
main characteristics of these four models are summarised in (Table 3.9). The teikei groups
belonging to the Principle Model emerged in urban areas in Hyogo Prefecture, the admin-
istration of these groups is carried out by both consumers and producers and the price of
the produce is based primarily on covering the costs of production. Teikei groups belonging
to the Expanding Model however, are located in regional areas. In teikei groups belonging to
the Expanding Model, increasing consumer membership is the main objective and the price
of produce is set to capture as many customers as possible. Since the standard of living is
cheaper in regional areas compared with urban areas, these teikei groups adopted a policy
of setting the price of produce 10 per cent lower than the retail price of produce in Kobe city.
Although the number of participants in the Principle, Regressive and Expanding Models of
teikei groups have stagnated, the members belonging to the Practical Model of teikei groups
are increasing. The number of registered members belonging to the Kobe Consumer’s Club in
1990 was 200, however, membership had increased to 1200 in 1996. Likewise the member-
ship of the Network to Connect Towns and Village has grown from 300 registered members in
1990 to 700 in 1995 (Table 3.10)(Hatano, 1998b). The growth in the membership of Practical
teikei groups is attributed to the relative ease in obtaining organic produce without partici-
pation in volunteer work nor any obligation to purchase produce in a group (Hatano, 1998b).
Table 3.18: An outline of the farmers belonging to Na no Hana no kai

Farmer 1 Farmer 2 Farmer 3 Farmer 4
Year of commencement 1982 1983 1982 1983
of organic farming
Area of farmland (ha) 1.5 1.5 1.3 1.5
Ratio of organic 100 50:50 40:60 50:50
conventional farmland
Gross income 0000 yen 1,200 1,000 800 1,000
Production costs (%) 40 50 40 40
Usage of part time labour None None None None
Source: Data collected from case study (October 2008).
The Tsuchi to Midori farmers’ group was selected for this study for the reason that the group
ships produce directly to a teikei consumer group and to conventional outlets. This study
is an extension on the study of the same teikei group by Park (2003). The Tsuchi to Midori
no kai and Na no Hana no Kai is classified as a regressive model in Hatano’s typology since
this teikei structure evolved in the late 1980s, producers determine the price of the produce
shipped to the consumer group, and also since consumers play a key role in carrying out
the administration of the teikei. Tsuchi to Midori farmers’ group consists of four producers,
who have farms based on the outskirts of a residential area in Kobe. This farmers’ group
was formed in 1986 after a group of housewives approached the farmers with a request to
supply them with safe and healthy foods. The farmers undertook to supply safe and healthy
produce to approximately 150 housewives in a teikei arrangement, while the housewives
agreed to purchase the produce at prices determined by the farmers. The consumers also
provided labour on the farms, and carried out the sorting, packing and delivery of the pro-
duce supplied under the teikei arrangement. The farmers in Tsuchi to Midori no kai primarily
engage in the production of vegetables on farm sizes varying in size from 1 to 2 hectares
(Table 3.18). Out of the four farmers, one farmer has all farmland under organic cultivation,
and the other three farmers have mixed organic and conventional farming operations. All
four farmers acquired Organic JAS certification in 2002. Each farmer in the group produces
between 40 to 60 crops per annum.
Agroecological Practices
The three principles key to the four producers farming operations are:
1. The building of healthy soil which is alive with beneficial organisms and has a natural
immune system intact that can control diseases;
2. The restriction of input usage to on farm materials or inputs procured from the local
area;
3. The replication of a natural environment on the farm.

Table 3.19: Inputs used by surveyed farmers in Na no Hana no kai

Farmer 1 Farmer 2
Chicken manure (t) 4.6 0
Cow manure (t) 0 2
Pig manure (t) 0 2
Compost (t) 10 3
Oil cake (kg) 218
Source: Data collected from case study (October 2008)
Labour practices
All four farmers belonging to Tsuchi to Midori no kai carry out farming operations without
the use of wage labour. Family members provide the necessary on-farm labour during busy
seasons and two of the farmers reported that they farm with their sons. Teikei consumers
also helped with the weeding and harvesting on the farms, although the farmers remarked
that they did not rely on help from the consumers.
Marketing practices
The farmers in the group Tsuchi to Midori no kai jointly ship produce to a consumer group, Na
no Hana no kai (Rape Flower Group). The annual amount of vegetables shipped to the con-
sumer group was 19.5 million yen in 1988 and increased to 21 million yen in 1989, however
shipment to the consumer group was only 14.2 million yen in 2008. The drop in shipment
volume resulted in a decrease in each farmer’s income. The annual farmer’s income from
teikei sales has decreased by more than 1 million yen in the last two decades. The farmers
generally agreed that a significant decrease in income from teikei began after 2000, although
a gradual contraction in their incomes had already been observed beginning in 1995. In or-
der to cover the drop in income from the teikei consumer group, the farmers have had to
find alternative outlets for their produce.
Table 3.20 shows the diversification of outlets for the representative of the group’s pro-
duce. The farmer currently ships approximately 30 per cent of the produce directly to the
consumer group, 30 per cent of produce to a local consumer cooperative, 30 per cent to two
local third party distributors and the remaining 10 per cent to local organic specialty shops,
and a convenience store. Although farmers surveyed for this study emphasised that the
ability to negotiate prices with their consumers was a major advantage of producing for a
teikei compared with conventional distribution routes, a comparative study by Hatano of
market distribution consumer prices and farm-gate prices with teikei, estimated that organic
produce obtained through teikei was on average 20% cheaper than the non organic produce
sold through conventional distribution routes. A study of market prices in 2008 has shown
that the farm-gate prices were substantially better for producers in teikei arrangements (Ta-
ble 3.16) (Table 3.17).
Table 3.20: Shipment outlet and year of commencement

Farmer A Year shipment Percentage
commenced
Teikei Consumer Group 1986 30
Toshi Seikatsu Co-op 1988 30
Green Life 1995 15
Shohishya Club 2003 15
Tokusen 2004 5
Family Mart Convenience Store 2005 5
Source: Data collected from case study, October 2008.
Local consumer group: Toshi Seikatsu Seikyo
In 1988, the members of Tsuchi to Midori no kai and three other farmers began shipping veg-
etables to a Hyogo-based consumer cooperative, Toshi Seikatsu Seikyo, and the seven farmers
formed the producers’ group Aisai Kai for this purpose. When Aisai Kai commenced selling
produce to Toshi Seikatau Seikyo in 1988, the farm-gate prices the members of Aisai Kai re-
ceived from the cooperative were the same as the farm-gate prices the farmers in Tsuchi to
Midori no kai received from the teikei consumer group. Unlike most conventional outlets or
the larger nation-wide consumer cooperatives, Toshi Seikatsu Seikyo allows producers to ship
produce to the consumer cooperative in bulk, without packaging or Organic JAS seals. Nor
does the cooperative specify the crops or quantity of crops to be shipped by the producers
or request the farmers to produce crops outside of their normal growing season. However
since 2003, the farm-gate prices received from Toshi Seikatsu Seikyo by the members of Aisai
Kai have decreased by 10 per cent (Table 3.21). According to the producers, Toshi Seikatsu
Seikyo has been compelled to lower the price it pays the producers for organic produce since
the cooperative is facing increasing competition from other outlets as a result of the prolifer-
ation of organic produce in the marketplace.
Organic speciality store and local third party distributors
The produce that is shipped to specialty retail stores and local third party distributors is
required to be packed by the farmers and labelled with Organic JAS certification seals. The
farm-gate price received by the farmers for produce from speciality stores and local third
party distributors is higher than farm-gate prices from other outlets (Table 3.22), however
the farmers are required to package the produce and apply Organic JAS labels. The farmers
are not tied to a contract to ship certain crops or tonnage but generally between 12 to 15
crops. If the crops are not sold however, the farmers do not receive payment.
Table 3.21: Comparison of farm-gate prices for shipments made to the Co-op in 2003 and 2008 (yen)
Crop Unit 2003 2008
Cauliflower 1 150 140
Potatoes 1kg 200 180
Capsicums 1kg 400 390
Tomatoes 1kg 400 320
Radish 1 150 140
Carrots 1kg 310 290
Chinese cabbage 1 200 180
Cabbage 1 200 170
Sunny Lettuce 1 120 110
Broccoli 1 150 140
Turnip 1 150 110
Table 3.22: Comparison of farm-gate prices for shipments made to various outlets (yen)
Crop Unit Teikei Unit Co-op Unit Specialty
store,
Third
Party
Distrib-
utor
Cauliflower 1 150 1 140
Leeks 1kg 490 100g 100
Potatoes 1kg 200 1kg 180 1kg 220
Capsicums 1kg 400 1kg 390 150g 100
Tomatoes 1kg 400 1kg 320 500g 230
Radish 1 150 1 140 1 180
Carrots 1kg 310 1kg 290 500g 170
Chinese cabbage 1 200 1 200 1 220
Cabbage 1 200 1 170 1 220
Sunny Lettuce 1 120 1 110 1 150
Broccoli 1 150 1 140 1 180
Turnip 1 150 1 110
Komatsuna 1 100 1 100 1 130
Chingensai 1 100 1 100 1 130
Table 3.23: Decline of membership in teikei consumer group and consumer cooperative
1995 2000 2008
Na no Hana no kai 350 187 183
Toshi Seikatsu Seikyo 600 320 200
boxed vegetables
Total members of Toshi 6,289 7,200
Seikatsu Seikyo
Local convenience store
In 2005, the local branch of the Family Mart chain of convenience stores established a corner
for the sale of “low-input and safe” agricultural produce after the competitor chain Lawson
announced its intention to open a Natural Lawson store in the neighbourhood. In the same
year, the members of Tsuchi to Midori no kai began to sell produce through the Family Mart
outlet which takes a 17% commission on sales the farmer make through it. The produce
sold by the members of Tsuchi to Midori no kai in this way is sold under a Family Mart in-
house “low input” standard and is not labelled as Organic JAS certified. The farmers supply
the convenience store with produce every Friday, Saturday and Sunday and are required to
collect any of their produce left unsold at the end of the day. Unlike produce sold through
the teikei arrangement, the produce the farmers sell through the convenience store must be
packaged by the farmers.
Teikei structure
The teikei consumer group Na no Hana no kai was established in 1986 and had 150 registered
members. All the members were housewives, who concerned with the problems associ-
ated with industrialized farming sought safe produce for themselves and their families. At
that time, since organic produce was not readily available in mainstream outlets, most of
the members were not able to purchase organic produce without joining a teikei consumer
group. The members agreed to purchase the produce from the farmers at the price fixed
by the farmers and to provide assistance to the farmers. Farmers deliver their produce to a
jointly owned warehouse three days a week, where the produce is sorted, wrapped in news-
paper and then placed in containers for delivery to consumers. Consumers carry out the
sorting and packing of the vegetables. Consumers are rostered on a monthly basis, although
helping with the sorting and packing of the vegetables, is carried out entirely on a voluntary
basis.
Na no hana no kai is based upon the following principles:
1. Principle 1 (Group)
This is a group in which the purchase of organic produce is made as a group.
2. Principle 2 (Goals and vision)

To promote the organic farming movement
To make democratic management the basis of the body’s operations
To cooperate with other bodies that have similar objectives
3. Principle 3 (Membership)
This is a body of people who are conscious that the group is a movement to promote
organic farming
The operating costs of the body will be financed by its members.
Members of the body will form groups for the purpose of interaction and collective
self-education.
4. Principle 4 (General Meeting)

The general meeting will be set up by all members, and the general meeting will be the
highest decision making body.
The general meeting will be held once a year, however a provisional general meeting
may be held whenever a member or the steering committee members deems necessary.
The general meeting will be set up when more than half of the members are present.
At the general meeting, the plans for the following year will be determined and a
report made of activities in the previous year.
A budget report of the current year and a report of accounts of the previous year will
also be made. Purchases of value greater than the membership fee of one thousand
members must be approved at a general meeting.
5. Principle 5 (Steering Committee)

The Steering Committee is made up of the steering committee members who do the
administration for the group. The steering committee members term of office will be
one year, however the steering committee members may be reappointed.
6. Principle 6 (Auditing of Accounts)

Two committee members will be selected from the group to audit the accounts. The
term of office is to be 1 year.
7. Principle 7 (Special Committees)

Members can create various committees on their own accord.
8. (Supplementary Rules)
This group will not have a representative. The delivery vans are in the hands of the
group however when it comes to disposing the van, consent from the producers group
must be given. The fiscal year will be from September to August (Na no Hana no Kai,
1986).
Originally, deliveries were made each week to designated stations, from which mem-
bers would pick up the produce. Deliveries were not made to individual households and
were only made to stations which consisted of 5 or more members. A fixed quantity of
vegetables were delivered in containers to each station. Consumers were expected to help
weeding, harvesting and assisting the farmers on their farms throughout the year. One con-
sumer explained how she would travel one and a half hours each way from her house to the
producer’s farm once a week to help weed and remove pests from the produce on the farm.
Changes in the teikei
The teikei consumer group currently has 183 registered members which is approximately
half the number of the group’s membership when the group was at its peak in the mid 1990s
(Table 3.23). In response to the decrease in membership, the consumer group has introduced
a number of changes to the delivery patterns. Two sizes for the organic vegetables con-
tainers were created so that consumers could choose to purchase either a small container
or medium container of vegetables. Restrictions on delivery to individual households were
lifted and the radius of household deliveries have increased with the introduction of Japan
Postal Services deliveries (A summary of the changes in the teikei are summarised in Ta-
ble 3.24). The most recent data collected from the group revealed that there are less than 50
containers delivered to households regularly each week. On some occasions there were only
30 containers delivered a week between August 2007 and August 2008 (Na no Hana no Kai,
2008). These figures reveal that less than 30 per cent of the members are purchasing contain-
ers of organic vegetables on a weekly basis. Similarly, the number of stations consisting of
only one consumer household considerably outnumbers the stations consisting of a number
of households. Out of the 110 stations, 87 stations consist of only one household. There has
been an increase in the number of households that have vegetables delivered to the doorstep
by postal service. As of October 2008, 12 households employed the services of Japan Post for
vegetable deliveries. Furthermore the purchases by consumers of small containers consid-
erably outnumbers consumer purchases of medium sized containers. From September 2007
to August 2008, S sized boxes accounted for 4075 out of 5784 boxes delivered (Na no Hana
no Kai, 2008). The price difference between S size and M size boxes depends on the week
and month, with the greatest difference occurring in the first weeks of June, July and August
when there is more than a 1000 yen difference between the two sizes.
The consumer group is faced with a decline in membership as well as an ageing of its
membership base. A large proportion of the consumer body is over forty, and the members
in their sixties outnumber members in their forties and fifties. The decrease in membership
of the consumer group is reflective of a number of factors, among which are:
(i) the low birth rate in Japan, the rapid ageing of the population and the decrease in the
size of young families;
(ii) increased participation rates of women in the paid labour force, has meant that existing
members have had less time to devote to the activities of the teikei, or dropped out of
the organisation altogether (Hatano, 2008) ;
(iii) the proliferation of outlets selling organic produce on the conventional market has
meant that working families can secure organic produce without the time and labour
commitments associated with membership of the teikei;
(iv) the fragmentation of groups and increasing individualisation of members in society
The farmers belonging to the teikei group expressed concerns over the decrease in con-
sumer membership and also the national law enacted in 2006 to promote organic farming.
They were not convinced that they would necessarily benefit from the newly enacted law to
promote organic farming, stating that they would face greater competition if there was an
increase in organic production and a further proliferation of organic produce in conventional
outlets 6 Similarly, the consumer group expressed concerns about how to increase member-
ship. One consumer had recalled how they had tried to increase membership by putting
flyers about the teikei in mailboxes of residents living nearby. The consumers who joined
the consumer group after receiving a flyer in their mailbox were generally only interested in
purchasing ”safe” food conveniently and at a reasonable price, not in taking part in a move-
ment and tended to leave the consumer group soon after finding a more convenient method
of procuring safe food.
Evidence of conventionalisation
The membership of the consumer association Na no Hana no kai has undergone both a change
in composition and a decline in membership since the formation of the group in the 1980s.
Although the observed changes in the composition and membership of Na no Hana no kai
are substantially attributable to demographic and economic changes in Japanese society, the
penetration of agribusiness into the organic sector and the subsequent proliferation of or-
ganic produce on the mainstream market have impacted on the association by reducing the
need for organic produce sourced through teikei arrangements, and by delinking organic
production from the social objectives of the teikei movement.
Aside from the decreased use of labour from the consumer association by the farmers,
the evidence observed here suggests that neither the agro-ecological nor the labour practices
of the farmer’s group Tsuchi to Midori no kai have altered substantially since the formation of
the group in 1986. However, due to the changes in the size and structure of the consumer
association that accelerated in the 1990s, the members of Tsuchi to Midori no kai have been
forced to adapt to ”conventional” markets, notably a regional consumer cooperative and
a local convenience store, for the production in excess of that absorbed by the members
of Na no Hana no kai. When the members of Tsuchi to Midori no kai initially began selling
organic produce to the regional consumer cooperative Toshi Seikatsu Club Seikyo, the prices
obtained from the cooperative by the farmers were on a par with the prices obtained through
teikei arrangements. However, in 2003, with the increase in competition in ”conventional”
organic markets, the farm-gate price received by Tsuchi to Midori no kai from the consumer
cooperative dropped by 10%.
6
Notes from interview with teikei farmers in October 2008.
Table 3.24: Changes in Tsuchi to Midori and Na no Hana teikei

Teikei at its peak Changes
No. of consumers 350 183
Distribution Only to consumer household Individual household deliveries
groups
Fixed container size Introduction of 2 container sizes
Weekly deliveries Introduction of deliveries every
alternate
All deliveries made to Postal deliveries introduced
household groups living near
farm
Outlet Only Na no Hana no kai Local consumer co-op, third
party distributors, convenience
store
Produce Not packaged, graded or Increase in packaged, graded
labelled and labelled produce
All produce absorbed by teikei 70 per cent of produce shipped
consumers outside teikei arrangement
In a period when overall consumption of organic produce has been increasing in Japan,
it is significant that Na no Hana no kai has experienced both a decrease in demand for the
produce by the membership of Na no Hana no kai, and a decrease in the farm gate price
for organic produce sold outside of the teikei arrangement. This observation suggests that
the expansion in organic production is occurring in ”conventional” marketing channels for
organic produce, and that adaptation by farmers to these conventional markets, made nec-
essary by the decline in teikei consumer associations, requires organic farmers to accept
significantly lower farm gate prices than they would receive through teikei arrangements.
3.7.2 Case Study 2: The Hayashi Farm

The Hayashi Farm was selected for this study since it illustrates the changes that have oc-
curred in the the teikei over the last 20 years. Although the farmer continues to farm in-
corporating a high degree of agro ecological principles based on the utilization of on farm
materials, the farmer has been compelled to sell an increasing amount of produce outside
the teikei and change the operation of the teikei in response to the decrease in the number of
consumers purchasing produce via the teikei.
The Hayashi Farm is a 2 hectare property located in Chiba prefecture. Organic methods of
farming were employed on the farm starting in 1980, when out concern for the environment
and possible health risks associated with agrochemicals, the farmer converted to organic
farming. The farmer has not acquired Organic JAS certification, but operates on a system
of trust with its consumers. The Hayashi Farm’s annual income was approximately 7 million
yen in 2007. The Hayashi Farm is farmed by a couple in their early 50s and also by a number
of trainees who live with the farmers for varying periods of time to learn about organic
farming techniques. Hayashi Farm is based on the minimal use of off-farm inputs, and on
management practices that restore, maintain and enhance ecological diversity. Annually,
the farmer produces approximately 80 crops including beans and wheat. Egg production
from approximately 150 chickens, and the processing of miso and pickles is also carried out
on the Hayashi Farm.
Agroecological practices
The farming methods employed on the farm emphasize building healthy soils by using com-
post and crop rotations and relying on crop diversity for risk management and pest control.
In addition, the Hayashi Farm attempts to mimic the biodiversity of nature through practices
such as intercropping, companion planting, establishment of beneficial habitats and crop ro-
tations. The crop rotations used on the farm are simple and involve the moving of blocks
of crop up the field in successive years to avoid repeated plantings of the same family. Veg-
etables from the gourd family are intercropped with leeks to prevent disease from the gourd
family from arising. For pest control, milk spray is used against aphids, garlic spray and,
loquat seed tea is also used. A variety of herbs are also used to control pests. For instance,
marigolds are planted very thickly throughout vegetable plots. Marigolds help to suppress
nematodes because their roots emit a substance that repels nematodes in the immediate area,
and mint is planted to help to repel aphids and cabbage pests.
The farmer has a low dependence on off farm inputs. The farmer uses approximately
40 tonnes of compost per annum. The compost used on the farm consists of tree prunings,
which are supplied to the farm by the local government, and rice hulls procured from a
nearby relative’s farm and chicken manure which is produced on farm (Table 3.25). These
three ingredients are decomposed on farm for one year before use. The farmer restricts the
usage of chicken manure to less than 5 per cent of the total manure content stating that ”too
much chicken manure results in excess nitrogen”. Similarly, the components of the fertilizer
used by the farmer are also primarily based on materials from the farm or from nearby the
farm (Table 3.26). Fish meal, sourced from Hiroshima is the only ingredient procured from
outside the farmer’s locality. As far as possible the farmer tries to recycle resources within
the farming system or at least within the local region.
Marketing practices
The Hayashi Farm supplies vegetables, dried beans, processed foods and eggs to approxi-
mately 80 households. Most of the deliveries are made to consumers located in Chiba pre-
fecture and the greater Tokyo metropolis, although about 15 deliveries are made by postal
service to customers living outside this radius. The vegetables are available in three sizes:
1000 yen for small sized boxes, 1500 yen for medium sized boxes and 2000 yen for large
boxes. The farm does not wash or grade the vegetables, nor package in plastic any of the
produce. Once a month, a farm newsletter accompanies the produce and twice a year, mem-
bers visit the farm for a tour, a meal and discussions about farming.
In addition to selling produce to consumers in the teikei arrangement, Hayashi Farm sells
produce to three restaurants and also through a direct marketing outlet located in the vicin-
ity of the farm. The farm is not tied to a contract with the restaurants, but supplies a box of
seasonal vegetables on a weekly basis. The farmer had been requested to produce radish all
year by a restaurant, but the farmer declined stating that he only grows within the seasons.
The produce sold via the direct marketing outlet is sold as conventional produce and is often
sold below the cost of production. Differentiation between the organic produce grown on
Hayashi Farm and the produce grown by conventional farmers is not made at the direct mar-
keting outlet since all produce is sold on the same stand. The amount of produce shipped to
the direct marketing outlet totalled approximately 800 thousand yen and the combined sales
of produce sold to the restaurants and through the local direct marketing outlet amounted to
approximately 1.8 million yen in 2006, which is one quarter of the farmer’s gross income. The
Hayashi Farm commenced selling larger volumes of produce outside the teikei from around
1995 onwards, as a result of the decrease in the number of consumers purchasing produce
through teikei. Prior to 1995, Hayashi Farm sold only a small volume of surplus produce to a
local restaurant.
Changes in the structure of the teikei
In the early 1980s produce grown on the Hayashi Farm was distributed on a weekly basis
to consumers who had formed neighbourhood groups. One household in each neighbour-
hood group was designated as a distribution centre, from which consumers belonging to the
group would pick up produce. The group leader was responsible for collecting the payment
from each member in the group and paying the farmer for the shipment. Consumers were
encouraged to visit the Hayashi Farm each month to partake in discussions about the opera-
tion of the teikei and also to learn about organic agronomic practices and issues associated
with agriculture and food. Consumers would help the farmer in activities such as weeding
and harvesting on the farm during these visits.
From the early 1990s, the number of teikei consumers began to decrease, and in 1995
there were only 50 consumers registered in the teikei, which was approximately half the
number of consumers belonging to the teikei in the late eighties. A number of changes
were made to the teikei in response to the drop in consumer numbers (a summary of the
changes in the Hayashi teikei is in Table 3.27). Firstly, consumers were no longer restricted
to forming a group to purchase produce, but could place individual orders and have produce
delivered to their doorsteps. The monthly study and interaction sessions held at the Farm
for consumers were reduced to twice a year. Furthermore a system of different box sizes was
introduced and the stipulation of weekly orders wavered. In addition the radius of delivery
from farm to household expanded and postal deliveries also commenced. As a result of these
changes, the number of teikei consumers has gradually increased from 50 to 80 households
(2007). However the number of consumers belonging to the teikei will need to increase to
approximately 100 consumer households if Hayashi Farm is able to operate without relying
Table 3.25: Compost produced on farm

Compost Percentage
Tree prunings 85
Rice bran 10
Chicken manure 5
on sales outside of the teikei. Out of 80 households, 15 customers receive produce by postal
service delivery and approximately 20 customers place orders every alternate week.
Although the number of teikei consumers has declined, and the farm has been compelled
to ship produce outside of the teikei to cover the drop in income, the farmer does not express
interest in shipping produce under contract to a co-op or third party distributor. Producing
under contract to co-ops and third party distributors would compel the farmer to alter his
cropping system. The farmer stated that co-ops and third party distributors are based on the
transactions of large volumes, and as a result, farmers are pressured into specializing in the
production of a few crops which would lead to an unbalanced ecosystem on his farm. The
farmer’s statement echoes the findings of Robert Rudd in Pesticides and a Living Landscape
Crop systems are necessarily ecologically simplified for economical production

of marketable foods. The frequent consequence is an unbalanced ecosystem in
which a few species of organisms increase beyond thresholds of numbers that
we can tolerate. By definition these species then become pests . . . . Production
and pest protection are parts of the same cloth and can not be separated (Rudd,
1964, p. 297).
Labour and Production Costs
The trainees, who vary in number each year from 1 to as many as 5, assist the farmer with
planting, weeding and harvesting, however, the farmer does not depend on their labour nor
on wage labour. The farmer shuns wage labour and stated that the planting and harvesting
of crops on the farm is carried out in such a way so to avoid dependence on wage labour. In
exchange for working on the farm, the trainees receive free food and accommodation. The
farm is relatively un-capitalized with only 3 tractors that had been purchased second hand.
There is no specialized machinery for planting and harvesting. The farmer tries to keep his
seeds each year although in some cases, for example in the case of potatoes, the purchase of
seeds is necessary. The farmer estimates the costs of seeds per annum to be approximately
200 thousand yen. The overall production costs on the Hayashi Farm are less than a quarter
of the farmer’s annual turnover, which as stated by the farmer himself, is considerably less
than the average farm in Japan.
Table 3.26: Compound fertilizer components and volume

Component Kilograms
Bokashi 200
Rice Bran 30
Fish meal 10
Chicken manure 40
Mountain soil Unspecified amount.
Coffee dregs Unspecified amount, not used
regularly.
This study of Hayashi Farm has been unable to discern any dilution of the farm’s agro-
ecological or labour practices since the establishment of the farm in 1980. The study suggests
that the farm has been able to maintain crop diversity and integrated livestock and crop
production, in keeping with core principles of the Japanese organic movement. However,
with the decline in the membership of the teikei association, and the decrease in orders by
the remaining members of the teikei association, the farmer has been forced to sell organic
produce as conventional produce on an ad-hoc basis, often at below the cost of production.
The decline in the membership of the Hayashi Farm teikei association has occurred in a period
when production of JAS certified organic produce, and its availability through mainstream
outlets such as supermarkets, department stores and internet based retailers, has continued
to grow. In an attempt to halt the decline in its membership and to maintain the viability
of the teikei distribution network, the Hayashi Farm has increased the size of its distribution
area, and introduced a postal delivery service.
This study suggests that, while the farmer has made a conscious and apparently suc-
cessful effort to insulate on-farm agro-ecological and labour practices from the effects of
increased external competitive pressures, participation in the Hayashi Farm teikei association
has declined since the institutionalisation of organic production. The farmer has responded
to the decline in participation in the Hayashi Farm teikei association by extending the reach
of the distribution network for the farm produce.
3.7.3 Case Study 3: Sanbu Yasai Network
The Sanbu Yasai Network illustrates the transformation of a farming group from a group that
had attempted to minimize dependence on off farm inputs by making on farm compost from
local materials to a group that has increasingly had to rely on off farm inputs as a result of
an increase in the number of downstream buyers and processors and farmland size.
Table 3.27: Summary of changes in the Hayashi Farm teikei

Hayasahi Farm Hayashi Farm at its peak Changes
No. of consumers 100 80
Interaction with consumers Monthly study meetings Bi-annual study and
meetings
Distribution Only to designated stations Individual household
made up of a number of deliveries
households
Fixed container size Introduction of three
container sizes
Weekly deliveries Deliveries every alternate
week
All deliveries made to Postal deliveries of
designated stations nearby produce introduced
the farm
Outlet Only teikei consumer Restaurants, direct
households marketing outlet
Produce Price set by the producer Produce sold as
conventional produce
below the cost of
production
Organisation and its development
The Sanbu Yasai Network (The Sanbu Vegetable Network) is a nōji kumiai hōjin (corporatised
farming association) with 46 members, based in Sanbu town, Chiba prefecture. The net-
work produces both Organic JAS certified and low–input vegetable produce on 80 hectares
of land, of which 45 hectares is currently certified as organic under the Organic JAS regula-
tions. The group grows a total of 70 crops, although approximately half of the farmland is
currently under the production of three crops: carrots, taro and lettuce. The network estab-
lishes annual or semi–annual contracts to supply processors, wholesalers and retail outlets
in the Kanto region with organic and low–input vegetable produce, and coordinates pro-
duction among its members accordingly. Farmers in the network register a portion of their
farmland with the network each year, and the produce of land so registered is sold through
under the network’s contracts. The network allows its members to achieve jointly scales of
production that would be impossible to achieve on individual plots, and, to the outlets with
which it is contracted, provides a supply of produce more secure and continuous than could
be obtained through contracts with any of the farmers individually. Currently the network
has sales contracts with third party distributors, (Daichi wo Mamoru kai and Radish Boya),
consumer cooperatives (Seikatsu Club Seikyō and Tōto seikyō), the food service industry (Mos
Table 3.28: Fluctuation of membership and Organic JAS certified area

Year Number of Members Registered Area (ha) Registered Organic JAS
certified area (ha)
1988 13 0.1
1998 68 90
2004 50 120–130 20
2007 46 80 40
2009 48 88 46
Burger and Watami) and various outlets such as U–League, Kinokuniya supermarket chain,
Bio Marche, Polan Hiroba, and a vegetable wholesaler (Table 3.29). The local school district
also obtains vegetables for school lunches through the network.
The Sanbu Yasai Network was established in 1988, as a division of the Sanbu JA, by thir-
teen local conventional vegetable farmers interested in low-input production methods and
building soil fertility. The farmers, who had been dependent on agrochemical inputs to
maintain soil productivity, wanted to replace off farm inputs with compost and to improve
the productivity of the soil with a minimum of off-farm inputs. The farmers began with ex-
perimental production of their own fertilizers from chicken manure, fish meal, oil seed cake
and rice bran, and cultivation without industrial pesticides on 0.1 hectares of farmland. Ini-
tially outlets for the farmer’s produce were restricted to Radish Boya and Daichi wo Mamoru
kai, however the number of the Network’s outlets gradually increased, particularly after the
introduction of the Organic JAS certification scheme.
In 2005, due to the organisation’s dissatisfaction with JA’s lack of vision for local agri-
culture” and the fact that as a division of JA the organisation was unable to admit farmers
who were not members of JA, the Sanbu Yasai Network disaffiliated from JA to form an inde-
pendent nōji kumiai hōjin. At the time of its disaffiliation from JA, members of the network
turned down the board’s proposal to form an nōgyō seisan hōjin, choosing the option of reg-
istering annually an amount of land for production with a nōji kumiai hōjin over the option
of transferring or leasing their holdings to the proposed nōgyō seisan hōjin.
The fluctuation in the membership of the Sanbu Yasai Network (Table 3.28) is reflective of
the demographic crisis and labour shortages facing Japanese farming. In 1998 the member-
ship of Sanbu Yasai Network consisted of farmers in their thirties and forties who used family
labour on their farms. By 2004 the farmers, who could no longer rely on family labour, faced
a labour shortage that led to reliance on the part-time labour of female retirees. In 2007,
many of these part time employees are beginning to withdraw completely from the labour
force leading to a deepening labour shortage for the farmers in the area. One farmer in the
Network responded to the labour shortage by incorporating his farm into an agricultural
corporate body.
Table 3.29: Sanbu Yasai Network sales by volume

Purchaser Proportion
Radish Boya 20%
Daichi wo Mamoru kai 19%
Seikatsu club seikyō 15%
Kinokuniya 15%
Wholesale markets 15%
Watami Food Service 5%
Tōtō 5%
Other 5%
Table 3.30: An inexhaustive list of Sanbu Yasai Network prices by outlet (yen per kg) in 2008.
Commodity Daichi Radish N. Ichi Touto Seikatsu Watami Mos
wo Boya Co-op Club Farm Food
mamoru
kai
Taro 277 280 314 296 278 139 150
Volume (kg) 12,160 33,690 3,670 20,430 18,200 1030 100
Carrots 157 158 184 194 178 148 99
Volume (kg) 47,270 39,880 13,450 20,790 2,910 8,350 10
Radish 115 115 114 137 124 103 126
Volume (kg) 17,427 47,427 8,428 13,253 5,672 27,950 28,199
Iceburg Let. 119 120 121 117 118 123 121
Volume (kg) 35,380 51,918 7,376 12,552 4,350 13,486 11,425
Sunny Let. 93 93 94 94 94 94 100
Volume (kg) 13,263 13,036 1,210 4,554 4,101 22,200 -
Leaf Let. 90 91 90 94 - 96 -
Volume (kg) 4,990 2,814 690 929 - 4,308 -
Roman Let. 105 103 112 103 105 103 -
Volume (kg) 1,228 360 360 1,265 225 7,020 -
Frill Let. 102 102 101 100 107 103 -
Volume (kg) 4,848 12,933 - 2,025 914 18,600 -
Source: Data collected from case study.
N.Ichi= Nukumori Ichi
Agroecological Practices
Farmers in Sanbu Yasai Network base their farming operations on the following 5 principles:
1. No usage of chemical fertilizers.
2. No usage of pesticides.
3. Cultivation of green manure crops such as wheat and sorghum.
4. In order to carry out crop rotations, more than 5 crops should be cultivated and one
crop should be less than 30 per cent of the total cultivated farm area
5. Fostering close relationships with consumers
The farmer interviewed for this study cultivates 12 crops on 5 hectares of farmland. Approxi-
mately half of the farmland (2.4 hectares) is under the cultivation of carrots which are in high
demand by downstream processors. The farmer does not source compost from off farm but
relies on green manure crops such as rye and oats to provide nitrogen for the soil. However
the farmer sources organic fertilizers such as guano off-farm via JA. Since the farmer is un-
der pressure to meet the demands of downstream buyers and processors, the farmer does
not have the time to plant the seeds and grow the crops from seeds but rather purchases the
seedlings that have been grown on Watami Farm.
Labour practices
The farmer employs 3 part time workers to assist with weeding and harvesting on farm.
The part time workers are in their seventies and eighties and are skilled farm workers. The
farmer also relies on the labour of trainees, who under a local government farmer trainee
program, are paid by the government to work on farms while they learn the necessary tech-
niques to become certified farmers themselves.
Marketing practices
The third–party distributors with which Sanbu Yasai Network has producer contracts are
Radish Boya and Dai chi wo mamoru kai, and the internet sales division of Polan Hiroba. Sanbu
Yasai Network has had producer contracts with Seikatsu club seikyō since 1991 and with Touto
seikyō since 1998. The prices obtained under the contracts the network has with these con-
sumer cooperatives and third party distributors have been held fixed since transactions com-
menced and according to the farmer, the prices do not reflect the increase in the price of
inputs.
Sanbu Yasai Network commenced shipment to organic specialty stores and to mail or-
der delivery companies after acquiring Organic JAS certification. Nukumori chi, Bio Marche,
Nukumoriya and Kodowari-ya. The farm-gate prices the farmers receive for produce shipped
to organic speciality outlets and mail order delivery companies are generally higher than
other shipment outlets (Table 3.30). In the food service sector, the Sanbu Yasai Network has
producer contracts with Watami and Mos Foods. While Sanbu Yasai Network supplies Watami
3.8. Conclusion from case studies 63
with taro, carrots, radish, lettuce and cabbage the network supplies Mos Foods only with let-
tuce and tomatoes. Out of the 1.2 tonnes of produce shipped to Watami, lettuce accounts
for approximately 60 per cent of the shipment. Prior to Sanbu town’s amalgamation into
Sanmu city in 2006, Sanbu Yasai Network supplied the school district with organic produce
for school lunches. At that time, Sanbu town was willing to pay a higher price for the or-
ganic produce, however, after amalgamation, schools were forced into competitive bidding
on a single criteria of price.
As Sanbu Yasai Network has become increasingly tied to contracts with downstream buyers
and processors, the producers in the network have been compelled into practising a shal-
lower form of organic farming, as progressively larger proportions of the cultivated area
is devoted to the production of the five main crops specified by producer contracts. The
farmer interviewed for this study is no longer able to adhere to one of the Network’s orig-
inal objectives which was to limit the cultivation of one crop to less than 30 per cent of the
total cultivated farm area but has almost half of farmland under the cultivation of carrot
production.
The requirements of producing under contract imply that the producers are no longer
able to be self sufficient in compost and fertilisers, and have become dependent on imported
substitutes procured at substantial cost through the local JA. As a result of their dependence
on retail outlets, the producers in the network are burdened with the labour and financial
costs of packaging and labelling their produce to meet the the exacting standards of the
Japanese mainstream consumer markets. Since 2000, the farmers in Sanbu Yasai Network
have become increasingly dependent on part-time labour that, given the shortage of people
of prime working age in rural Japan, is supplied by female retirees employed at a reduced
”silver” hourly wage.
By contrast with the teikei farmers, discussed above, who face declines in consumer asso-
ciation membership and falling demand for their produce among the existing membership
of teikei networks, the producers in Sanbu Yasai Network have been able to secure steady
and expanding markets for their produce. Though able to get relatively high prices for the
small amounts of produce it sells to up-scale niche and internet-based retailers, the success
of Sanbu Yasai Network in securing bulk markets for organic produce is mitigated by the fact
that the large scale processors and retailers with which the network has producer contracts
pay comparatively poor prices and have stringent packaging and labelling requirements.
3.8 Conclusion from case studies

The case studies carried out above indicate that teikei farmers continue, with greater or lesser
degrees of success, to minimise dependence on off-farm inputs and to maintain diverse crop-
ping systems and integrated pest control systems. At the same time as teikei farmers have
avoided substantial dilutions to their agro-ecological practices, changes in the structure of
the teikei system have been introduced in response to declines in the membership of teikei
associations and the increased availability of organic produce through mainstream outlets
such as supermarkets and department stores. As a result of the falling membership of the
teikei associations, farmers have been forced to adopt more ”conventional” marketing strate-
gies, including the use of postal delivery services, deliveries to individual households, and
sales through convenience stores and consumer cooperatives.
The farmers in Sanbu Yasai Network have had relative success in securing bulk markets
for organic produce, but this success has been mitigated by the increased labour and finan-
cial costs that the members of the network bear in order to meet the stringent packaging and
labelling requirements of mainstream markets, and by the comparatively low prices paid
for organic produce on these markets. Additionally, the farmers in the Sanbu Yasai Network,
whose original goals included the minimising of dependence on off-farm inputs, have come
to depend on imported organic fertilizer procured through the JA. The decision of the farmer
interviewed to cease the on-farm production of crops from seed may be in part attributable
to the increased demands place on the farmers’ labour by the sorting and packaging of pro-
ducer for bulk outlets.
Our results suggest that, for organic farmers producing under the teikei system, the main
evidence of conventionalisation is observable in changes to the off-farm and distribution
nodes of the agro-food chain. The farmers producing outside the teikei system in this study,
evidence for conventionalisation is apparent in the dilution of agro-ecological practices, in-
creased dependence on off-farm and manufactured inputs, and the adoption of labour prac-
tices that are at odds with the early social objectives of the organic movement.
Chapter 4
Watami Co. Ltd and the Organic Sector
4.1 Introduction
Watami Food Service was formed as a joint stock company in 1986, and re-branded as
Watami Co. Ltd in 2004. Watami is a holding company with fifteen consolidated sub-
sidiaries, involved in a diversity of industries, including the food services sector, food cater-
ing 1 , food waste processing, agriculture, nursing homes and education (Table 4.1). The
food service division of Watami includes 12 restaurant and izakaya chains, and had sales
of approximately 85 billion yen for the financial year of 2007 (Watami, 2008a). The food
service division of Watami accounted for approximately 85 per cent of the group’s gross
profit in 2007. However, the company’s main food service business has been affected by
the increased competition for market share and profits in the Japanese restaurant and iza-
kaya sector which experienced a 12 per cent decline in combined sales in the period 1994–
2004 (Gaishoku Sangyou Sougou Chousa Kenkyuu Senta, 2007). According to the CEO of
Watami, the company has found itself unable to maintain both its market share and prof-
itability in this climate by simply cutting prices to increase the frequency of customer visits
to its food outlets, as was possible in times of economic expansion (Watami Food Service
Co., Ltd, 2002). To ensure the survival and growth of its restaurant businesses within a sec-
tor which is experiencing little or no overall expansion, the company’s chosen strategy is to
differentiate itself from its competitors in the food services industry by raising the quality of
the raw materials used in its food outlets and using “safety” and “health,” as well as “trace-
ability,” as selling points for its restaurant businesses (Watami Food Service Co., Ltd, 2002).
This strategy of differentiation using high quality ingredients had already been adopted by
Jonathon restaurants in the Sky Lark chain in 1995 and Mos Food Service outlets in 1997
(Oda, 2007). In 2002 the company began using JAS certified organic ingredients in its restau-
rant chains. To provide its restaurant business with a supply of JAS certified organic ingre-
dients, and apparently with the wider aim of developing its agribusiness arm as one of the
Watami group’s main components, the company established Watami Farm as a subsidiary in
2002. Through Watami Farm, the group diversified into cattle and pig breeding and rearing,
organic egg production, the manufacture of organic fertilizers, organic seedlings, and animal
feed, as well as the production, distribution, wholesale and retail of organic vegetables and
processed foodstuffs. As of March 2007, sales of the agribusiness division amounted to 2.2
billion yen (Watami, 2007b).
1
Watami expanded into the manufacturing and delivery of precooked foodstuffs and produce after the ac-
quisition of Takushoku in June 2008 and re-branded the company Watashoku. From March 2008 to April 2009,
the costumer base of Watashoku was 60 thousand households.
66 4. Watami Co. Ltd and the Organic Sector
In this chapter we will provide an overview of Watami food service business and case
studies of Watami farming operations in two prefectures in Japan. In addition, case studies
of two organic farming groups producing under contract to Watami will illustrate the inte-
gration of organic farmers into agro food chains dominated by off farm capital. Following
the case studies is an examination of how the local and national governments have both
promoted the corporate restructuring of the domestic agricultural sector in response to the
failure of longstanding post-war attempts to reconstitute family based farming along pro-
ductivist lines, and identified organic farming as a special value added production that will
allow domestic producers to compete with imports on bases besides cost.
4.2 Watami food services business

The food services division of Watami operates 618 restaurants in 12 chains in Japan, Hong
Kong, China, Taiwan and Singapore. Based on demographic characteristics such as age,
income, gender and marital status, each chain in the Japanese arm of the company’s restau-
rant business targets a different segment of the Japanese population. For instance, the chain
Zennoya targets a wealthy demographic segment and bases its appeal on use of organic prod-
ucts and anshin anzen ryori or “trustworthy, safe food”; the chain Japanese Dining Gohan tar-
gets young professional women and emphasises anshin anzen ryori and high quality sake
(Japanese rice wine) along with a “modern, stylish dining environment”; at the lower end
of the market, Izakaya Nagomi tei is often located in station precincts and targets salarymen
and a young demographic segment, offering a small amount of organic fare on its menus;
Watamin chi is a “low price izakaya” that “unsparingly uses organic vegetables from Watami
Farm” and targets families and groups dining out (Watami, 2008c). Although the company
heavily advertises the use of organic ingredients by its restaurant chains, menus of the lower
end watami restauants, which constitute the majority of the company’s outlets, suggest that
the bulk of the organic produce used by the company’s restaurants are comprised of just two
vegetables, namely lettuce and radish. In Watamin chi for instance, radish and lettuce are the
only organic ingredients available (Watami, 2008b). Although there has been an overall in-
crease in low end Watami dining chains, the restaurants using larger amounts of organic
produce, specifically Zen no ya and Gohan have decreased in number (Table 4.2). According
to a Watami monthly report, ”it turned out that it was difficult to establish competitive su-
periority in the category that focuses on the quality of materials”. In all Watami restaurant
chains, a monthly brochure, Anshoku which is published by Watami Farm is provided free
of charge to consumers in an attempt to educate customers about the anshin anzen produce
grown on Watami operated farms. Consumers are also provided with the opportunities to
visit Watami Farms throughout the year for the aforementioned reason.
Currently, Watami restaurants use 1500 tonnes of organic vegetables per annum, of which
30% is sourced from the company’s farms, and 70% from the company’s network of contract
farmers. Overall, 20% of produce used in Watami restaurants is certified organic, while
another 10% is produce farmed by “low chemical input methods”. The company plans
to increase the proportion, relative to conventional produce, of organic and specially cul-
4.2. Watami food services business 67
Table 4.1: Watami’s consolidated subsidiaries

Business categories Company name Business
Holding company Watami Co., Ltd Control of the Watami Group
Real-estate leasing Leasing of shops, nursing care facili-
ties and offices
Restaurant Watami Food Service Co., Ltd. Restaurant management; Watami,
Za-Watami, Gohan
Wamintei
Watami Direct Franchise systems Co., Wataminchi
Ltd
T.G.I. Friday’s Japan, Inc. and Restaurant management in Japan
and Guam,U.S.(
Watami USA Guam Management of T.G.I. Friday’s, a US
restaurant chain)
Watami International Co., Ltd. Development of restaurant franchis-
ing business overseas
subsidiaries and planning, imple-
menting of strategy for advancing
overseas areas.
Watami (China) Co., Ltd. and
Watami (Shenzhen) Co., Ltd. Restaurant management in China
(Watami Hong Kong, Watei and
Watami Shenzen)
Watami (Taiwan) Co., Ltd. Restaurant management in Taiwan
Watami Food Service
Singapore Pty Ltd
Watami Tezukuri Merchandising Purchasing of alcohol and beverages
from wholesalers to
Co., Ltd. distribute to the directly managed
restaurants of the Group and
franchise member restaurants
Watami Farm Co., Ltd Sales of agricultural products, fertil-
izers and agricultural equipment
Toma Green Life Inc. Production of agricultural products,
and provision of agricultural prod-
ucts to Watami Farm Co. Ltd.
Nursing care Watami no Kaigo Co., Ltd. Management of pay nursing homes,
visiting care and at home nursing
care support business
Watami Medical Service Co., Ltd Consigned medical processing and
sales of medical equipment
Restaurant
construction Watami Ecology Co., Ltd. Environment improvement work,
consigned construction and
maintenance of restaurants for the
Group and other companies
Food catering Watami Takushoku Co., Ltd. Production, sales and home delivery
of uncooked and cooked food
Watami University Co. Ltd
Source: Data compiled from Watami financial statements.
Table 4.2: The fluctuation in the number of Watami Restaurants in Japan between 2003-2009
Restaurant 2003 2005 2007 2009
category
Watami 267 309 262 225
Za-Watami 24 151 192
Nagomitei 30 33 22 16
Gohan 12 19 7
Zen-no-ya 8 25 1
Watamin-chi 4 34 121 143
Source: Data compiled from Watami (2007a) and Watami (2009).
tivated produce used in its restaurants from 30% to 40% by the end of 2008 and to increase
the amount of organic produce used in its restaurant chains to 2000 tonnes by 2011. The
quantity of organic produce used in Watami restaurants will continue to grow relative to the
quantity of conventional produce “provided the cost of procuring or producing organic veg-
etables remains within the range of the food service industry.”2 Production by the farming
division of Watami is closely integrated with operations of the company’s food services di-
vision. Produce grown on Watami farms and contract farms is shipped directly to either the
company’s kitchens, located in three regions, or to the company’s fresh produce distribution
centers. Preparation of the produce takes place in the kitchens, before it is shipped to the
company’s restaurants.
In addition to using organic produce sourced from the company’s farms and its network
of contract farmers in Watami restaurants, the company sells approximately 1500 tonnes
of organic produce to domestic wholesalers, supermarkets, department stores, restaurants,
consumer cooperatives, food processors, old people’s homes and hospitals. In 2008, the
company also started a mail order business, through which the public can purchase Watami
produced vegetables online. The company plans to increase these external sales of organic
produce to 2000 tonnes by 2011 (Table 4.4). The proportion of the organic produce from the
company’s farms and its network of contract farmers accounted for by external sales has
grown from 20% in 2004 to 50% in 2008, and expected sales by Watami’s wholesale division
account for a large part of the predicted growth in sales from 2008 to 2009 (Table 4.4).3
A study of corporate expansion into agriculture by Muroya (2005) argues that by estab-
lishing dedicated vegetable supply chains which it controls from the farm gate, it is possible
for a corporation such as Watami to supply organic vegetables at the same price as suppliers
of conventional vegetables to wholesalers and retailers.
2
Notes from email correspondence with the CEO of Watami Farm in July 2008.
3
Notes from email correspondence with the CEO of Watami Farm in July 2008.
4.3. Watami farming operations 69
4.3 Watami farming operations

The Watami group commenced organic farming in 2002 with the establishment of Sanbu
Farm in Chiba prefecture. The main impetus for the company to start organic farming was
due to the costs associated with procuring organic produce for its restaurants from the con-
ventional market. The CEO of Watami Farm stated that:
It costs too much to procure organic produce from the market. We thus set our
sights on economy of scale...Since we can fill a four tonne truck with produce
from our farms we are able to lower distribution costs (Nikkei, 2009a).
As of 2009, Watami Farm operates nine farms; three located in Hokkaido prefecture
(Teshikaga town, Toma town, Setana town), three in Chiba prefecture (Sanbu town, Sahara
town and Shirahama town), one in Kyoto prefecture (Kyotango), one in Gunma prefecture
(Kurabuchi town) and one farm in Oita Prefecture4 Watami Farm is involved in raising dairy
cattle and poultry in the Setana property, beef cattle in Teshikaga town and in the cultivation
of rice and vegetables on the remaining properties (Table 4.3).
In the deregulated farming zones of Chiba prefecture and Setana town, created under the
2003 reforms to the Agricultural Land Law, where agribusiness is allowed to lease farmland
for agricultural production, Watami commenced farming operations through wholly owned
subsidiaries. Outside the deregulated agricultural zones, corporations were not allowed to
directly lease farmland, but were required to do so through agricultural production corpora-
tions, which could only be formed by corporations in partnership with individuals who are
registered with the state as farmers. Therefore Watami Farm has a capital stake varying from
10 to 51 per cent in its farms in Gunma prefecture, and Teshikaga and Toma towns. As of
June 2009, 50 hectares of farmland are directly under the control of Watami Farm.
The company’s nine farms are based on 495 hectares of farmland of which 175 hectares
are certified organic, 70 hectares is farmland for the cultivation of low pesticide produce,
and 250 hectares is grazing land. The 170 hectares of certified organic farmland currently
managed by Watami Farm makes it one of the largest single domestic producers of certified
organic produce. The company’s 170 hectares of certified farmland gives Watami approx-
imately 3 per cent of the total farmland under certified organic cultivation. According to
the CEO of Watami Farm, the company had planned to expand its production by acquiring
two or three farms annually (Table 4.4), but has been forced to alter its strategy and increase
production by enlarging its existing farms instead:
We cannot set up new farms since establishing a new farm requires an investment
of 50 million yen and also, in the first year, no profit will be made unless condi-
tions on the farms are extremely good. In comparison, increasing the acreage
of existing farms does not require a financial investment and involves no risks.
So we plan to increase the acreage of our good farms. We plan to increase the
acreage on two of our farms: Sanbu Farm and Gunma Farm.5
4
Farmland in Oita prefecture was procured by Watami Farm in 2009, but farming operations are due to
commence in 2010.
5
Interview with the CEO of Watami Farm.
Watami Farm outsources vegetable production to a network of 100 contract farmers. Cur-
rent production of organic vegetables on the company operated farms and its network of
contract producers gives Watami an approximate 6% share by volume of organic produc-
tion in Japan (Watanabe, 2006). Additionally, the 120 tonnes of organic soybeans produced
on Watami Farms and by the company’s contract producers is approximately 120 tonnes,
or 14 per cent share by volume of organic soybean production in Japan (Takeuchi, 2006).
According to the CEO of Watami Company, Watami aims to hold a 20% share of domestic
organic production by the year 2010 and, by achieving this goal, Watami envisions that it
will “have the ability to determine prices” in the domestic organic vegetable sector (CEO of
Watami Farm cited in Watanabe (2006)). Although it is highly unlikely that Watami’s goals
of capturing a 20 per cent share of domestic organic production will be realized by the year
2010 , nevertheless it can not be disputed that an increasing volume of organic production is
under the control of Watami. The CEO of Watami Farm also stated in an interview for this
study, that given the low recognition of the Organic JAS label, the Watami brand is likely
to be associated with “organic” in the popular consciousness which equates “organic” with
Watami, rather than the Organic JAS label.6 Elsewhere, the CEO of Watami Farm stated that
restaurant managers have found that consumers are more likely to trust the Watami brand
than the Organic JAS label and that consumer ”trust in Watami is increased by the fact that
the produce has come from our own company farms” (Kato, 2008).
4.3.1 Case study: Watami Farm, Setana town
Watami acquired operational control over a 62 ha organic farm in Setana town in 2004.
Twenty five hectares of this property is constituted by an organic farm, which had been
operated as a family concern until it went into receivership with a debt of approximately
18 million yen in 2002. Under the agreement that gave control of the farm to Watami, the
company purchased the livestock and machinery from its owner for an amount equal to the
debt owed by the farm, and continues to lease the land and buildings from the owner. The
buildings and land are leased on a monthly basis for a rate of 50,000 yen for the buildings and
between 3000 to 5000 yen per 0.1 hectares for the land. In addition, the owner of the property
is retained as a manager and employee of Watami Farm in Setana town. The remainder of
Watami farm in Setana is 50 hectares of formerly abandoned farmland leased from the local
government. The landholdings of Watami Farm in Setana town have gradually increased
since 2004, amounting to a total of 75 hectares in October 2008.
The owner of the property who is now retained as a company employee (farm man-
ager) stated that dairy farming as a conventional farmer was no longer viable and since the
company which incorporated his farm had a vast marketing outlet for organic produce, the
farmer decided to farm organically. Vegetable production, dairy farming and processing,
and egg production are the main activities carried out on Watami Farm in Setana. Milk from
43 milking cows on the farm is processed into organic butter, organic ice cream and a variety
of organic cheeses in the company owned processing plant. Although it was not possible
6
Notes from the interview of the CEO of Watami Farm in October, 2007.
Table 4.3: Outline of Watami Farms (2008)

Watami Farm Prefecture Year of Farming Total Processing
activities
Establishment activities area (ha)
Sanbu Farm Chiba 2002 Salad veg- 7
etables,
Chinese
vegetables
Kura– Gunma 2003 Salad veg- 12
etables
buchi Farm
Setana Farm Hokkaido 2004 Dairy, 77 Cheese,
milk, ice-
Poultry cream man-
(eggs), ufacture
Vegetables
Toma Green Hokkaido 2004 Rice, 162 Rice milling,
legumes jams
Life Farm Vegetables tomato juic-
ing
Flowers and bot-
tling,
amazake,
miso paste
Pig farming Seedling
cultivation
Sawara Farm Chiba 2005 Salad veg- 3
etables
Chinese Seedling
vegetables cultivation
Shira– Chiba 2005 Salad veg- 8.5
etables
hama Farm
Teshikaga Farm Hokkaido 2006 Beef cattle 212
Kyou– Kyoto 2006 Vegetables 10
tango Farm
Oita Farm Oita 2010 Vegetables 5 Vegetable
juice
Source: Data collected from case studies.
Table 4.4: Watami farming operations (2008)

Year 2004 2005 2006 2007 2008 2009
Number of farms 5 5 7 8 8 9
Farm Area (ha) 14 230 260 290 490 490
Processing plants 2 2 3 4 4
Poultry 800 2,100 3,000 3,000 3,500
Dairy cattle 60 60 60
Beef cattle 300 400 1200
Organic vegetables (tonnes) 800 1050 1,250 1,450 1,500 2,000
Sales (millions of yen) 1,000 1,200 1,600 1,900 2,200 3,400
Restaurant:Retail 8:2 7:3 6:4 5:5 5:5
Source: Tamaotsu (2005) with additional data obtained in interview with the CEO of
Watami.
2 The 2009 data was forecast by the CEO of Watami Farm. Data obtained via email corre-
spondence with the CEO of Watami Farm.
to obtain precise figures, the sales for each division of Watami Farm in Setana for 2007 were
estimated by the farm manager as follows: 30 million yen for dairy farming, 30 million yen
for vegetable production, 30 million yen for egg farming and 80 million yen for processed
products.7 The farm manager commented that when he was operating the farm as an in-
dependent farmer he farmed to feed his family but now he farms to make a profit for the
company.8
Agroecological practices on Watami Farm, Setana town
Watami Farm in Setana town specialises in the production of two crops radish and lettuce on
8 hectares of farmland. Although the company engaged in the production of six vegetables
in 2004, the company has attempted to maximize the yields of the two crops used in the
greatest proportion in the company’s restaurants, by specializing in the production of radish
and lettuce (Table 4.5). The yields of these two crops have increased dramatically since
the establishment of the company farm. In 2004, 9 tonnes of radish were produced on 3
hectares of farmland and 3 tonnes of lettuce on 7 hectares of farmland, however in 2007 the
tonnage produced of each crop had increased to 50 tonnes (Table 4.6). Corresponding with
the increase in yields has been an increase in inputs. In 2004, the company used 2 tonnes
of fertilizer and 21 tonnes of compost, and by comparison the company currently uses 21
tonnes of fertilizer and 500 tonnes of compost (Table 4.7). The fertilizers and compost used
on the farm include cow and chicken manure, fermented rice bran (bokashi), bonito fish
extract, and Watami manufactured fertilizers. The results of this survey agree with the work
of R. Nishimura (2005), who found that, out of the 180 tonnes of vegetables produced on
7
Notes from correspondence with the farm manager of Watami Farm, Setana in September, 2007.
8
Notes from email correspondence with the farm manager of Watami Farm, Setana in September, 2008.
Table 4.5: Acreage per crop under organic cultivation on Watami Farm, Setana (ha)
2004 2005 2006 2007
Pumpkin 0.5 0.5 0 0
Potatoes 0.5 0.5 0 0
Radish 3 5 4 4
Lettuce 3 7 4 4
Potherb mustard 0.5 0 0 0
Broccoli 0.3 0 0 0
Table 4.6: Yields per crop on Watami Farm, Setana (t)

2004 2005 2006 2007
Pumpkin 1 1 0 0
Potatoes 1 1 0 0
Radish 9 15 45 50
Lettuce 3 7 45 50
Potherb mustard 0.3 1.5 0.5 0
Broccoli 0.1 0.5 0.5 0
Watami Farms in 2005, 70 to 80 per cent of the total output consisted of radish and lettuce.
4.3.2 Case study: Watami Farm Kyotango

Watami Farm in Kyotango, Kyoto prefecture is a 9.5 ha organic farm on which the company
carries out the production of 15 to 16 vegetable crops a year. The Watami Farm in Kyotango
was established in 2005 and acquired organic JAS certification in 2007. Unlike the Watami
Farm in Setana described above, which can be considered to be a model Watami Farm, the
Watami Farm in Kyotango does not include livestock in its farming operations. The gross
income of the farm was 2.4 million and production costs amounted to 3 million yen in 2008.
The farm manager of Watami Farm Kyotango who was surveyed for this study stated that
although he had been dispatched to the farm, market demand and his concern for the envi-
Table 4.7: Increase in fertilizer and compost usage on Watami Farm, Setana
2004 2005 2006 2007
Fertilizers (t) 2 5 10 20
Compost (t) 21 45 500 800
ronment motivated him to work for Watami.
Although Watami farm in Kyotango grows up to 16 crops, the farm specialises in the pro-
duction of lettuce and radish which are the organic vegetables used in largest proportion in
the company’s food services division. Lettuce production is carried out on approximately
4 hectares and radish cultivation on 2 hectares of farm land. Production of crops including
mustard greens, tomatoes, carrots and green leafy vegetables are carried out on the remain-
ing 3 hectares. The farm which was established on mountainous land levelled as part of the
National Land Reclamation Scheme has suffered poor yields due to water drainage and soil
quality problems. In an attempt to rectify the soil quality problems and to increase the yields,
the farm has relied on heavy use of organic compost and fertilisers. The farm used a total of
450 tonnes of off-farm sourced compost and 15 tonnes of off-farm sourced fertiliser in 2008.
The major components of the compost and fertilizers used on the farm are Watami man-
ufactured fertilizers, cow manure, pig manure, magnesium, and soil amendments sourced
from China. Following the failure of efforts to control insect pests by companion planting,
the farm has not had a strategy to control insect pests, instead discarding the pest damaged
portion of the harvest.
The farmer reported that he is under pressure to increase the productivity of the farm
since the farm has recorded negative growth throughout the period it has been operating.
The farmer stated that he could raise profitability on the farm by managing labour more ef-
ficiently and by adding more compost material to the soil. The application of large amounts
of animal based compost to increase nitrogen is a practice that has been observed on Watami
Farms in Kyoto and Setana. Altieri, Rosset, and Nicholls (1997) comment that using urea
to overcome nitrogen can all too often lead to an outbreak of insect pests such as aphids or
white flies, thus perpetuating a process of treating symptoms rather than the real causes that
evoked the ecological balances.
4.3.3 Case study: Toma Green Life

Watami purchased a 51 per cent share of Toma Green Life in 2004, thereby making it effec-
tively a Watami company Farm. Toma Green Life is an agricultural production corporation,
with 12 full time employees, 9 long term part time employees and 2 trainees, based in Toma
town Hokkaido Prefecture. The farmers in this agricultural production corporation produce
organic and low input rice, vegetables, flowers and livestock on a total area of 150 hectares,
of which 100 hectares is certified organic under Organic JAS regulations. In addition, the
company is engaged in the processing of fermented bean paste, sake, tomato juice, and noo-
dles made from a special variety of buckwheat known as Dattan. Out of the 150 hectares
of Toma Green Life farmland, 8 hectares are owned directly by the corporation, 60 hectares
are leased from the farmers in the corporation and 82 hectares are leased from farmers out-
side the corporation. Sales by Toma Green Life amounted to approximately 28 million yen in
2005, of which 60 per cent resulted from rice sales to a consumer group, 30 per cent from
sales to Watami, less than 10 per cent to wholesalers and retailers in the Kanto region, and
approximately 0.2 per cent from sales in the company owned shop.
The evolution of Toma Green Life agricultural production corporation
Toma Green Life has its antecedents in the Green Life Research Group which was established in
1990 by 50 farmers who produced low input rice for direct sales to consumers. The mem-
bers of the group began to experiment with organic methods of rice production and in 1996
introduced ducks in their paddy fields in an attempt to control weeds without the use of
herbicides. Shortly afterwards, the group commenced the production of organic vegetables
and rice for a major restaurant chain.
In 1998 the Green Life Research Group was incorporated into Toma Green Life Pty Ltd, with
6.3 million yen in capital and control over 200 hectares. Each of the farmers from the Green
Life Research Group invested 0.5 million yen in the company, and leased their farmland to
the company. The company employs the former members of the research group and pays
each member a salary according to the position occupied in the company. The company is
structured along functional lines. The head office oversees the six main divisions which are:
operations and administration, field cultivation, livestock breeding, processing and irrigated
rice production, green leaf vegetable production and greenhouse vegetables and flower pro-
duction.
With the incorporation of Toma Green Life, the company disaffiliated itself from JA. The
reasons given for the company ending its affiliation with JA included the following reasons:
JA marketed the producer’s produce as undifferentiated bulk produce to wholesalers and
payment for the produce from JA was slow forthcoming. The company moved its offices
which had been located inside the local JA and curtailed its purchases of inputs from JA and
sales of agricultural produce to JA. The director of Toma Green Life stated that it was advan-
tageous for Toma Green Life to become part of Watami since it would enable the company
to procure capital readily and also to secure a stable market for organic produce cultivated
by Toma Green Life. The acquisition by Watami of a 51 per cent stake in Toma Green Life has
enabled Watami to strengthen its control over Toma Green Life and to secure a large volumes
of organic raw materials for its restaurant chains.
The company had received 70 million yen from JA since its inception till 2000. Currently
in addition to Watami, a bank injects 40 million yen in capital into the company. As of
2005, the company purchases 90 per cent of fertilizers and other inputs from companies
unaffiliated with JA.
4.3.4 Case Study: Watami Farm, Teshikaga town

Watami expanded into the beef cattle farming in 2006 with the acquisition of a 212 hectare
ranch in Teshikaga town in Hokkaido. The farm had been a family concern until it went
into receivership. Watami purchased the cows and equipment for approximately 70 million
yen, and leases the land from the farmer. The company currently raises 1200 heads of cattle
ranging from Shorthorn, Angus, Wagyuu and Holstein breeds. From 2008, the company
expanded into the production of corn for animal feed on 20 hectares of land.
From the point of view of the company’s operations in the food services sector, Watami’s
strategy of diversification into organic production has several advantages:
1. By directly engaging in the production of organic raw materials, the company is able to
secure a steady supply of the raw materials required in its restaurants, and to control
the cost of these raw materials;
2. Given that the average size of certified organic farms in Japan is less than 0.5 hectares
(International Federation of Organic Agriculture Movements, 2008), entering organic
farming directly, on a comparatively large scale, allows Watami to avoid the uncer-
tainty in supply and the high transport and administrative overhead associated with
obtaining organic raw materials from the large number of small scale organic farmers
dispersed around Japan, which any competitors must face;
3. By vertically integrating farming, processing, and distribution and marketing of or-

ganic produce under the control of a single entity, the corporation is able to secure for
itself the profits that accrue at each stage in the commodity chain;
4. The company’s strategy is not easily replicable by its smaller competitors in the food
services sector, a fact which is recognised in the company’s 2002 Annual Report.
4.4 Watami Farm and labour management

The labour practices on Watami Farm have been shaped by the neo-liberal structural reforms
instituted in Japan following the end of the Japanese economic bubble and the onset of eco-
nomic stagnation in the 1990s. The dominant trend in Japanese labour relations since the
early 1990’s has been the dismantling of the “lifetime employment” system and the growth
of part-time and casual labour (McCormack, 2007). Consistent with these trends, the ma-
jority of workers on each of the company’s farms are employed on a part-time casual basis
(Table 4.8). Furthermore, these workers are rotated in four hour shifts (Zenkoku Nougyou
Shinbun, 2003), thereby saving the company the cost of employment insurance which would
otherwise be mandatory under Japanese labour law. While the bulk of manual labour on
Watami’s farms is casual part-time, the management staff on Watami Farms are either drawn
from employees of the company’s restaurant chains, rotated onto farms for “training” for pe-
riods of one to two years, or drawn from the farming subsidiary of Watami and rotated in
and out according to demand for managerial staff on the farms. On the Watami Farm in
Sanbu town for example, the farming operations are overseen by two permanent employees
while fourteen casual part-time workers are rotated onto the farm in four hour shifts. On
the Watami Farm in Setana, four permanent employees are in charge of the dairy and pro-
cessing operations and during the growing season, from spring to autumn each year, three
employees of the farming subsidiary of Watami are dispatched to the farm to oversee veg-
etable production, and manual labour on the fields during the growing season is performed
4.4. Watami Farm and labour management 77
Table 4.8: The usage of part time employees on Watami Farms

Setana Kyotango Toma Sanbu
No. of part 21 9 9 14
time employees
by up to twenty one casual part-time employees.9 The available data strongly suggests that
there is little to distinguish the labour practices and relations on Watami’s organic farms
from labour practices and relations in the conventional capitalist economy.
Although farm labour on Watami company farms is typically carried out by part-time
casual workers, the operations on the company’s farms are managed by permanent staff ro-
tated from the company head office and its restaurants. The manager of Watami Farm in
Kyotango, as a former manager of a Watami restaurant in Tokyo, had no farming experi-
ence prior to being dispatched to Kyotango. Farming operations on the company farms are
based on a cultivation manual which covers the fundamentals of farming, although farm
managers are expected to adapt the farming manual to the locality in which the farm is lo-
cated (Muroya, 2005). Additionally, farm managers deemed to have run their operations
successfully, frequently face reassignment to other farms. These practices suggest that farms
are run by staff who may not have had sufficient time to familiarise themselves with the soil
and climatic conditions, or with the diseases and pests of the regions in which the company
farms are located; during the course of this survey, local agricultural officials familiar with
the company’s farming operations expressed frustration about the fact that efforts to famil-
iarize the employees with local conditions are negated by the company’s frequent rotation
its employees. Watami Farm management system emulates the Watami Food Service man-
agement system, whereby the management of personnel, cultivation schedules and profit
and loss analysis is carried out on a weekly basis, and all workers on Watami Farms have to
follow a schedule which indicates the tasks to be performed each hour of the day. As a result
of thorough production management, Watami Farm claims it has been able to keep labour
costs to 35 per cent of the total production costs.
Entrepreneurial business management skills are deemed to be as important or more im-
portant than farming skills for farm managers on Watami Farms. Additionally the CEO
believes that the problems facing agriculture in Japan can be solved by the business man-
agement skills of corporate farming bodies stating:
During busy times on the farms we can rotate our part time workforce in and out
of our farms. The problems of farming heirs do not arise with corporations. We
have the capital and the capacity to procure capital, so we can make investments
in advance and can expand the size of our farms . . . . Farmers should not be in
charge but people with business management skills. This is the era of business
management in agriculture. What is necessary for organic farming is carrying out
9
Notes from correspondence with the farm manager of Watami Farm in Setana town, September 2007.
market studies, product development, cost calculation and drawing up plans to

increase production. These things are considered to be common sense for corpo-
rations (Nikkei, 2009a).
In another interview, the CEO of Watami Farm states:
What is most important is raising farm managers that understand business. Farm-
ing requires the very detailed planning of production and its implementation.
Business can not be done if produce is not harvested at the time it should be and
if vegetables are harvested a week late then they are not marketable. A farm
manager must be able draw up daily and weekly schedules and be able to follow
that schedule. In other words farm managers must have productive management
ability. In our company, all company employees are initially dispatched to our
restaurants. Even if they are suddenly transferred to a farm, they can pick up
farming techniques at a later stage. What is most important is management skills
(Nikkei, 2009b).
We formulate a production system that can respond to the needs of the market.
We could not have a successful business if we did not have the necessary crops
at the necessary time or if we produced the same crops at the same time on all
our farms . . . . As soon as the volume, commodity and time required for delivery
is decided on, we formulate a production plan for each month of the year. We
then break down that monthly production schedule to a weekly, and then a daily
schedule so we can designate the necessary materials and personnel(Nikkei, 2009b).
4.5 Watami contract farmers

Watami maintains a network of approximately 100 organic contract farmers across the main
islands of Japan. The geographical distribution of Watami contract farmers between Hokkaido
in the north of Japan and Kyushu in the south-west is such as to ensure a year round supply
of fresh vegetables for the company’s restaurant chains and distribution outlets. Farmers
who produce under contract for Watami Farm are either individual farmers with compar-
atively large scale operations, or groups of farmers who have formed relatively capitalised
and large scale jointly held corporate farming bodies. According to one contract farmer for
Watami:
There are no teikei farmers amongst us. You’ll find that many Watami contract
farmers have recently converted to organic farming and that we’ve all got top
class corporate farming operations.10
The contract farmer quoted above defined corporate farming as a relatively large scale farm-
ing operation which relies on wage labour rather than family labour.
10
Notes from interview with Watami contract farmers, August 2008.
4.5. Watami contract farmers 79
Watami’s preference for dealing with relatively large scale farmers or farming bodies de-
rives from the lower transaction costs of dealing with large scale producers, and the logistical
difficulties of precisely coordinating production and distribution of vegetables, based on the
requirements of its restaurant chains and distribution outlets, among large numbers of dis-
persed small-scale producers (Watami, n.d.). Watami has encouraged both the conversion
of farmers from conventional to JAS certified organic production, and the consolidation of
existing or newly converted organic farmers into jointly held corporate farming bodies.
4.5.1 Case study: Yuuki Seikatsu Aya

For this study, we surveyed jointly held corporate farming bodies that produce under con-
tract for Watami corporation: Yuuki Seikatsu Aya (Organic Lifestyle Aya), based in Aya town
in Kyushu and Organic Shin Shinotsu, based in Shin Shinotsu town in Hokkaido. Each farmer
belonging to Yuuki Seikatsu Aya had been using low input farming methods since commenc-
ing farming. The form of low input farming practiced by these farmers had been promoted
by the local government in Aya town since the early 1970s. In an attempt to combat local
economic stagnation and increase the town’s food self sufficiency ratio, the local government
distributed seeds to its citizens free of charge and encouraged its citizens to plant vegetables
in their home gardens (Aya Chou Yuuki Nougyou Kaihatsu Senta, 2006). Later initiatives
carried out by the local government to promote low input farming methods included the
provision of government operated retail outlets for produce grown using low input farming
methods, the manufacturing of organic fertilizer in town operated plants from manure on
livestock farms in Aya town and the establishment of an Organic JAS certification body.
The jointly held agricultural marketing body, Yuuki Seikatsu Aya, was formed in 2000 as
an affiliate of JA and currently consists of two Organic JAS certified vegetable farmers and
three pig farmers based in Aya town in Miyazaki Prefecture in Kyushu. For the initial three
years after formation of the group, Yuuki Seikatsu Aya remained affiliated with JA, through
which the group indirectly shipped vegetable produce to Watami. However in 2003, the
members of Yuuki Seikatsu Aya disaffiliated from JA and began to ship directly to Watami.
Although neither of the members of Yuuki Seikatsu Aya interviewed for this study stated so
explicitly, it can be inferred that the group disaffiliated from JA in order that Watami might
procure produce from the farmers directly and so avoid the handling costs associated with
transactions carried out through JA.
The members of Yuuki Seikatsu Aya carry out production individually on privately held
plots, but ship produce to Watami collectively under a contract between Yuuki Seikatsu Aya
and Watami Farm. The members of Yuuki Seikatsu Aya produce organic vegetables on a
collective total of 10 hectares of Organic JAS certified farmland. Although the farmers in
Yuuki Seikatsu Aya produce carrots, broccoli, bitter gourd, radish and lettuce for Watami, 70%
of their sales to Watami are accounted for by winter lettuce, and the bulk of the remaining
30% accounted for by radish. The group shipped approximately 140 tonnes of lettuce to
Watami over a four month period in 2007 and accrued a collective 100 million yen in sales
of vegetables to Watami in that year. Watami supplies the farmers with farm inputs, notably
organic fertiliser and seeds, on a trial basis through a contract with Yuuki Seikatsu Aya.
Table 4.9: Crops and Yields on Farm A

Acreage (ha) Yields (t)
Radish 1.5 70
Lettuce 0.7 14
Carrots 0.35 10
Taro 0.20 3
Ginger 0.10 2
Bitter Gourd 0.10 1.5
Source: Data collected from case study, April 2008.
2 Since some crops are grown twice, the area under cultivation exceeds total farmland.
Table 4.10: Crops and Yields on Farm B

Acreage (ha) Yields (t)
Radish 0.3 15
Lettuce 4 80
Carrots 0.6 18
Broccoli 0.2 2
Sweet Potato 1 15
Taro 0.6 9
Two farmers, Farmer A and Farmer B from Yuuki Seikastu Aya were interviewed for this
study. The farm sizes of Farmer A and Farmer B are 4 hectares and 10 hectares respectively.
Farmer A grows vegetables on two hectares of farmland, and rice on the remaining two
hectares. Out of the two hectares of farmland, only 0.5 hectares are under Organic JAS cer-
tification however, 1 hectare of farmland is currently in conversion. Farmer B has 3 hectares
of farmland under Organic JAS certification. The two farmers interviewed for this study
have shipped root crops to Green Co-op, since Green Co-op was founded in 1988. The farm-
ers shipped carrots, sweet potatoes and taro to Green Co-op via JA until 2003, after which
the farmers commenced selling produce directly to Green Co-op. The farmers began the
production of lettuce and radish after incorporation into the Watami network and currently
cultivate 6 crops on each farm respectively (Table 4.9) (Table 4.10). In order to secure high
yields, the farmers have a high dependency on off farm inputs (Table 4.11).
Labour practices
The farmers belonging to Yuuki Seikatsu Aya interviewed for this study stated that they are
not able to carry out production entirely by themselves and employ part time labour on a
Table 4.11: Costs and usage of fertilizer and compost on 0.1 hectares
Farmer A Farmer B
JA organic compound fertilizer 550 kg 215 kg
Watami fertilizer 15 kg 15 kg
Cow manure 2t 2t
Total input costs (0000 yen) 150 149
regular basis. Senior citizens living in the local area make up the bulk of the part time labour
employed on the farms. A town run organisation supplies the labour of elderly people at a
minimum hourly wage to farmers and other employers in the area.
Reason for obtaining Organic JAS certification
The four Organic JAS certified organic farmers belonging to Yuuki Seikatsu Aya had been
practising low input farming before acquiring Organic JAS certification in 2002. Unlike most
of the farmers practising low input farming in Aya town who found that additional cer-
tification was not necessary for the marketing of their produce, the farmers belonging to
Yuuki Seikatsu Aya were requested by Watami to acquire Organic JAS certification. Addition-
ally, according to the farmers interviewed, the farm sizes of low input farmers in the area
are smaller in comparison to the Organic JAS certified farmers, and the farmers belonging
to Yuuki Seikatsu Aya are more capitalised. After the formation of Yuuki Seikatsu Aya, the
farmers set up a warehouse costing approximately 10 million yen and also an office to hold
negotiations with Watami. The costs associated with Organic JAS certification are often cited
as major difficulty in obtaining Organic JAS certification, however certification costs in Aya
town are minimal since the certification body is run by the local government 11 . The lo-
cal government agreed to establishing a certification body in exchange for Watami bringing
business into the area.
4.5.2 Case study: Organic Shin Shinotsu

Organic Shin Shinotsu has its origin in a loose network of nine farmers formed in 1997 to pro-
duce organic tomatoes under contract for the major food service corporation Heisei Foods.
Before the formation of the group, the farmers had been growing tomatoes using hydro-
ponic methods in local government owned green houses. A local government official intro-
duced a buyer from Heisei Foods, who is currently the CEO of Watami Farm, to the farmers
and the farmers began producing organic green onions, mini tomatoes, lettuce and radish
under contract for the company. The group obtained Organic JAS certification in 2000 and
11
The costs associated with obtaining Organic JAS certification in Aya town are the following: 3000 yen per
plot in certification fees, 2000 yen per plot in inspection fees and 3000 yen for auditing costs (Ministry of Agri-
culture, Forestry and Fisheries, n.d.-c)
Table 4.12: List of buyers

Food service industry Retail Others
Watami Group Lucky Supermarket Processors
Monte Roza Group Ario Sapporo Delivery service
Cuchina Mitsukoshi Department Store Direct marketing outlet
Orizonte Daimaru Department Store
Source: Data collected from case study, November 2007.
shipped organic green onions, mini tomatoes, lettuce and radish to Heisei Foods for five years.
However in 2003, Heisei Foods withdrew from the procurement of organic produce and the
farmers were forced to find alternative outlets for their produce. In 2003 the members in the
group formed Organic Shin Shinotsu as a jointly owned agricultural farming corporation to
market their produce to the food service industry, wholesalers, retailers and direct market-
ing outlets, and reincorporated the company as a joint stock company in 2008. Organic Shin
Shinotsu currently consists of eleven farmers producing on a collective total of 50 hectares of
farmland. The group’s sales in 2007 amounted to 92 million yen.
Four main reasons were given for the groups incorporation in 2003: Firstly and primarily,
Watami did not want to carry out transactions with an unincorporated group, stating that
transactions would only be carried out “between corporate bodies”. Secondly, incorporation
would make it easier for the group to borrow money from the bank to expand farming
operations. Thirdly, the group wanted to create a brand, Organic Shin Shinotsu brand and
lastly incorporation would enable the group to secure labour.
The farmers in the group carry out organic production on a total of 15 hectares of Organic
JAS certified farmland, in which organic soybeans are produced on 4 hectares, organic rice
on 2 hectares and organic vegetables on 9 hectares. The group cultivates approximately 20
crops per annum, although lettuce and radish are the two main crops cultivated. In 2007
approximately three hectares were under cultivation of organic lettuce and 5 hectares under
the cultivation of organic radish. Watami is the largest single outlet for the group’s produce,
absorbing 30 per cent of the groups sales. The group ships tomatoes, green onions, radish,
lettuce, carrots and soybeans to Watami for 5 months of the year, from June to November.
The group’s sales to Watami of lettuce and radish amounted to 9.2 million yen respectively
in 2007. Out of the produce shipped to Watami, green onions, radish and carrots are des-
tined for Watami’s external sales. While Watami is the single largest market for Organic Shin
Shinotsu, the bulk of the group’s produce is shipped through wholesalers to retail outlets
such as Lucky Supermarket, Ario, Natural House and Mitsukoshi department store. Pro-
cessors, door to door deliveries and direct marketing outlets make up approximately 15 per
cent of the groups sales.
Table 4.13: Wholesale market prices for vegeta-

bles by month 2007
Crop Tomatoes Radish
(yen/kg)
January - 49
February 420 48
March - 43
April 390 30
May 317 88
June 243 62
July 261 58
August 225 60
September 267 59
October 381 61
November 554 50
December 919 43
Source: Sapporo wholesale market 2007.
The production contract between Watami and contract farmers
The production contract between Watami and Organic Shin Shinotsu is established in De-
cember each year and the production contract between Watami and Yuuki Seikatsu Aya in
July each year. Watami estimates the amount of produce it will require from Organic Shin
Shinotsu weekly over the six month period from the following June to November and the
amount of produce it will require from Yuuki Seikatsu Aya from December to April. Based
on these estimates, the contract between the two groups of contract farmers and Watami
specifies the number of crops, the approximate volume of each crop, the price and the dates
of shipment during the harvesting months. The amount to be delivered each week is then
fixed a week before the delivery, when the farmers inform Watami of the amount of each
crop they expect to harvest the following week, and Watami places a firm order with the
group based on this information. For this reason, each week during the harvesting season,
the farmers are required to inform Watami of the volume of each crop they expect to harvest
the following week.
In providing Watami with the weekly estimates of the volumes to be harvested in the
following week, the farmers generally underestimate their expected harvest by twenty per
cent. Once the weekly delivery scheduled under the contract with Watami has been fulfilled,
the farmers find alternative outlets for the remaining twenty per cent of their production.
The farmers stated that they underestimate their yields in case of bad weather and also since
Watami has, on occasion, a week before harvesting, informed Organic Shin Shinotsu that
Watami will not require as many tomatoes as the farmers planned to harvest. Each month
during the harvesting period, the CEO of Watami Farm visits the farmers to confirm that the
farmers are fulfilling their contract with Watami and that any failure to meet the contract is
Table 4.14: A comparison of buyer prices for radish and tomatoes (yen)
Watami Lucky supermarket Direct marketing
outlet
Radish (per radish) 100 110 120
Tomato (1kg) 550 600 600
Lettuce (per head) 100 120 150
Source: Data collected from case study, November 2007.
The farm-gate prices listed above were obtained from the surveyed farmer. Although
the farm-gate price obtained by the farmers from Lucky supermarket is not fixed, the
farm-gate price listed above was quoted as the average price from the buyer.
Table 4.15: Prices received from Watami by Sanbu Yasai Network and Shin Shinotsu compared with
prices received by teikei farming group in 2007
Teikei (Tsuchi to Sanbu Yasai Shin Shinotsu
Midori no kai) Network
Radish (per radish) 150 103 100
Sunny Lettuce (per head) 120 103 100
Source: Data collected from case study, 2007.
not due to Organic Shin Shinotsu selling the produce elsewhere for a higher price.
The farm-gate price Organic Shin Shinotsu receives from Watami is 9% lower than the
farm-gate prices the farmers receive from its other buyers based it Hokkaido. However the
price the group receives for its produce from Watami is higher than the price of produce
shipped to Sapporo wholesale market (Table 4.13). For example, the farmers receive 100
yen per radish from Watami but 110 yen per radish from Lucky Supermarket, door to door
deliveries and direct marketing outlets. Similarly, the farmers receive 550 yen per kilo of
tomatoes from Watami and 600 yen from their other buyers (Table 4.14). Although the price
given to Organic Shin Shinotsu for produce by Watami is consistently lower than the price
given to Organic Shin Shinotsu by its other local buyers, the large volumes purchased by
Watami mean that the farmers are compelled to sell to Watami.
Organic Shin Shinotsu attempts to schedule the production of vegetables so that harvest-
ing occurs in seasons when Watami is not able to produce the crops on Watami Farms out-
side of Hokkaido. The farmer interviewed stated that as farming techniques improved and
yields increased on Watami Farms, it is likely that the company will procure vegetables from
Watami company owned farm rather than from contract farmers.
Contract producers’ perceptions of their relationship with Watami Farm
The farmers interviewed for this study expressed mixed opinions of their relationship with
Watami. The farmers stated that producing for Watami under contract arrangements were
favorable due to
(i) since Watami is able to absorb a large amount of organic produce the farmers can ship
produce in large volumes. The farmer’s contracts with Watami specify the price, which
does not fluctuate. The farmers viewed the contract as a risk management strategy in
the face of market instability, a point which is also made by (Tonts, Halpin, Collins, &
Black, 2004); (Lockie & Halpin, 2005) and (Lockie, 1997).
(ii) while Watami Farm does not pay premium prices, an advantage of producing for
Watami lay in the fact that the company’s restaurant business placed lower aesthetic
and packaging requirements on its vegetable suppliers than do most Japanese veg-
etable wholesalers and retailers. However, with the expansion of Watami’s role as a
distributor and retail outlet for organic produce, the aesthetic and packaging require-
ments that Watami places on its suppliers have become stricter, reflecting the notori-
ously high aesthetic and packaging standards of Japanese supermarkets. This trend
has burdened farmers with costs of labour and inputs for packaging, and the cost of
discarded produce that does not meet the shape and size standards of the Japanese
retail market.
(iii) the perceived inadequacy of JA to market the farmer’s produce. The farmers were
critical of the size of JA stating that since JA is such a large organisation, it is unable to
make a distinction between good and bad produce.
JA is just a shipping agent. There are so many farmers forwarding their

produce to JA. It is impossible for an individual farmer to show his expertise
in such an environment. I could only demonstrate about one tenth of my
ability. It is impossible for individuality to be demonstrated in such a large
organization. I want to sell my produce to an outlet where my farming ability
and management skills are truly appreciated.
The farmers also expressed dissatisfaction with Watami stating that
(i) although their group had been able to secure a 10 per cent price increase from another
of its major outlets, they were unsuccessful in their attempts to negotiate a similar
increase from Watami. They were rebuffed on the ground that “the company had ex-
perienced a fall in sales in the last quarter.” The farmers’ perception was that Watami
expected the contract farmers, who are now “part of Watami” to share some of the
burden12 13
(ii) in contravention to the principle of “local production for local consumption” which
proponents of sansho tekei movement argued would represent a more sustainable
pattern of production and consumption than observed in conventional agro-food com-
modity systems, the organic vegetables produced under contract to Watami are shipped
12
Correspondence with Watami contract farmer carried out by phone on 8th October, 2008.
13
The document used at the Settlement Explanatory Meeting for investors on November 11th, 2008 shows that
Watami forecasts for the fiscal year ending in March 2009 sales for its restaurants business is 85,268 million yen,
which is a drop of 1643 million yen from the previous year.
out of the locality they are are produced in, and transported more than 700 kilometres
to a company distribution centre in Tokyo.
(iii) lastly, contract farmers stated that they are compelled to ship the volumes agreed on,
and are brought into direct competition with Watami corporate farms, a fact the CEO
of Watami revealed in the interview for this case study and also during a speech made
for the Thirteenth Food, Agriculture and Rural Area Policy Deliberation Meeting:
The (farmers say) the weather is bad, or growth is bad so we can not ship
vegetables [today] but I tell them that on Watami Farms even in bad weather
we have to ship produce. The farmers know we have our farms so we can
create competition with the contract farmers by referring to what is going on
our farms each time. 14 (Watami, n.d.)
It is important to note that although the farmers expressed a certain amount of dissat-
isfaction with Watami, the farmers were keen to point out that their contracts and business
dealings with Watami were no worse than their dealings with other buyers.
Green Co-op
Green Co-op holds meetings with its contract producers biannually, at which the volumes to
be produced by its contract producers are negotiated. In November, the volume required by
the co-op from each contract farmer on a weekly basis for the first 6 months of the following
year is specified, and in May the volume for the following 6 months of the year is agreed
upon. The co-op encourages its produces to plant 20 per cent more than the volumes sched-
uled at these meetings so that the producers can meet the agreed on volumes even should
bad weather result in a drop in yields. Although the co-op specifies the volume it requires
its contract producers to plant at the biannual meetings, the exact volume to be received
by the co-op is fixed each week only after the co-op has received its weekly orders from its
members. Each Thursday during the harvesting season the co-op notifies the farmer of the
exact volume it will require and the producer ships the produce on the following Saturday,
Sunday and Monday.
The surveyed farmers reported that although they are not penalised by the co-op if they
are not able to ship the amount requested by the co-op, they do absorb all the risk of dispos-
ing of any excess of the quantities agreed upon at the biannual meetings over the amount
that co-op actually specified in its weekly order. The total volume ordered by the co-op mem-
bers is often significantly lower than the amount agreed upon at the biannual meeting, and
as a result the farmers are frequently compelled to sell the produce that is not sold to Green
Co-op on the open market without a premium. In some weeks the farmers are compelled to
sell approximately 60 per cent of the harvested produce on the marketplace (Table 4.16 and
Table 4.17). The farmers stated that the strategy adopted by the co-op is an escape route which
allows the co-op to ensure the availability of produce throughout the year without assuming
14
Notes from interview with Watami Farm CEO in September, 2007.
4.6. Watami farm and supply of organic certified farm inputs 87
Table 4.16: Fluctuation in volumes agreed on during coop meeting with farmers and the actual vol-
ume ordered by coop members
Week 1 Week 2 Week 3 Week 4
Taro 1 2 % 1 2 % 1 2 % 1 2 %
2008 3,870 3,909 101% 3,870 3,557 92% 3,870 3,544 94% 3,870 2,318 60%
2009 3,870 2,526 63% 3,870 2,591 67% 3,870 1,680 43% 3,870 1,738 45%
Source: Data collected from correspondence with surveyed farmer in 2009.
1 refers to the volume agreed on during the meeting held in November each year.
2 refers to the actual volume ordered by the coop members.
% has been determined by dividing the volume ordered by the co-op members by the
volume fixed at the meeting
Table 4.17: Fluctuation in volumes agreed on during coop meeting with farmers and the actual vol-
ume ordered by coop members
Week 1 Week 2 Week 3 Week 4
Burdock 1 2 % 1 2 % 1 2 % 1 2 %
2008 1040 1048 101% 1040 765 74% 1040 898 86% 1040 671 65%
2009 1040 556 53% 1040 651 63% 1040 769 74% 1040 422 41%
Source: Data collected from correspondence with surveyed farmer in 2009.
1 refers to the volume agreed on during the meeting held in November each year
2 refers to the actual volume ordered by the coop members
% has been determined by dividing the volume ordered by the co-op members by the
volume fixed at the meeting.
the risks associated with farming or disposing of produce in excess of what is ordered by the
co-op members.
4.6 Watami farm and supply of organic certified farm inputs

Watami Farm has been engaged in the manufacture and supply of organic fertilisers since
November 2005, when an application to begin the manufacture of JAS certified organic fer-
tiliser was lodged with the Hokkaido Prefectural Government and production began at a
Rumoi Biomass Processing Center under contract to Watami Farm. The fertiliser was made
from ingredients including sewerage sludge, cow and poultry manure and seafood process-
ing residues (Hiryou Kyoukai Shinbun, n.d.). The fertiliser, named Bio-Organic, according
to the CEO of Watami, “sold like hot cakes”. Due to the claimed demand for Bio-Organic
Watami announced the intention to open an additional production facility in Iwate prefec-
ture where the chicken manure used in Bio-Organic was sourced. After the announcement
by Watami of a new fertiliser plant in Iwate, the prefectural governor stated that the plant
“will increase employment opportunities [in Iwate prefecture] and that the prefecture will
do whatever it can [to assist Watami]”. The announcement of the new plant in Iwate was
Table 4.18: Examples of specifications for produce shipped to Watami

Radish More than 1 kilogram 10 kg per box
Lettuce Between 300 - 400 grams 16 lettuce heads
Bitter gourd More than 300 grams 10 kg box
made in spite of environmental criticisms levelled at the Rumoi plant in the Hokkaido pre-
fectural assembly. The Rumoi plant received 500 million yen in subsidies from the national
government, which is consistent with the recent trends of corporations becoming benefi-
ciaries of generous subsidizes from the national government for projects with a green and
environmental theme (Hiryou Kyoukai Shinbun, n.d.).
Farmers producing under contract to Watami reportedly procure fertiliser from Watami
Farm at a higher price than purchases made through JA, “as a condition of business [with
Watami]”. Farmers in Aya town reported that Watami fertilizers were priced at 3000 yen
for 15 kilograms, while fertilizers procured from JA were retailed at 2000 yen for 20 kilo-
grams15 . The Organic Shin Shinotsu group in Hokkaido reported that although they could
provide their own on- farm fertilizers, they were strongly encouraged to purchase fertilizer
from Watami. In 2007, Organic Shin Shinotsu commenced purchasing 0.5 tonnes of fertil-
izer from Watami. In addition to supplying the farmers with fertilizers manufactured by
Watami, the farmers also reported that purchases of seeds and boxes from the company
were included in their contracts from 2006. All producers growing lettuce under contract
for Watami reported that since Watami required standardization of lettuce production, the
farmers were compelled to purchase lettuce seeds from the company. Farmer A in Aya town
also purchased carrot seeds from Watami, remarking that carrots produced from seeds pur-
chased through Watami were in demand on the market due to the colour and fragrance 16 ).
Farmer B in Aya town, by comparison, reported that he procured all his seeds from Watami
stating he was led to believe that the price for the inputs supplied by Watami will decrease
if all contract farmers buy all their inputs from Watami17 .
Farmers interviewed for this study stated that they felt Watami considered the interests
of the company’s shareholders to be more important than the farmers that produce under
contract to Watami. The farmers stated that they were compelled to pay for the Watami
manufactured fertilizers prior to use whereas farmers who procure fertilizers from JA are
not compelled to pay for the fertilizers until after the harvesting season, which is often 6
months after the farmers use the fertilizers. Since Watami issues quarterly reports to its
shareholders, the company attempts to maximize the profit it makes each month and thus
the company’s contract farmers are compelled to pay for the fertilizers before use.
15
Notes from interview with contract farmer group, October 2007
16
Notes from interview with contract farmer group, September 2008
17
Notes from interview with contract farmer group, April 2008
4.7. Watami Farm relations with local governments 89
4.7 Watami Farm relations with local governments

The establishment of the Watami Farm in Setana town was supported by a subsidy from the
Hokkaido prefectural government for the promotion of ”Green Agriculture” in Hokkaido.
In Sanbu and Shirahama in Chiba Prefecture, Watami farming operations were established at
the invitation of the prefectural government, while in Kyotango, Watami Farm was offered a
subsidy by the city government conditional on the company establishing a farm in the newly
established ”National Development Land” agricultural zone in the city.
Chiba prefecture, Setana town and Kyotango provide a study in the problems afflicting
rural Japan and the attempts of local authorities to address these problems through regional
specialisation and increasing corporatisation of the agricultural sector. Their economic main-
stay faced with competition from a growth in cheap imports of agricultural products and a
decline in traditional industries, authorities in rural Japan localities have turned organic
farming and corporate agriculture to revive regional economies. Organic farming has been
seen as providing domestic agriculture with a means to distinguish its products from low
cost imports on the basis of health and quality rather than low price, and to secure some
of the economic rents that were associated with the organic label. Through the adoption of
organic farming, the disadvantages of small scale and relatively high labour requirements
per hectare which encumber Japanese agriculture in internationalised markets which are in-
creasingly dominated by large scale capital intensive producers, could be offset, or perhaps
even realised as advantages, in niche domestic markets where price per volume was not a
decisive factor in determining consumer preferences. On the other hand, local authorities
conceive of corporate farming as allowing the regions to compensate for the ageing of the
farming population, rural depopulation and the deficit of farm heirs associated with the
ongoing decline in family based farming.
Complementing the local government policies, MAFF has responded to the decline of
Japanese family based farming through changes to the national agricultural laws that allow
local authorities to designate zones in which it is permissible for corporate capital to use
farmland for agricultural production. These reforms to the basic agricultural laws, have
allowed regional authorities to offer corporations financial and tax incentives to encourage
corporations to locate farming operations in their particular localities (see also Sekine and
Hisano (2007) for a discussion of the operations of Dole in Kyushu and Hokkaido). Being a
corporate entity involved in organic production has placed Watami Farm in a strong position
to take advantage of these recent changes in agricultural policy by the national and regional
governments.
4.7.1 Case study: Chiba prefecture

In 2002, Chiba Prefecture introduced a scheme under which farmers who reduced pesticide
and chemical fertilizer usage by 50% were allowed to market products under the Chiba Eco
label which identifies the area of production and the methods of cultivation. The scheme
was created to promote sustainable farming methods and in response to consumer demands
for safer produce. Currently sales of Chiba Eco produce are made through supermarkets,
Table 4.19: Number of farmers, area under cultivation and abandoned farmland in Sanbu town
1990 2002
Number of farmers 1,109 907
Cultivated land area (ha) 1,272 1,072
Cultivated land per farmer (ha) 1.15 1.18
Abandoned farmland Area (ha) 73 110
Source: Chiba Pref. (n.d.).
co-ops, direct marketing outlets and retail outlets in Chiba prefecture as well as in the wider
Tokyo metropolis. The latest data available reveals that 99 products including vegetables,
rice, fruit and legumes have been certified by the prefecture on a total of 3966 hectares of
farmland (Chiba Prefectural Government, n.d.). Furthermore, in 2004, Chiba Prefecture cre-
ated a ”Special Deregulated Farming Zone for the Promotion of Organic Farming,” Yuuki
Nougyou Suishin Tokku, to promote organic farming. The special zone incorporates two areas
in Chiba prefecture; Sanbu town and Shirahama town and covers 24 hectares in area (Chiba
Pref., n.d.). Over the period from 1990 to 2002, the number of farmers in Sanbu and Shi-
rahama town had decreased by 18.2 and 25.1 per cent respectively (Table 4.11)(Table 4.12).
Over the same period, there was a 50 per cent increase of abandoned farmland in Sanbu
town (Table 4.11). The stated intention of the government in establishing the special dereg-
ulated organic farming zone, was to allow corporate farming bodies to establish farming
operations in an attempt to create an agricultural base for the food retail industry seeking to
procure a fixed volume of organic raw materials at a fixed price and of unchanging quality
(Chiba Pref., n.d.).
The Watami operated farm in Shirahama is located in a special economic zone, which
includes farmland that was mechanically levelled to create fields “suitable for large-scale
mechanised farming” by the prefectural government. Under this project (nouchi hoyuu
gourika jigyou) approximately 200 hectares of disparate plots of land have been consoli-
dated. The CEO of Watami Farm stated that the land provided to Watami Farm by the pre-
fecture under this scheme was pebbly and not suitable for cultivation and that the company
has accrued debts of 100 million yen on account of the poor land in Shirahama.18 The CEO
concluded that the special economic zone is little more than “a commercial for the prefec-
ture” and stated that the company is considering closing or reducing the scale of the Shira-
hama farm. Besides allegedly providing Watami with marginal land in the special economic
zone, the prefectural government requested that the company establish a system to train
young farmers, something that the company CEO regarded as “beyond the call of duty”.
Although the company has been experiencing problems on the Watami Farm in Shirahama,
farming operations in Sanbu town, have been more successful.
18
Notes from interview with the CEO of Watami Farm, October 2007.
4.7. Watami Farm relations with local governments 91
Table 4.20: Number of farmers, area under cultivation and abandoned farmland in Shirahama town
1990 2002
Number of farmers 905 678
Cultivated land area (ha) 142 88
Cultivated land per farmer (ha) 1.6 1.9
Abandoned farmland area (ha) 31 29
Source: Chiba Pref. (n.d.).
4.7.2 Case Study: Setana town, Hokkaido
Setana town has implemented schemes to assist farmers in the adoption of organic farming.
Between 1998 and 2005, the local government bought, for use in school lunches and at local
retirement homes, organic rice produced locally by 5 farmers on 6 hectares, and supported
the use of this locally produced organic rice in the production of sake at a local brewery.
From 2001 to 2005 the local government funded the “Green Agriculture in Setana Farm”
scheme to “promote high quality and safe produce and to boost market competitiveness”
among local producers. Under this scheme, farmers producing organically, or in conversion,
or farmers carrying out soil improvement, or dairy farmers trying to improve productivity
by improving the conditions under which their cows were kept, were eligible to apply for an
annual subsidy, capped at 250,000 yen, to cover 50% of the cost of farm expenditure applied
towards approved projects.
To encourage corporations to locate farming operations in Setana, the local government
provides subsidies for relocation, water use, acquisition of land, and for companies to im-
plement pollution prevention measures. Watami Farm in Setana receives subsidies to cover
costs associated with Organic JAS certification under the Prefectural Clean Agricultural Pro-
gram, in addition to subsidies provided by the Hokkaido government in support the creation
of employment opportunities by corporations in the area. Under the scheme to enhance em-
ployment opportunities (ichi mura ichi koyou), corporations receive 300 thousand yen per
person employed by the corporation from the local area and up to half the costs of opera-
tional expenses capped at 2.5 million yen (Hokkaido prefectural government, n.d.). The local
government in Setana town, anticipates that by inviting corporations to establish farming
operations in the area, problems such as abandoned farmland (Table 4.21) will be amelio-
rated and that corporate entry will increase the farmland under organic cultivation and the
number of farming heirs (Table 4.22).
4.7.3 Case Study: Kyotango, Kyoto
Prior to the decline of Japanese sericulture in the 1970s, Tango area, in which several towns
were amalgamated to form Kyotango City in 2004, had been major centres of silk textile
production. In 1982, following the decline in the domestic silk industry which had been pre-
dominant in the area, the local and national government embarked on a National Farmland
Table 4.21: Number of farmers, area under cultivation and abandoned farmland in Setana town
1990 2000
Number of farmers 80 62
Full time no 51 25
of farmers
Farmers over the 1.6 1.9
age of 65
Abandoned farmland area (ha) 31 29
Source: Japanese Ministry of Agriculture, Forestry and Fisheries [MAFF] (n.d.-b).
Table 4.22: Anticipated changes after corporate entry into farming, Setana town
Initial year of corporate Projected results for 2008
entry (2004)
Acreage of farmland 60 80
utilized by corporations (ha)
Acreage of certified 3.5 70
organic fields (ha)
Creation of employment 2 3
opportunities
New farming heirs 0 3
Total vegetable output (yen) 46 million 61 million
Organic vegetable output (yen) 26 million 38 million
Acreage of organic fields 3 24
Acreage of reclaimed 35 85
organic farmland
Source: MAFF (n.d.-b).
Development Project, under which 500ha of mountainous land in Kyotango was levelled
over twenty years, with the goal of creating open areas suitable for large-scale farming.
The costs of the mountain levelling were shared between the national government, which
bore ninety per cent of the cost, and the owners of the mountains, who bore the remain-
der under the assurance that their outlay would be recovered when the land was leased to
farmers. When the local government found that already established local farmers were un-
able to utilise the newly created farmland by expanding their existing cultivated area, the
local government made the farmland available to individuals outside the region and sought
corporations willing to establish farming operations.
In contrast to most areas, where farmland which is available in small parcels of discon-
tinuous plots, Watami was able to secure 10 hectares of semi-consolidated farmland created
in Kyotango under the National Farmland Development Program. Watami also obtained
4.8. Conclusion: Organic farming and agribusiness capital in Japan 93
the subsidies made available to corporations establishing farm operations when individual
farmers failed to take up farming on the levelled land in sufficient numbers in addition to
special subsidies to establish a farm in the area on account of the company’s “name value”
and because the company was engaged in organic farming. Soon after Watami established its
Kyotango farm, nine other corporations followed suit (Table 4.23). However, in spite of the
20 million yen subsidy which Watami received, of which two thirds came from the central
government and one third from the Kyotango local government, the company is seeking fur-
ther government funds to rectify a drainage problem on the land which it attributes to the to
the alteration of the topography that took place under the National Farmland Development
Program. According to the manager of the Watami farm in Kyotango, the land provided to
the company has such drainage problems that the farm has not been able to produce suffi-
cient yields. The manager estimates that, as a consequence of the drainage problem, the farm
is accruing 10 million yen in losses each year. However, a government official stated in an
interview for this study that the drainage problem on the company farm in Kyotango does
not require further subsidies but can be resolved by changes to the company’s agricultural
practices.
4.8 Conclusion: Organic farming and agribusiness capital in Japan
An initial impetus for the expansion of the Watami group into the Japanese organic sector
was the stagnation in the Japanese food services industry, particularly its restaurant and
izakaya segments, that began in the mid 1990s. However the company’s operations in the
organic farming sector are now part of a two pronged strategy: firstly, to use the Organic
JAS label to differentiate and add value to its restaurant and izakaya chains and to insulate
its restaurant business from intensified competition following the stagnation of the food ser-
vices sector, and secondly to establish itself as a major domestic supplier of organic produce
and farm inputs. In the first regard, Watami’s strategy is characteristic behaviour observed by Baran
and Sweezy of capital in mature markets:
[W]hen the number of sellers is small and each accounts for a large proportion of
an industry’s output and sales . . . relatively large firms are able to exercise a pow-
erful influence upon the market for their output by establishing and maintaining
a pronounced difference between their products and those of their competitors.
This differentiation is sought chiefly by means of advertising, trademarks, brand
names, distinctive packaging and product variation; if successful, it leads to a
condition in which the differentiated products cease to be close substitutes for
each other. The more telling the effort at product differentiation, the closer is
the seller of the differentiated product to the position of a monopolist. And the
stronger the attachment of the public to his particular brand, the less elastic be-
comes the demand with which he has to reckon and the more able he is to raise
his price without suffering a commensurate loss of revenue (Baran & Sweezy,
1966), p.116.
Table 4.23: Corporate bodies engaged in farming on farmland created by the National Farmland
Development Program in Kyotango, Kyoto
Company Parent Acreage (ha) Production Year of
Company corporate
entry
Watami Farm Watami 10 Organic JAS 2005
certified
vegetables
Nishiri Farm Nishiri 3 Vegetables for 2006
pickles
Kanesei Agrisystem Kanesei Seika 4.5 Onions, 2007
carrots
other crops
Happyaku Ichi Central Fruits 3.5 Pumpkin 2007
Dream Farm Merican Club 3.3 Cabbage and 2007
leek
Sono Kiya Yodo Clean 7 Green tea, 2007
vegetables
No name supplied Agro 5 Organic JAS 2007
Gardening vegetables
Holdings
Hyakusho Tengoku 10 Green tea 2003
Nihon Kai Bokujyo 17 Livestock
Fukutomi Nouen 20 Green tea 2006
Source: Kyotango local government (2007).
It is not being claimed here that Watami restaurants have a monopoly in either using Or-
ganic JAS certified organic produce or in being marketed on this basis; rather, within the
segment of the restaurant and izakaya sector that provides standardised and relatively low
cost products to a mass market known in Japan as ‘family restaurants,’ Watami is seeking to
be substantially differentiated from its competition by the “organic,” “healthy” and “safe”
ingredients used in its restaurants, and that Watami is driven to pursue this strategy by
competition in the conventional restaurant sector, and by the opportunities for expansion
into a newly created sub-sector of family restaurants and izakaya using Organic JAS certified
organic produce.
Although Watami uses the organic label to add value across its restaurant business, in the
company’s restaurants which cater to the lower end of its market, the use of organic produce
is limited to the two most easily produced organic vegetables. Not surprisingly therefore,
the company envisages that its corporate food supply chains that cater to the demand among
privileged consumers for organic and other niche products can expand alongside continued
production of the standardised edible commodities associated with the mercantile industrial
4.8. Conclusion: Organic farming and agribusiness capital in Japan 95
food regime. As explained by the CEO of Watami in an interview:

In Taiwan and Hong Kong, Japanese vegetables are highly valued from an anzen
anshin perspective and are retailed at a high price. China should aim to produce
low price foodstuffs, and Japanese producers should supply the wealthy and
middle strata with high value added vegetables such as organic produce (Fuji
Sankei Business i, 2009).
Parallel to its restaurant business, Watami is seeking to establish itself as a dominant pro-
cessor and distributor of Organic JAS certified organic rice, fresh vegetables, eggs and dairy
products, obtained both from its own farms and through contracts with smaller producers,
and as a supplier of JAS certified organic farm inputs, Watami is following a well worn path
observed in studies of capital penetration of the agricultural sector, by reconfiguring farm in-
puts so they can be produced in the factory, and by adding value and asserting control in the
processing, distribution and retailing links of the commodity chain (Buck et al., 1997). This
penetration of the off-farm nodes of the Japanese agri-food sector by Watami and other off
farm capital, and the construction of corporate controlled agri-food chains has been accom-
panied by the relative marginalisation of the JA cooperatives which were the major statutory
body associated with the mercantile-industrial food regime in Japan.
The entry of off-farm capital into the Japanese organic sector observed in this study has
implications for the “conventionalisation” debate as follows. Firstly, it provides evidence
that a significant and increasing portion of Japanese organic production is taking place un-
der the auspices of agribusiness capital. The entry of capital into the sector has been facili-
tated by government regulation in the form of Organic JAS standards, which have created
economic rents and new opportunities for capital accumulation, and by deregulation in the
loosening of the Japanese Agricultural Land Law in 2003 to enable agribusiness to acquire
land for agricultural production. Secondly, it is evidence that the Japanese organic sector is
being shaped by competition in the non-farm sector: in this instance, the pressures to expand
and increase the profitability of Watami’s interests in the mass market restaurant and retail
sector, by containing and pushing down costs of raw materials, are transmitted to the organic
farming sector as a whole, through increases in scales of production and downward pressure
on prices received by farmers for organic produce. The organic supply chains constructed
by Watami, through contract farming, the use of part-time casual labour, and the drive to
agricultural specialisation and monocropping, have reproduced many of the structural fea-
tures observed in studies of conventional food-commodity chains. Through expanding mass
markets for organic produce sold through supermarkets, department stores and restaurant
chains, off-farm capital has reconfigured the social demand, raised by the teikei movement,
for ”healthy” and ”safe” food as a means for rent and profit seeking, while marginalising
the movements’ demands for agro-ecological sustainability, production of use rather than
exchange values, and the de-commodification of farm labour.
The entry of off-farm capital into the production, processing and distribution of organic
and non-organic agricultural produce has been enabled by, and accelerated, the diminution
in status of the JA cooperatives which was the major domestic statutory authority associ-
ated with the mercantile industrial food regime. Formerly exercised through the marketing
of undifferentiated bulk agricultural products and the supply of finance and agricultural in-
puts to farmers, the dominant role of JA in the Japanese agricultural sector is being eroded by
gradual sectoral deregulation, accompanied by expansion of off-farm capital into production
and distribution of agricultural products distinguished according to ”quality,” ”safety” and
traceability. Off-farm capitals, including Watami and leading supermarket chains and food
processors, are creating and expanding dedicated audited corporate controlled agro-food
supply chains that meet private standards of ”safety” and ”traceability” higher than the
baseline public standards enforced by the national government. The growth of corporate
controlled agro-food supply chains in response to competitive pressures by off-farm capi-
tals in the retail and food services sector of the economy does not signal the demise of the
markets for standardised edible commodities constructed under the mercantile industrial
food regime. Rather, reflecting the outcomes of structural reform of the Japanese economy
in the post-bubble era that have created a vast ”insecure employment sector” dependent
on hourly wages, alongside a middle tier of high-level technical specialists and a top tier of
career management and administrative staff (McCormack, 2007, p. 41-43), the emergent agri-
food regime continues to supply the poor with diets of standardised edible commodities, at
the same time as it meets the demands of ”increasingly cosmopolitan privileged consumers”
(Friedmann, 2005) for ”niche” and ”quality” products.
In this chapter, we have attempted to examine how agribusiness in Japan has influenced
organic production, in rule setting and inter-sectoral dynamics and how agribusiness drives
wider processes of agro-industrialisation (as discussed by Guthman (2004b). It is not be-
ing claimed here that agribusiness is aiming to take over teikei operations, rather that teikei
producers are brought indirectly into competition with industrial producers. As organic pro-
duce which was once only attainable from teikei movement producers is increasingly sold
in supermarkets, department stores and restaurant chains, teikei producers face a decline in
consumer membership and subsequently are forced to sell produce as either conventional
produce below the costs of production or as organic commodities outside the teikei arrange-
ment as a result. Coombes and Campbell (1998) consider that the greater number of family
farmers in the organic sector may be able to out-compete corporately owned capitalist pro-
ducers, and (Ikerd, 2001); (Clunies-Ross, 1990); (Campbell & Liepins, 2001) as well as teikei
farmers interviewed for this study point to the relative smallness in scale and independent
marketing practices of teikei operations, both of which are thought to give farmers their
own space to manoeuver in the sector, this study suggests that the future trajectory of the
Japanese organic sector will to a significant degree be shaped by the activities and impera-
tives of off-farm and agribusiness capital.
Chapter 5
Organic farming and agribusiness capital in the Darling
Downs
5.1 Introduction
This chapter provides a brief outline of the characteristics of Australian agriculture in the
context of the ongoing neoliberalism regime. Following we provide a summary of the or-
ganic sector in Australia and then present case studies of one organic processor and 10 or-
ganic farmers in the Darling Downs to argue that the organic sector in Australia has been
and is continuing to be shaped by capitalist forms of agriculture. Our research in the Dar-
ling Downs indicates that recently converted producers of grains and legumes, base their
farming operations on comparatively diluted forms of organic farming which emphasised
input substitution to the detriment of integrated and sustainable agro-ecological practices.
Agricultural producers of longer standing were found to have taken more affirmative mea-
sures to create on-farm nutrient cycles and to have lower dependence on off-farm inputs,
including fertilisers, compost and manure. The study shows that contract farming, accompa-
nied by control over the processing and distribution nodes of the organic grain and legume
commodity chains, enables agribusiness to capitalise on the integration of the sector into
domestic and international markets.
5.2 Characteristics of Australian agriculture

In this section the characteristics of Australian agriculture will be summarised briefly since
research on Australian agriculture has been covered in detail in the literature by Gray and
Lawrence (2001), Lawrence (1996) and Higgin and Lockie (2001) Australian agricultural sec-
tor has been shaped and continues to be shaped by:
1.The role of Australia in the international economic system. Australia predominantly
relies on the export of raw materials and minerals to purchase industrial imports. Although
Australia exhibits features of the core countries such as high levels of consumption, ad-
vanced technology and social infrastructure, Australia’s reliance upon resource industries,
its foreign capital, its balance of payments problems, and dependent economic status are
typical features of peripheral countries.
2.Decline in price of agricultural commodities on the international market. As the price
of agricultural commodities has fallen on the international market and the costs of capital
goods increased, the Australian government called for the consolidation of farms, the elim-
ination of ”inefficient” producers and the raising of productivity through rationalization
98 5. Organic farming and agribusiness capital in the Darling Downs
measures, with the stated goal of making Australian agricultural production internationally
competitive. In effect, government policy has been to accelerate the productivist treadmill
to the benefit of large-scale, corporate oriented producers and to the detriment of smaller
farmers, rural society and the environment.
3.Adoption by the government of neo-liberal policies. These policies removed support
for the rural communities, through privatization and cutbacks, targeting social services and
government employment in rural areas. Simultaneously structures, which previously pro-
vided underwriting of farm-produce prices and inputs were dismantled (Gray & Lawrence,
2001).
Organic farming provided a possible survival strategy for farmers forced with govern-
ment pressures to restructure and also as a means by which farmers could add value to
their produce as the price of conventional commodities on international markets rapidly
decreased.
5.3 The Australian organic industry

Organic farming in Australia can be traced to the early 1980s when conventional farmers
out of economic necessity or as a result of the perceived problems to their health, crops or
livestock commenced using organic farming methods (Wynen, 2007). These early organic
farmers were geographically isolated from other organic farmers as well as consumers and
were not able to supply their produce directly to end consumers (Wynen, 1990)(Wynen,
1994). In a 1991 study, it was estimated that there were less than 200 organic farmers in 1982,
although the number increased to 1260 in 1990 (Conacher & Conacher, 1991). Another study
reported that more than half of all Australian organic producers in 1990 said that they had
been farming organically for 3 years or less, with over two-thirds farming organically for 5
years or less.
The total area of farmland certified for organic production in Australia is estimated to
be approximately 12 million hectares, which is the largest area of certified farmland in the
world (Biological Farmers of Australia, 2008) and accounts for nearly half of all land world-
wide certified for organic production (Yussefi, 2003). Although there has been an overall
decrease in farmland acreage and in the number of farmers since 1990, farmland certified
organic has increased nine fold and the number of organic farmers has risen five fold in the
same period. Table 5.2 shows that the average organic farm has grown twenty five fold,
although the increase in the average organic farm size reflects mainly the large scale area
of livestock farms. Broadacre production (grazing and cereal cropping) accounts for 60 per
cent of the total area and horticulture production (vegetable, fruit and nut) accounts for 8
per cent (RIRDC). However organic horticultural farmers make up 75 per cent of all organic
farmers, and broadacre farmers account for 12 per cent. In the report commissioned by the
Rural Industries Research and Development Corporation, Export Potentials for Organics,
Opportunities and Barriers, it is estimated that organic vegetables account for 19 per cent of
the total sales of vegetables in Australia (Table 5.5). The farm-gate sales of organic vegetables
amounted to 77 million AUD in 2006 (Table 5.3). The dollar value of Australian organic pro-
5.3. The Australian organic industry 99
Table 5.1: Exports of Australian organic food produce by standardised net mass, tonnes or kilolitres
Commodity 1999 2000 2001 2002 2003
Animal product 20.4 204 190 157 183
Beverage and spices 0 249 715 397 224
Cereals 252 1,057 26,307 9,290 1,298
Drinks and juices 4 40 425 724 380
Fruit and nuts 10.5 558 696 452 44
Meat products 27 102 396 682 244
Processed products 463 3,073 6,095 3,843 1,197
Sugar 1 1 4 87 141
Vegetables 3 921 2,449 227 119
Wine 19 49 188 336 244
Other 10 0 47 0.5 15
Processed products 463 3,073 6,095 3,843 1,197
Sugar 10 0.3 4 87 141
Vegetables 3 921 2,449 227 1,195
Wine 19 49 188 336 244
Other 1 0 5 1 16
Total 774 15,770 37,470 16,195 4,089
Source: Halpin (2004).
duction expanded 10 fold between 1990 and 2000, and currently stands at AUD 625 million
(Biological Farmers of Australia, 2008).
Exports account for 30 per cent of the dollar value of Australian organic production. Or-
ganic grains and processed products constitute 66 per cent and 12 per cent respectively of the
value of Australian organic exports. Table 5.1 shows that exports of organic produce have
fallen dramatically between 2001 and 2003. Much of the decline reflects prolonged drought
conditions in major broadacre farming areas. It is clear both that the export future for Aus-
tralian organic produce is highly unstable and uncertain and that the majority of Australian
organic produce remains destined for domestic consumption. Japan provides a major mar-
ket for Australian organic produce, absorbing 12 per cent of the value of Australian organic
exports. The bulk of the exports in 2006 consisted of prepared foods, cereal and legume
grains, beef and oil seeds (Table 5.4).
Certification procedures, government grants and subsidies have created opportunities

for the large scale production and export of organic produce to overseas markets in Japan
and the European Union. National organic standards were introduced by the Australian
Quarantine Inspection Service, AQIS in 1992 to regulate the export of organic produce, and
have by default become the organic standard used as a baseline in Australia.
Table 5.2: Organic farmers and farmland in Australia

Description 1990 1995 2000 2003 2007
No. of organic producers 1,260 1,429 1,657 1,920 2,063
Total no. of producers 150,000 147,100 146,400 129,000 140,403
Average organic farm 296 783 1,048 1,403 5,817
size (ha)
Total organic area 000 (ha) 150 336 546 887 11,988
Total farmed area 481 463 455.5 447.0 425.4
million (ha)
Organic farm area as 0.31 0.72 1.08 1.98 2.82
% of total
Source: Compiled from Australian Bureau of Statistics (2008) and Biological Farmers of
Australia (2008).
Table 5.3: Organic food production in Australia in 2008

Commodity Volume (t) Farm-gate Sales (AUD million)
Vegetables 9,601 77.14
Fruit 5,976 34.06
Beef 8,775 31.64
Grains 4,017 21.78
Poultry meat 550,000 18.26
Honey 1,058 16.62
Milk and dairy 5.6 13.19
Lamb 24,174 9.13
Wool 205,442 5.21
Nuts 109 1.89
Eggs 89,666 1.83
Essential Oils 8.9 0.49
Pigs 413 0.32
Source: Biological Farmers of Australia (2008).
5.4 Agribusiness penetration of the organic sector: A case study of

Kialla Pure Foods Pty Ltd
5.4.1 The Darling Downs and Australian wheat production
Wheat production in Australia is concentrated in a geographically non-contiguous area,

commonly referred to as the wheat belt, incorporating parts of central Queensland, through
New South Wales, Victoria, South Australia and parts of Western Australia. In global terms,
5.4. Agribusiness penetration of the organic sector: A case study of Kialla Pure Foods Pty Ltd 101
Table 5.4: Australian organic exports to Japan, 2006

Product Category kg or l
Animal product 26,208
Beverage and spices 106, 915
Cereals 26, 095
Drinks and Juices 332,687
Fruit and nuts 258
Meat products 114,165
Other 14,179
Processed products 730,290
Sugar 20,750
Vegetables -
Wine 2,154
Source: McKinna (2006).
Table 5.5: Estimated farm-gate value of Australian organic fruit, vegetable and nuts
Product category Estimated total (AUD) Total organic category (%)
Vegetables 24,384,964 19.07
Fruit and nuts 21,373,875 16.71
Total 45,758,839 35.78
Source: McKinna (2006).
Australia is a relatively minor wheat producer, accounting for three per cent of total world
production. Yet within Australia, the largest enterprise in the Australian grain industry is
wheat production. The Darling Downs, a significant part of the Australian wheat belt, is
a rich agricultural region located in South East Queensland. Typically, farms in the Dar-
ling Downs remain family run concerns which, which before the neo-liberal restructuring of
the Australian economy in the 1980’s, relied on statutory marketing authorities such as the
Wheat Board and the Wool Board to provide assured outlets and minimum price regimes
for their produce. Deregulation and the diminished role of state authorities in agriculture
has meant a correspondingly increased role for the corporate food sector through control
of inputs, lines of credit, processing and marketing. At the same time there has been a
move away from the production of mass undifferentiated products, as handled by statutory
authorities such as the Wheat Board, and a corresponding growth in the production of spe-
cialized high value products for niche markets, particularly in the Asia-Pacific region. Kialla
Pure Foods is evidence of both trends, namely the integration of independent family farmers
into agribusiness dominated marketing and processing chains, and the move towards spe-
cialized value added products aimed at niche markets domestically, and to a greater degree
in the Asia-Pacific region.
Table 5.6: Volume of organic crops produced on KPF’s landholdings and volume of crops marketed
on the domestic and Japanese market.
Crop Farmed by Domestic Japan(t) Total Volume(t)
KPF(t) Market(t)
Soybean 200 300 1000 3000
Buckwheat 300 100 2000 2500
Wheat 300 n/a n/a n/a
Spelt 150 n/a n/a n/a
There are four major organic grain processors in Australia; Weston Milling, Goodman
Fielder, Kialla Pure Foods Pty Ltd and Whole Grain Milling; of these, Kialla Pure Foods Pty
Ltd is the only processor specialising entirely in the production of certified organic milled
grain and legume products. Kialla Pure Foods Pty Ltd is a proprietary limited company
which has antecedents in a family property on 1300 hectares of farmland in the Darling
Downs. The farm, established in 1983, was a medium sized concern, producing organic
beef, grains and legumes. In 1988, the farm was incorporated as Kialla Pure Foods Pty
Ltd, creating a vertically integrated grain processor with the capacity to handle and market
quantities of grains and legumes in excess of the total product of the original farm holdings
(see Table 5.6).
At the same time as Kialla Pure Foods Pty Ltd reduced its own land holdings, and there-
fore the extent and scale of its farming operations, the company has expanded the capacity of
its grain and legume processing infrastructure and its domestic and international marketing
networks. As of 2007, Kialla Pure Foods exports 40 per cent of its total output to interna-
tional markets. including Singapore, Malaysia, Japan, the United States, New Zealand and
Italy. The company currently outsources the production of raw materials to a network of
approximately 400 contract farmers located in a wide area between Rockhampton in Cen-
tral Queensland, and the Victoria–New South Wales state border. Kialla Pure Foods has an
approximate annual turnover of AUD 8 million.
5.4.2 Processing and distribution

At the time of writing, Kialla Pure Foods maintains an infrastructure necessary to process,
store, package and transport up to 19 different grain and legumes which it processes and
markets up to 150 distinct products as listed in Table 5.9.
The company operates on its site, a capital intensive facility where cereal grains are
milled, classified and stored in the company’s silo complex. Stored grains are treated with
carbon dioxide to prevent insect infestation while processed and packaged products are
stored in cold rooms prior to dispatch. It is estimated that the company’s processing, dis-
tributing and marketing networks together handle an annual throughput of up to 12,000
tonnes.
While the company markets grain and legume products under its own brand name, the
5.4. Agribusiness penetration of the organic sector: A case study of Kialla Pure Foods Pty Ltd 103
Table 5.7: Kialla Pure Foods contracts with downstream processors.

Company Products
Japan Rail Tokai (Japan) Buckwheat flour
My Kitchen (Japan) Wheat flour
Crops Australia (Australia) Wheat flour
Haku Baku (Japan) Buckwheat flour
Nisho Iwai (Japan) Buckwheat flour,spelt
American Health and Nutrition (USA) All products
Ogura Trading Co.Ltd (Japan) Spelt
Heinz Wattie (New Zealand) Wheat Flour,chickpeas
Supermarket chains (Australia) Wheat Flour
Bakeries (Australia) Wheat Flour, bread mix
Wholesalers, various (Australia) All products
Source: Data collected from case study
Table 5.8: Example of Kialla Pure Foods contracts with downstream processors.
Processor Shipper Commodity Volume (t) Product
Japan Rail Tokai Bio Oz Buckwheat 2000 Buckwheat Noodles
Haku Baku Nisho Iwai Buckwheat 200 Organic Buckwheat
Noodles
Muso Bio Oz Wheat N/A Udon Noodles
bulk of the output is sold as raw material to domestic and international downstream food
processors and to domestic processors and retail outlets. The company’s products are also
repackaged and sold by downstream processors and distributors under their own brand
names. For instance, Merriam, an Australian food wholesaler and distributor, packages
and markets Kialla Pure Foods produce under the Soland brand name. Grain and legume
products handled by Kialla Pure Foods are used as ingredients in a wide range of processed
foodstuffs including breakfast cereals, snack foods and baby foods. Large scale international
food processors who purchase Kialla Pure Foods grain and legume products include Heinz
Wattie, American Health and Nutrition Inc, Japan Rail Tokai (JR Tokai) and Haku Baku (see
Table 5.8 and Table 5.7).1 International purchases of Kialla Pure Foods products are some-
times mediated by third party agro-food trading houses. For instance, JR Tokai is supplied
with Kialla Pure Foods organic buckwheat flour by Buckwheat Enterprises, a medium sized
Australian based agro-food international trading house, on the basis of a five year contract
1
American Health and Nutrition Inc is a Supplier to 200 organic manufacturers and distributors worldwide.
Haku Baku is a Japan based organic noodle processor, supplying the Australian and Japanese markets, currently
holding the largest share of the Japanese organic noodle market. Haku Baku maintains a noodle plant in the
Australian state of Victoria, processing locally farmed organic grains. The company’s turnover in 2002 was val-
ued at approximately 4 million dollars. Nisho Iwai, a Japanese medium sized trading house,is a key shareholder
in the company.
Table 5.9: KPF Products.

Produce Product
Barley Barley grain, barley bran, barley flour, pearled flour
Buckwheat Buckwheat grain, buckwheat flour
Chick Peas Brown chickpeas, white chick peas, split peas, chick
pea flour
Corn Maize grain, maize meal (cornmeal), popcorn, mealie
meal (white cornmeal)
Durum Durum wheat, durum wheat flour, duralina
Fenugreek Fenugreek
Linseed Linseed, millet
Millet Whole grain millet, millet flakes, hulled millet,
milled millet,millet meal, millet flour
Oats Oat grain, oats groats, rolled oats, rolled oats (steamed)
Rice Brown (long or short), white (long or short),
rice flour (brown or white)
Rye Rye grain, kibble rye, rye flour
Soybean Soybeans, soy flour
Spelt Spelt grain, white spelt flour, wholemeal spelt flour
Sunflower Sunflower seed, sunflower kernels, sunflower kernels
cracked, sunflower cold pressed
Wheat Wheat grain, kibble wheat, wheat porridge meal, wheat
bran coarse, wheat bran stockfeed,
unbleached plain increased bran,
unbleached plain flour, unbleached high protein flour,
unbleached high protein flour,
unbleached self–raising flour,
cake biscuit pastry flour, bread wheat semolina
Bread Premixes White bread mix,wholemeal bread mix,
Multi grain,bread mix, rye bread mix,
White spelt bread mix,
Wholemeal Spelt
Bread Mix, 7 grain mix
under which JR Tokai receives 400 tonnes of buckwheat flour per annum. The flour is con-
verted to buckwheat noodles for sale at the extensive network of JR Tokai stations.
The organic raw materials procured by Japanese downstream processors via contracts
with Kialla Pure Foods, are used in a wide range of processed foodstuffs including, buckwheat
noodles, udon noodles, miso and tofu which may be labelled as organic. Buckwheat noo-
dles processed by Haku Baku are labelled as JAS organic certified and sold on niche markets
5.5. Kialla Pure Foods expansion into organic livestock feed 105
both on the domestic and international market. However, organic buckwheat raw material
procured by JR Tokai and Gomei Shoji are used to make buckwheat noodles which are not
sold as organic. Rather, since freshly harvested buckwheat can not be procured locally in
Japan during the winter months, and the seasons in Japan lag the seasons in Australia by
six months, buckwheat is procured from Australia and is used to make noodles from freshly
harvested buckwheat, enabling Japanese companies to sell ”shin soba” all year round.
5.5 Kialla Pure Foods expansion into organic livestock feed

An expansion of Kialla Pure Foods into the processing and supply of organic off–farm inputs
and outputs has been supported by a 2003 Australian Federal Government New Industries
Development grant of AUD 110,000.2 The New Industries Development grant provided
Kialla Pure Foods to build a mill specialised in the processing of certified organic livestock
feed. The government grant and the concomitant expansion of the company’s infrastructure
is significant in a number of respects. Firstly, given the growing international demand for
lean, high quality and BSE free beef products, and Australia’s position as an exporter of beef
products and livestock feed, it is reasonable to expect domestic and international demand
for organic livestock feeds to continue to match or outstrip supply for the foreseeable future.
The New Industries Development grant is indicative of a certain level of material support
at the official level for continued expansion of an export oriented, large scale model of or-
ganic agro-food commodity production. Further evidence for support at the state level for
this large scale, export oriented model of organic farming is the award to Kialla Pure Foods
of two Australian Federal Government Export Market Development Grants, each worth an
estimated value of AUD 37,000. The grants were intended to support the expansion of Kialla
Pure Foods organic products to markets in Japan and the European Union. Further, the ex-
tension of Kialla Pure Foods into the supply of certified organic livestock feed suggests a
trend towards the commodification of organic farm inputs and marks a consolidation of two
previously independent off–farm nodes of the organic agro-food commodity chain, that is
manufacture and supply of newly commodified farm inputs and the downstream process-
ing and marketing of organic farm produce, in the hands of a single corporate entity. As
noted in our introductory remarks, the vertical integration of the manufacture, processing
and distribution of off–farm inputs and the processing and marketing of farm produce is a
prevalent characteristic of conventional agro-food commodity chains.
The organic livestock feeds currently manufactured by Kialla Pure Foods is listed in (Ta-
ble 5.5). As of February 2009, the company manufactures up to 15 varieties of organic live-
stock feed ranging from feed with a high protein content to non meat based feed for pigs,
chickens, horses, beef cattle, and fish farming. One variety of chicken feed manufactured by
Kialla Pure Foods contains both meat meal and fish meal. Similarly, livestock feed for pigs
also contains animal and fish products. All the livestock feed manufactured by Kialla Pure
Foods contains soybean products.
2
The Federal Government’s New Industries Development Grant provides financial assistance to agribusiness
to support its commercialization of new products.
Table 5.10: Organic livestock feed

Feed Product Description
Beef Cat- Consists of sorghum, wheat gradings, mill run, wheat flour,
tle
full fat soya meal, mineral and vitamin supplements
Chicken Sorghum, wheat gradings, mill run, wheat flour,
Broiler
Full fat soya meal, meat meal, fish meal, mineral and vitamin suppliments
Grain Sorghum, mill run, hominy, barley and wheat gradings
Horse Made from a hard wheat with a protein level of more than 13 per cent
Laying 4 different types of feed depending on stage of growth of the hens, and diet,
hens
Organic vegetarian and high protein available
Pigs Sorghum, wheat gradings, mill run, wheat flour, full fat soya meal,
(Breeder)
Meat meal, fish meal, mineral and vitamin supplements
Pigs Sorghum, wheat gradings, mill run, wheat flour, full fat soya meal,
(Meat)
Meat meal, fish meal, mineral and vitamin supplements
Rodents
Fish
Pellets
Source: Kialla Pure Foods (n.d.).
5.6 Producer contracts

Raw materials processed by Kialla Pure Foods are typically obtained through arrangements
under which farmers are contracted to produce a pre–negotiated tonnage of a particular
product or to cultivate a pre–negotiated acreage of a given crop. Farmers who enter into con-
tracts to supply the company with a pre–negotiated quantity of a given crop suffer penalty
clauses should they fail to meet the contracted amount of produce, while farmers who enter
into contracts to cultivate a pre-negotiated area of particular crops are protected by a risk of
god clause under which the farmer is exempted from liability in case drought, flood or other
natural disaster should render the yield of the area cultivated under the contract worthless.
Producer contracts typically include clauses stipulating the variety of crop to be planted, and
determining the grade or quality of the material required by the company. For instance, a
contract may specify the variety of wheat to be planted by the farmer and the protein con-
tent of wheat to be received by the company. Wheat failing to meet the grade specified in the
contract may be purchased at a lower price than agreed under the contract, for conversion
to animal feed for instance.
In general, whenever Kialla Pure Foods has a fixed term contract to supply a downstream
5.6. Producer contracts 107
processor with a given product over one or more planting seasons, the company manages
the risks associated with climatic or other factors that may adversely affect the crop yield
by contracting out the cultivation of the crop to a number of different contract farmers. Ad-
ditionally, in order to protect itself from fluctuations in the price of a given product in the
period between the planting and harvesting of the crop, the company does not contract out
the entirety of its requirements for the year at the beginning of the planting season. Rather,
it contracts a percentage of the estimated demand before the planting season, and staggers
the contracts for the remaining portion of its requirements over the growing season. Thus
the annual income received by a farmer under contract to Kialla Pure Foods may not be deter-
mined in whole at the beginning of a season, since under the company’s risk management
strategy, the terms of the contracts entered into later in the growing season are influenced by
such factors as fluctuation in market prices and expected yields in the growing season. On
the other hand however, it is not uncommon for contract farmers who consistently provide
produce of sufficient grade and quantity and considered by the company to be dependable,
to be offered longer term producer contracts for a portion of their production.
The decisions as to what crops the contract farmers plant in a given season are greatly
influenced by external factors which are beyond the farmer’s control. Farmer’s decisions
regarding crop varieties and acreages to be planted in a given season are directly related to
contracts entered into with Kialla Pure Foods. In turn Kialla Pure Foods requirements for raw
materials to be procured under producer contracts are determined by the company’s con-
tracts with further downstream international and domestic processing and marketing enti-
ties. Prior to planting, contract farmers enter into negotiations with Kialla Pure Foods to deter-
mine which products are likely to provide the contract farmer with greatest returns.Through
price differentials (Table 5.11) and (Table 5.12) producers are encouraged to grow varieties
of wheat with high protein contents. Ancient varieties of wheat, such as spelt and kamult
wheat contain easily digestible forms of gluten and are consequently in high demand on the
Japanese and other Asian markets. High premiums are attached to these speciality products
on the world markets.
Table 5.11: Variation in price paid by KPF per metric tonne of specialty organic wheat varieties
Variety Harthog Likeheart Spelt Sunco Rosella Tallow
Price per tonne (AUD) 300 300 450 300 280 280
South: Data collected from case study.
Table 5.12: Variation by protein content in price per metric tonne of wheat
Protein content More than 13 11.5-13 Less than 11.5
Price (AUD) 300 280 210
5.7 Case Study

Our case study included a sample of ten organic producers farming under contract to Kialla
Pure Foods. The farms studied are located roughly in three areas of the Darling Downs; Cen-
tral Downs including Millmerran, North West Downs including Dalby and its environs, and
Cecil Plains in the West Downs. The mean distance between each producer being 150km.
One of the farmers surveyed, began organic farming in the 1960s, while the majority of the
farmers started organic farming in the 1980s and 1990s. The farmers surveyed produce at
least one winter crop, namely chickpeas, wheat, linseed and canola and one summer crop,
namely soybeans, millet, maize and sorghum. These summer and winter crops are com-
monly interspersed with green manure crops, which may include fenugreek, mungbeans,
medic and lablab. Green manure plants are generally ploughed back into the soil as fer-
tilizer. The farms studied vary in size; the smallest farm is only 26 hectares whereas the
two largest farms are 1676 hectares and 2530 hectares, making them larger than the average
conventional grain farm size which in 2000-2003 was 1656 hectares (see Table 5.13).
Table 5.13: Year of conversion, certified organic and farm area (ha) by producer.
Producer 1 2 3 4 5 6 7 8 9 10
Year 1987 1999 1998 1990 1964 1997 2000 2006 1990 2003
Certified 147 520 662 416 2530 1676 413 26 455 256
Farm 147 520 782 416 2530 1676 413 26 455 256
Livestock 60 0 0 72 3500 0 0 0 0 250
5.7.1 Cited reasons for conversion to organic farming

This survey attempted to assess the motivations of farmers converting to organic farming;
that is whether farmers started organic farming out of concern for the environment and other
ideals of organic farming or whether it was for more pragmatic reasons.
Growers were asked to score by importance a list of seven possible reasons for converting
to organic farming, a score of one being given to the most significant reasons and a score of
three to the least significant (see Table 5.14)
• a = Concern for the environment
• b = To secure long term viability of property
• c= Concern for own or family’s health
• d= Potential to increase income
• e= Requested by buyers
• f= Risk free opportunity presented itself

5.7. Case Study 109
Table 5.14: Reasons for conversion
a b c d e f g
P1 FF FFF F
P2 F F FF
P3 F FF F
P4 FFF F FF
P5 F FF FFF
P6 F
P7 FF F F
P8 F
P9 FF FFF F
P10 FF FFF F
F= most significant reason, FFF = least significant reason
• g= Conventional farming not economically viable
Our case study revealed that concerns about health and pesticides were key factors for
farmers to convert to organic farming. Producers 1,3 and 7 converted to organic farming
due to personal experience and illness in the family, which they attributed to pesticide use.
In addition to the health costs, producer 3 sited the financial costs of inputs required for
conventional farming. Before conversion to organic farming, producer 3 produced cotton
using conventional farming methods. Conventional cotton farming required large amounts
of chemical inputs, the costs which could amount to as much as 100 000 dollars a month
during the growing season.
At the same time as these producers stated they converted to organic farming out of
concerns with financial costs and health problems related to pesticide usage, these producers
also cited the higher prices accruing to organic produce as reason for conversion. Producer
2 revealed that farmers were offered premiums of up to 100 per cent for organic soybeans,
which influenced his decision to convert to organic farming.
Producer 6 was brought into organic production by a large scale highly capitalized or-
ganic grower, who had already converted the land. Producer 6 had worked as a wage
labourer on his parent’s property. Economic conditions on the family dairy farm meant that
he and his wife had to work long hours and accept low wages. At the same time the farmer
experienced dissatisfaction with his lot on the family farm, an opportunity arose to work as
an organic farmer in a relatively risk free environment. Producer 6 was presented with the
opportunity to continue farming, albeit as an organic farmer with minimized up-front costs.
Producer 6 was happy to find that he could immediately become an organic farmer since
the land had already been converted and that he would be able to farm ”under the wing”
of the more capitalised farmer, and thus his entry into organic farming did not involve high
upfront costs.
Producer 1,4,5 and 9 had started practising organic farming before the implementation
of formal certification regimes. Producer 5 is considered to be one of the pioneers in the
organic movement in Australia. Although no formal certification regimes existed at the time,
producers mentioned above began using processes and methods which qualify as organic
under current standards.
5.7.2 Agronomic practices

Guthman (2004a) identifies the following four fundamental precepts of organic farming from
a technical viewpoint:
1. The use of cover crops and mulches.
2. The promotion of soil biotic activity through the regular addition of organic matter
such as manure and compost procured from on farm.
3. The use of rotations, crop-livestock mixed systems, and legume-based intercropping

systems for nutrient recycling.
4. The encouragement of biological pest control agents through biodiversity manipula-

tions, and the introduction and/or conservation of natural enemies.
This survey attempted to assess the degree to which farmers in the sample incorporated
the above agro–ecological precepts in their farming practices. Following Guthman’s sur-
vey of organic farmers in California (Guthman, 2004a), a rating of 1 was assigned when a
producer took no affirmative steps but merely replaced disallowed inputs with allowable
inputs; a rating of 2 through 4 was assigned when a farmer attempted to put some of the
above mentioned principles into practice and a rating of 5 assigned to farmers who man-
aged the entire operation by design with minimal outside inputs and maximum attention to
processes. The ratings of the surveyed farmers are listed in Table 5.15.
Three out of the ten surveyed farmers actively incorporated the agro–ecological prin-
ciples identified above, while the remaining 7 producers, to varying degrees, farm organi-
cally by substituting certified ”organic” off–farm inputs for their conventional counterparts,
while leaving pre-conversion nutrient cycles and agronomic practices largely intact. At one
extreme among the farmers surveyed, producer 7 relied most heavily on the purchase of per-
missible off farm inputs which, in this case, included certified biological pest control agents
and fertilizers, and composted manure obtained from a nearby feedlot. Beyond the nutrient
cycles which exist on his farm without any intervention, producer 7 did not take any active
measures to enhance nutrient cycles on his farm. Thus, among the farmers in the survey,
producer 7 is most heavily reliant on the purchase of off farm inputs. Off–farm input costs
for producer 7 are listed in Table 5.16.
5.7. Case Study 111
Table 5.15: Agronomic ratings by producer
Producer Year Item 1 Item 2 Item 3 Item 4 Average
Rating
5 1964 5 5 5 5 5.00
1 1987 3 4 4 3 3.50
9 1990 5 5 5 5 5.00
4 1990 4 4 4 4 4.00
6 1997 1 1 1 1 1.00
3 1998 3 1 1 1 1.50
2 1999 1 2 1 1 1.25
7 2000 1 1 1 1 1
10 2003 1 1 1 1 1
8 2006 1 1 1 1 1
5 is assigned to the farmer with the most agro-ecological practice and 1 to the farmer with least agro-
ecological practice
Table 5.16: Post-conversion input costs for producer 7
Organic Inputs Fertilizer Bio Pesticide Composted Manure
Number of hectares 389 215 389
Cost per hectare $297 $124 $198
Total costs $115,533 $26,660 $77,022
At the other end of the spectrum among the farmers in the survey, producer 5 met all
his fertilizer and manure requirements by actively managing and tapping into on-farm nu-
trient cycles. Producer 5 includes green manure, fodder crops and sown pasture (leys) in
his crop rotations (Table 5.17). The green manure and fodder crops included in Producer 5’s
crop rotations are typically nitrogen fixing legumes which may be ploughed into the soil.
The inclusion of grazing livestock in rotations on his farm allows producer 5 to more effec-
tively control weeds without the use of herbicides and provides the soil with a rich source
of nutrients in the form of animal manure.
Table 5.17: Crop rotations for Producer 5.
Year Season Area 1 Area 2
1 Winter Oats/Medic Rye/Medic
Summer Lablab Soybean or Mungbean
2 Winter Wheat/Medic Wheat/Medic
Summer Buckwheat Mungbean
3 Winter Fenugreek Fenugreek
Summer Millet or soybean Sunflower or Maize
Table 5.18: Crop rotations for Producer 5.
Year Season Area 1 Area 2
1 Winter Wheat/Medic Barley/Medic
Summer Lablab Lablab
2 Winter Medic Medic
Summer Fallow Mungbean
3 Winter Wheat/Medic Fallow
Summer Fallow Sorghum
4 Winter Barley/medic Medic
Summer Mungbean Mungbean
5.7.3 Labour practices
Another goal of the survey was to assess the degree to which the farmers were able to man-
age their farms solely with family labour. Organic farming was posited as an environmental
movement but also as one for social justice imply that the movement includes the concerns
of rural workers (Refer to IFOAM Principle Aims of Organic Production and Processing
Michelsen (2001), Belasco (1989) and Conford (2001)). The use of labour contractors, for ex-
ample, is arguably anathema to the maintenance of an ongoing, committed labour force. Yet
the use of labour contractors is quite common in organic production, as shown in Table 5.19.
Although producer 5 does not employ contract labour, he is dependent on a sharecropper.
5.7. Case Study 113
Table 5.19: Labour practices: Use of part time employees
Producer Year Never Occasionally Routinely
P5 1964 *
P1 1987 *
P4 1990 *
P9 1990 *
P6 1997 *
P3 1998 *
P2 1999 *
P7 2000 *
P10 2003 *
P8 2006 *
Out of the 10 farmers surveyed, only three farmers were able to carry out production
entirely by themselves. Six of the farmers used contract workers, with 3 farmers employing
contract workers on a regular basis. One farmer is able to procure additional organic raw
materials through a sharecropping arrangement.
5.7.4 Sharecropper
From 1997 onwards producer 6 was no longer employed as a worker but was given permis-
sion to run the farm independently, under a sharecropping arrangement. In exchange for
the use of the land, the larger and more capitalized farmer who owned the land, receives
twenty seven per cent share of the harvested crop. Producer 6 was agreeable to these condi-
tions and considers himself lucky to be able to farm. Land prices have soared and thus the
producer is not able to purchase his own farmland. However, the arrangement does pose
some difficulties. Unlike other farmers we surveyed, who had mainly inherited farm ma-
chinery, producer number six was required to purchase his own machinery, storage facilities
and other inputs after turning into a sharecropper. Due to financial constraints, the farmer is
currently using primitive unsealed silos, which have high rates of storage losses and insect
infestation. The producer is not able to store his grain for a long time in these silos and thus
can not choose when to sell the grain produce. Even when there is high supply of the prod-
uct on the market and limited demand, the farmer is forced to sell his produce and thus is
not able to capture high premiums for his products.
Furthermore, under the sharecropping arrangement the more capitalized grower receives
a percentage of the sharecroppers harvested crop which enables him to supply large amounts
of produce to a free range chicken farmer offering high prices for organic grains. The share-
cropper is unable to utilize this local market for his produce and is forced to remain depen-
dent on the whims of the big processors. The producer depends on the processor to store,
grade and transport the produce.
5.7.5 Marketing and distribution nodes

This survey also attempted to assess how the off farm nodes of organic production in the
Darling Downs, in particular the off–farm nodes of the organic grain and legume sector in
this region, meet the goals envisioned for organic farming as an alternative to the conven-
tional capitalist model of food production and distribution. Here we examined the modality
by which organic grain and legume producers in the Darling Downs are embedded into
food-commodity chains in which the salient characteristics of conventional food commodity
chains are reproduced, with particular reference to
• The appropriation of a growing proportion of profits in the sector by off farm capi-
tal through control over the processing, distribution and marketing nodes of the food
commodity chains.
• The orientation of organic bulk grain and legume producers in the region to the eco-
nomic imperatives of off–farm capital and commodity markets of international reach
through such mechanisms as price premiums and differentials for organic farm pro-
duce.
There exists a relatively minor variation in the extent to which eight of the ten producers
surveyed in the case study depended on Kialla Pure Foods as an outlet for their farm pro-
duce. Producer 1, who farms solely under contract to Kialla Pure Foods, cited the distance
between producer 1’s farm and alternative organic grain processing facilities as the main
reason to contract the entirety of the farm’s produce to Kialla Pure Foods.
Producer 2 produces corn and wheat solely under contract to Kialla Pure Foods while
also supplying barley to Country Heritage Feeds for processing as stock feed. Producer 2
also supplies soybeans to Kialla Pure Foods, to Vitasoy and to Phillip Rodey Grains. Pro-
ducer 3 presently stores the farm’s wheat production with the intention of marketing it in-
dependently for use as organic poultry feed, while cultivating the remaining 80 per cent of
the farm under contract to Kialla Pure Foods. Producer 4 farms under contract to three dif-
ferent processors located outside of Queensland. Currently, this producer does not supply
Kialla Pure Foods, although he has previously.
Producer 5 produces wheat, chickpeas, buckwheat and millet under contract to Kialla
Pure Foods, while supplying local poultry farmers with barley. Producer 6 produces millet,
sorghum, chickpeas, fenugreek and wheat under contract to Kialla Pure Foods, and at the
same times supplies Country Heritage Feeds with Barley. Producer 7 grows soybeans under
contract to Vitasoy, while supplying livestock and dairy farmers with wheat and barley.
5.7. Case Study 115
Table 5.20: Proportion by area of total production under contract to Kialla Pure Foods. Entries N/A
refer to crops not cultivated by the given producer. All figures refer to 2003.
P1 P2 P3 P4 P5 P6 P7 P8 P9 P10
Wheat 100% 100% 80% 0% 100% 100% 0% N/A N/A 0%
Soybeans 100% 15% 100% 0% 0% N/A 0% 100% N/A 100%
Buckwheat 100% N/A 100% 0% 0% 0% N/A N/A N/A N/A
Barley 100% 0% 100% 0% 0% 0% 0% N/A N/A N/A
Chickpeas 100% N/A 100% 0% 100% 100% N/A N/A N/A N/A
Corn 100% 100% 100% 0% N/A N/A N/A N/A 100% N/A
Rye 100% N/A 100% 0% N/A N/A N/A N/A N/A N/A
Linseed 100% N/A 100% 0% N/A N/A N/A N/A N/A N/A
Sorghum 0% 0% 0% 0% 100% 100% 0% 0% 0% 0%
Millet 0% 0% 0% 0% 100% 100% 0% 0% 0% 0%
Producer 8 only grows soybeans, which he supplies Kialla Pure Foods. Producer 9 produces
maize under contract to Kialla Pure Foods, while supplying natural food stores, and small
retail outlets with carrots onions and adzuki beans, and a local processor called Santos with
peanuts. Producer 10 produces soybeans under contract to Kialla Pure Foods and cattle under
contract to Coles, one of the largest supermarkets in Australia.
The data reveals that seven of the ten grain and legume farmers in the survey pro-
duce 70% or more of their farm output under contract to an organic or mixed organic–
conventional grain processing or marketing entity. The farmers in the survey, with the excep-
tion of Producer 4 who is in the process of acquiring a grading and grinding mill, supply raw
materials to processors in the form of un–graded un–milled grains and legumes. Process-
ing and shipping entities which acquire un–processed grain and legumes from the organic
farmers in the survey are linked contractually or otherwise to manufacturers of speciality
products in domestic and international markets. Thus the substantial value adding which
sector produce undergoes between the farm gate occurs in nodes where control is exercised
by non–farm capital. Though a survey of this size cannot yield data sufficiently detailed
to determine whether farmers in the sector as a whole retain a significantly higher propor-
tion of the final value of their product than do non-organic grain and legume farmers, it is
doubtful that the higher prices paid by consumers for processed organic grains and legume
products translate solely to higher farm gate prices for raw materials and a lower rate of
profit for post-farm gate processing, distribution and marketing entities.

Thus in its processing, distributing and marketing nodes, the organic grain and legume
sector in the Darling Downs closely resembles the conventional grain and legume sector in
the following significant respects:
• the sector exhibits a high degree of integration into domestic and international mar-
kets, mediated by off–farm capital to which accrues any surplus profits generated in
the off–farm nodes of these organic agro-food commodity chains;
• production patterns in the sector are determined to a large degree by Australia’s posi-
tion in world production as an exporter of non-manufactured farm and mineral prod-
ucts to North American, Asian and European markets.
One consequence of the above observations is that in contravention of the principle of “lo-
cal production for local consumption” which certain proponents of organic farming argued
would represent a more sustainable pattern of production and consumption than observed
in conventional agro-food commodity systems, the organic grain and legume sector in the
Darling Downs is driven in large part by premiums currently offered for its products in niche
international markets.
5.7.6 Value adding

Of the surveyed farmers, one has set up a plant to process and add value to harvested pro-
duce. In 2002, producer 4 commenced operating on his site a medium sized facility to grade
produce and process all certified organic cereal and pulses. The processing operations are
currently restricted to the cleaning and grading of the grains, that is the removal of screen-
ings such as cracked, undersized or infested grain, dust particles and other extraneous ma-
terial from harvested grain and legume produce. A high amount of screenings in harvested
produce impacts on the returns of the processor either via reduced flour yields or increased
cleaning costs, and concomitantly on the returns of the producer.
Downstream processors reward producers of grains and legume producers on an incre-
mental basis for clean grain and correspondingly penalise producers for grains containing
high amounts of screenings. Grain with high amounts of screening is likely to be sold as feed
grain rather than as grains for human consumption. Thus on farm removal of screenings and
other foreign material from harvested produce enables the producer to sell the screenings ex-
tracted from the grain as stock feed. Grading and cleaning grains, in addition to farming has
enabled the producer to move up the commodity chain from being a primary producer to a
producer-processor and has enabled the producer to retain more of the surplus that would
otherwise be appropriated by downstream processors. An example of the surplus retained
by the producer is illustrated in the following example. In 2004, grading and cleaning costs
of soybeans were 80 dollars per tonne, thus the grading and cleaning costs for producer 7,
who harvested 500 tonnes of soybeans amounted to approximately 5000 dollars.
According to producer 4, merely growing organic produce is no longer enough to pro-
vide the organic producer with significant returns. As more farmers convert to organic farm-
5.8. Discussion: Role of off–farm capital 117
ing to capture high premiums, oversupply of the organic commodity has in cases resulted in
a drop in the premium value of the product.
Increasing the farm share of profits by adding value
A section “adding value to organic produce” in the report commissioned by an Australian

quasi-non-governmental organisation, the Rural International Research and Development
Corporation (RIRDC) observes that
• Australian farmers have faced a situation of increasing costs and reduction in income
since the 1950’s;
• farmers typically net only four to ten cents in every dollar paid by consumers for farm
produce, where manufacturers, distributors and marketers net ninety to ninety six
cents in every dollar paid by consumers for farm produce;
• processing generally adds more value than the fact that the produce is organic while
an investment in processing generally give better returns on labour, capital and time
than the same investment in farming.
The RIRDC report advises that investment in downstream processing offers organic farmers
one way to increase their share of the surplus profits generated in the commodity chain and
presents a theoretical calculation where a farmer obtains an after costs return of $30,000 p.a
on an initial investment of $40,000 in a wholemeal mill for wheat flour. However, with the
exception of Producer 4 who is in the process of acquiring a grain sorting and grinding mill,
none of the farmers in the survey add value to their produce after harvesting and storage.
5.8 Discussion: Role of off–farm capital

The survey results on the processing and marketing of sector produce reveals that off–farm
capital, including a small number of more highly capitalised farm–processor entities, have
established a dominating presence in the non–farm nodes of the organic grain and legume
sector in the Darling Downs. These results indicate that the scenario raised by Buck et al.
(1997) in which off–farm capital captures a proportion of organic producers surplus profits
by adding value between the farm and table, or by reconfiguring farm inputs as manufac-
tured products, is being realised in the Australian organic bulk grain and legumes sector.
Equally importantly, as observed by Guthman (2004a) in the Californian setting, the domi-
nating presence of non–farm capital in the processing, distribution and marketing nodes of
the commodity–chains in question and the dearth of alternative or attenuated distributions
networks, subjects the sector as a whole to the “punishing logic” of globalised commodity
markets, thus accelerating trends to intensification which are shaping the political economy
of the organic sector.
Manufacture and distribution of farm inputs
Of the grain and legume farmers surveyed, Producer 4 and Producer 5 are able to farm
organically without the use of externally sourced fertilisers and Producer 7 was the most
heavily dependent on externally sourced fertilisers and composted manure. While the sur-
vey data is incomplete, pre-conversion and post-conversion costs for Producer 7, suggest
that even when a grower in the organic grains and legumes sector remains reliant on ex-
ternally sourced farm inputs, as does Producer 7, post-conversion producer costs for the
inputs may be lower than pre-conversion producer costs. Thus the survey indicates there is
at present potentially a marginally smaller role for off–farm capital in the manufacture and
distribution of farm inputs in the organic sector by comparison with the conventional.
5.9 Evidence of Conventionalisation

The survey suggests that the organic grain and legume sector in the Darling Downs com-
prises a minority of farmers whose practice of organic production pre-dates the explosion
in niche organic markets and the codification of organic certification standards and proce-
dures in early 1990’s and a larger number of recently converted farmers attracted to organic
production by the incentives of premiums available for organic produce in the burgeoning
Australian and international markets since the 1990’s. The grain and legume farmers in the
Darling Downs whose practice of organic farming pre-dates the expansion of the organic
sector that began in the 1990’s were generally highly capitalised large scale farmers whose
position allowed them to bear financial and other uncertainties associated with establishing
forms of agricultural production new to the area. These producers’ transition to forms of
organic farming appear to have been motivated largely by concerns for the long term agro–
ecological sustainability of their farms, and by health concerns about the toxicity of chemi-
cals applied in conventional farming, seeking to reduce their own and their families’ risks of
exposure to these agro–chemicals. However, though the early practitioners of organic grain
and legume farming in the Darling Downs had formulated critique of conventional farming,
this critique which has always remained limited to agro–ecological practices of conventional
farming, does not incorporate any of the concerns that exist within sections of the organic
movement about the fundamental dynamics of capitalist agricultural production. This his-
tory of the organic grains and legume sector of the Darling Downs is borne out in the fact
that the sector has from its inception remained firmly integrated into the conventional cap-
italist agro–food commodity system. In this respect the organic grain and legume sector of
the Darling Downs is scarcely differentiated from the conventional grain and legume sector.
In their agro–ecological practices, the farmers in the sector, particularly those organic
producers of longer standing, remain substantially differentiated from those of conventional
Australian grain and legume farmers. However, the influx of newly converted farmers to the
sector following the expansion of Australian and international markets for organic produce
appears to have been accompanied by a degree of agro–ecological enfeeblement. The survey
indicates that it is the more recently converted organic grain and legume farmers who are
5.9. Evidence of Conventionalisation 119
likely to practice diluted forms of organic farming, frequently relying on “input substitution”
to obtain and maintain their organic certification.
Chapter 6
Organic farming and agribusiness capital in Victoria
6.1 Introduction
In this chapter, the field data from case studies conducted of horticultural producers in Vic-
toria is summarised and interpreted with respect to the ongoing conventionalisation debate
surrounding the organic sector. Although case studies of ten organic horticultural producers
were carried out, studies of three of the representative growers were selected for discussion
in this section. The study investigated the agro-ecological, labour and marketing practices of
the individual farming operations, in an effort to understand the possible interrelationships
between these on-farm practices, farm scale and capitalisation, and the modalities of the in-
teractions between organic horticultural producers and off-farm circuits of distribution and
consumption.
6.2 Case studies

The three organic horticultural farmers selected for this study are located in Victoria, which is
the largest horticulture area in Australia. All three surveyed farmers are full time commercial
operators who commenced organic farming in either the 1990s or in 2000. The three farms
are located approximately 100 kilometers from each other.
6.2.1 Case Study 1: Tomato Grower

The first farmer discussed in this study is a tomato farmer, producing on five hectares of
farmland, leased on a short-term basis, in the town of Seymour which is situated approx-
imately two hundred kilometers north of Melbourne. The farmer began organic farming
in 1990. Faced with the fact that conventional farming operates on economies of scale and
small margins, and lacking the capital to establish a large scale conventional farm, farmer
one chose to farm organically since doing so would enable him to produce relatively high
value products for a niche market on a reduced scale. Although his farm is relatively small,
according to farmer one, his tomato farm is one of the largest operations devoted to the pro-
duction of organic tomatoes in Australia. The farmer is engaged in growing tomatoes for
seven months of the year and for the remaining months, the farmer is employed to spray
122 6. Organic farming and agribusiness capital in Victoria
crops, make hay, and shear sheep on a nearby conventional farm. The farmer’s gross income
from his tomato farming operation was approximately fifty thousand Australian dollars in
2007.
Agro-ecological practices
The farmer grows a ’jointed’ tomato variety since the tomato with its stalk attached looks
attractive to the buyer. This tomato variety grows to a bush about 1 metre high and then
stops growing and sets a concentrated crop of tomatoes which can be picked over a few
weeks. The farmer obtains a harvest of twenty to twenty six tonnes per hectare. The farmer
follows a two year rotation system whereby tomato crops are planted after a green manure
crop such as rye. Clover also grows naturally on the property. The farmer stated that a more
complex rotation system with more green manure crops would be beneficial in building soil
fertility without external fertilizers. However the farmer is compelled to settle for a simple
rotation system citing time and financial constraints.
The farmer lays plastic mulch and drip irrigation tape on tomato beds before planting.
During the season, large amounts of soluble organic fertilizers, which are typically fish-
based, are fed to the crop through the drip system (organic fertigation). Large amounts of off
farm fertilizers and composts are also applied to the soil before transplanting the seedlings.
A mixture of animal meal by-products and kelp meal is used to supply the crops with ni-
trogen, while rock powders such as rock phosphate, colloidal phosphate, untreated (mined)
potassium sulfate, and sulfate of potash-magnesia are the main source of potassium and
phosphorous. Biological sprays are used to eliminate pests on the farm. For instance Bt
spray (Bacillus thuringiensis) is used to eliminate the heliosis grub. In addition to manual
weeding, plastic mulch is used to suppress weeds in between and within the tomato rows.
The plastic mulch also reduces soil splashing onto the leaves and fruit, thus reducing dis-
eases. The main disease the farmer grapples with is mildew on the tomatoes, for which
sulfur is applied.
At the time of this study, without competition from other local growers, or from growers
in South Australia who are unable to commence harvesting tomatoes till mid May, farmer
one is the sole supplier of organic tomatoes in Victoria during the first weeks of May. Al-
though extending the growing season into May can be risky, as the tomatoes are susceptible
to frost damage, the farmer employs various methods to try and extend his growing sea-
son. In order to minimize frost damage to the crop, plastic tunnels are used as row covers,
and hay burned to keep the tomatoes warm. In 2005, the farmer lost 20 000 dollars as a
result of frost damage to his produce. Up until 2007, the farmer received premium prices
for shipments made in May since he was the only grower able to supply to the market late
in the season. However, the farmer expects these premium prices to fall as farmers utilising
hydroponic technology have begun to enter the sector.
6.2. Case studies 123
Labour practices
The farmer is highly dependant on part-time casual labour during the tomato planting and
harvesting season. Each year the farmer employees three to four Vietnamese farm hands.
The farmer acknowledged that picking tomatoes is hard work, and expressed concern for
the workers doing this job. He stated that he did not believe that the hourly wage paid
the workers was sufficient compensation for their hard work but, given the intensity of the
farming operation, he can neither carry the work by himself nor employ full time workers,
given financial difficulties.
Marketing practices
Farmer one sells the entirety of his crop through a single wholesaler based in the Melbourne
wholesale markets. In theory, the wholesaler buys the tomatoes from the producer, though
in practice the wholesaler buys the produce from the producer only after the produce has
been sold on the wholesale market. Thus, if the tomatoes do not sell, then the wholesaler
does not buy them from the producer, and the producer does not get paid for that shipment.
The wholesaler therefore acts in practice as a agent, selling the produce on commission. The
prices the farmer receives from the wholesaler fluctuates widely in a season, from approx-
imately 16 dollars for a 10 kilogram box in the beginning of the season, to 35 dollars for a
10 kilogram box in the end of the season when supply tapers off. Since the prices are the
highest at the end of the season, the farmer attempts to extend the growing season.
The farmer does not have a contract with the wholesaler. Rather, the farmer informs the
wholesaler of the volume he plans to ship and the prices he would like to receive. According
to the farmer, the actual price received depends on the whims of the market and the ”work”
of the wholesaler. The farmer stated that a wholesaler he had shipped produce to over the
previous 15 years ”really screwed me. . . in some weeks I should have had 10 to 12 grand [10
to 12 thousand dollars] but I only got 4!”
The farmer ships only Grade A tomatoes to the wholesaler, and bears the cost of dis-
carded produce that does not meet the shape and size standards of the retail market. Be-
tween January and April, approximately 2 tonnes of tomatoes are shipped to the wholesaler
each week, and from late April to May, the farmer attempts to increase the size of weekly
shipments to the wholesaler to between 2 to 3 tonnes. The farmer packs the produce in
10 kilograms boxes and delivers the boxes each week to a depot, from which the produce
is shipped to the wholesale markets by a transport company. The farmer is responsible
for the freight costs of 60 dollars per delivery, leading the farmer to say, ”farmers have to
sell wholesale, buy retail and pay the freight each way. . . . It’s all cost, cost, cost”. Prior
to the consolidation of wholesale markets, the farmer was able to ship produce to regional
wholesale markets. Following consolidation however produce has to be delivered to the sole
wholesale market located in Melbourne. Despite the disadvantages of shipping produce to
the Melbourne wholesale markets, the farmer does not sell his produce at the farmers’ mar-
kets on account of time and labour constraints, and limited turnover; from the point of view
of the farmer, it is more effective to sell a larger volume at wholesale prices than to spend
time and labour to selling a smaller volume at retail prices through direct marketing outlets.
This study suggests that farmer one, who specialises in the production of a single crop, does
not employ any integrated pest and disease control strategies or practice polycropping. The
farmer is heavily dependent on off-farm inputs to maintain the soil productivity, and to
control pests and diseases and, by his own admission, practices a form of organic farming
that emphasises inputs over processes, and pays scant attention to ecological sustainability.
The farmer’s decision to specialise solely in the production of tomatoes was influenced
by external factors beyond his control. Firstly, the costs involved in buying or leasing agri-
cultural land places constraints on the acreage of farmland an uncapitalized farmer can cul-
tivate. Secondly, since the agricultural markets in Australia operate on high volumes, the
farmer is not able to poly crop, but is compelled to specialise in the production of one crop
so as to produce high volumes. Only by monocropping is the farmer is able to obtain, from
5 hectares of farmland, the volumes of tomatoes necessary to supply the wholesalers. In the
farmer’s words, ”in this game, if you’re a little guy, you’ll loose for sure. A survey conducted
by the Biological Farmers Association revealed that out of 27 out of the 39 respondents in-
tended to increase the size of their farms significantly (Table 6.4).
In response to the pressure to produce high volumes, the farmer uses quantities of plastic
sheeting and phosphate based fertilisers, without consideration for resource renewability,
the biodegradability of plastics, or the impact of phosphate run-off on the local environment.
This case study demonstrates how rules and conventions in the wholesale and distribution
nodes of the commodity chain are capable of exerting a strong influence over on-farm agro-
ecological practices, resulting in the dilution.
6.2.2 Case Study 2: Wombat Forest Organics

Wombat Forest Organics is located at the top of the Great Dividing Range, at Lyonville, mid-
way between Daylesford and Trentham, Victoria. The altitude (760 m) and cool climate area
make it ideal for the production of carrots and potatoes, which benefit from a reduction in the
number of diseases and pests. The property is named Wombat Forest Organics as one third
of the property is bordered by the Wombat State Forest. The Farm was established in 1890
and, until 1998, was engaged solely in the production of potatoes. Currently, Wombat Forest
Organics is run by a married couple in their 50s, and their 20 year old son. Wombat Forest
Organics specializes in the production of three crops: potatoes, carrots, parsnips for ship-
ment to wholesalers. In addition to the production of vegetables, 100 sheep and 100 head of
cattle are also raised on the property. Wombat Forest Organics has a total of 200 hectares of
farmland, of which 40 hectares are cultivated intensively for the production of vegetables.
Wombat Forest Organics is a highly capitalised farming operation with specialized machinery
for planting, harvesting and weeding. The farm also has three large sheds with cold rooms
so that produce can be stored for weeks, or in some cases months, prior to being shipped to
Table 6.1: Marketing outlets in organic vegetable, herb and nurs-
ery products
Market Outlet Percentage of Growers
Wholesale 50
Farmers’ market 18
Retail 14
Retail, local 7
Processor 7
Supermarket 3
Direct to public 2
the market. The turnover of Wombat Forest Organics in 2007 was approximately 1.8 million
dollars.
Prior to conversion to organic farming, the farm produced potatoes under contract to a soup
processor. As more and more potato farmers disappeared from the rural landscape and the
contract with the soup processor came to an end, the farm decided to convert to organic
farming as a means to stay on the land. At the same time, a local green grocer requested that
farm to produce organic potatoes, and after achieving initial success with growing organic
potatoes on a small plot of land, the farmers converted to organic farming and acquired or-
ganic certification with the National Association for Sustainable Agriculture Australia (NASAA)
in 1991. Unlike other other small hippy farmers in the region who had attempted organic
farming but soon gave up, Wombat Forest Organics found the conversion process relatively
easy. The farmers were ”professional” growers and so did not encounter any problems in
growing organic carrots and more importantly, given the scale of the property, the farmers
were able to take farmland out of the production of commercial crops to plant green ma-
nure crops without suffering a commensurate loss of income. Additionally, the farmers had
the capital to invest in specialized machinery and infrastructure necessary to be a successful
commercial organic grower. The farmers currently carry out the production of vegetables
on approximately 40 hectares of farmland. On 30 hectares of farmland, nine varieties of
potatoes are cultivated, and the remaining 10 hectares are devoted to carrot and parsnip
cultivation. On 7.5 hectares, two varieties of carrots are grown and, since the farmer is ex-
Table 6.2: Estimated mean proportion of organic produce sold as organic through different marketing
channels
Number of Consumers Intermed Processors Retailers
respondents iaries
Beef 84 14 39 29 19
Sheep and 29 14 36 23 41
goat meat
Pork 5 10 0 48 42
Poultry 7 22 23 0 41
Eggs 18 26 43 2 39
Milk 9 5 30 55 18
Cereals, 52 10 27 49 1
pulses
and oilseeds
Vegetables 119 21 65 1 18
Fruit and nuts 141 14 63 8 15
Source: Lockie and Halpin (2005).
perimenting with parsnip production for the first time, only 2.5 hectares are currently under
parsnip cultivation.
Wombat Forest Organics is heavily dependant on externally sourced organic fertilizers.
Regular soil analyes are carried out by and agronomist to determine the nutrients required,
and Wombat Forest Organic purchase customized fertilizer based on the results of the soil
tests. The fertilizer they currently use consists mainly of blood and bonemeal and guano.
One tonne of fertilizer is generally applied to each 0.5 hectares. In addition to fertilizers, soil
amendments are regularly applied. The price of the fertilizers used by Wombat Forest Organ-
ics has increased by 40 per cent since 2003, reflecting the shift from ready made fertilizers
to tailor made fertilizers. In order to continuously increase yields on the farm, the farmers
use more specialized fertilizers in greater volumes. In 2007, the farmers reported yields of
25 to 30 tonnes per 0.45 hectares for carrots and 30 tonnes for 0.45 tonnes for potatoes. With
a new fertilizer formula, the farmers are expecting to increase carrot yields to 50 tonnes per
0.45 hectares in the following year. The current potato yields of 30 tonnes per 0.45 hectares
Table 6.3: Organic farm production levels and projected change for selected products
Product category Estimated no. of Sample size Mean projected
organic change in
producers organic volume per
nationally producer
2005-2007
Beef 331 87 +28.2
Sheep and 118 31 +71.9
goat meat
Pork 19 5 +152.0
Poultry 27 7 +74.3
Eggs 68 18 +59.4
Milk 57 15 +40.7
Cereals, legumes 217 57 +36.3
and oilseeds
Vegetables 486 128 +89.2
Fruit and nuts 593 156 +95.7
Source: Lockie and Halpin (2005).
are double the yields on the farm when production was carried out by the farmers using
conventional farming methods.
In addition to using off-farm fertilizers, the farmer also grows green manure crops and
uses the manure from the cattle and sheep on the farm to build the fertility in the soil. Wom-
bat Forest Organics grow to the one-year-in-three system, which entails the planting and har-
vesting of carrots, followed by the planting of a green manure crop and then the subsequent
planting of another green manure crop. Green manure crops such as rye corn, oats, broad
beans and peas are grown at the end of summer and are ploughed into the soil at the end of
winter in preparation for the planting of carrots or potatoes.
Labour practices
Wombat Forest Organics employ two permanent workers and two regular workers that are
permanently ”on call” but who do not receive benefits such as holiday pay. Additionally,
the farm employs eight part time workers and a ”crew” of sixteen contract workers who
work as weeders for two months of the year. Since 1995, a labour contractor has supplied
the farm with Vietnamese workers. Each year the labour contractor supplies the farm with
a different crew of Vietnamese workers who either have seven months working visas as a
part of a government guest working scheme, or are undocumented workers. Although the
farm uses specialised weeding machinery, manual labour is still required to weed between
the rows of the carrots and potatoes. The eight part timers wash the produce and also plant
the parsnips since parsnips can not be planted mechanically. Wombat Forest Organics labour
costs in 2007, totalled 350 000 dollars. Wombat Forest Organics is currently considering using
a flame weeder so as to reduce the labour costs of weeding.
Marketing practices
Produce from the farm is sold directly to wholesale agents, of whom two are located in
Melbourne, two in New South Wales and one in South Australia. The interstate market for
crops in South Australia exists due to the lag in the harvest times for crops in South Aus-
tralia and the central highlands of Victoria. Between 1 to 1.5 tonnes of carrots and potatoes
are shipped to wholesale agents on a weekly basis. The wholesale agents forward the pro-
duce to supermarkets and speciality green grocers in their respective states, while the agents
in Melbourne also forward the produce from the farm to markets in Singapore. The agent
in New South Wales forwards the products to Woolworths, one of the largest supermarket
chains in Australia. The farmer does not want to ship produce directly to supermarkets,
stating that ”supermarkets usually try and finish us off and there is always someone to re-
place you after they finish you off.” The owners of Farm A cite time and labour constraints
as the main reason for not selling their produce through farmer’s markets.
Wombat Farm Organics has a verbal agreement with the wholesale agents. Before the
season starts, the farmer submits a letter of intent detailing the crops they plan to grow,
the likely volumes and the expected harvest periods. The price the farmer receives from the
wholesale agents does not fluctuate for the season, although the prices fluctuate each year. In
2005, the farmer received 22 dollars for an 18 kilogram box of carrots, however the farm-gate
price for a 18 kilogram box had increased to 45 dollars in 2007. The increase in farm-gate
price was due to the scarcity of carrots on the marketplace at that time, as other growers
were not able to cultivate carrots during the drought. The farmer is not as vulnerable to the
whims of the market as the other farmers interviewed in this study. The reasons the farmer
is able to have considerable control over the price of the produce are due to:
1. The farmer converted to organic farming in the early stages and was able to build up
a long-standing relationship with the wholesalers
Table 6.4: Farm size projections
Change Total responses Per cent of responses (%)
Significant Increase 39 27%
Marginal increase 20 14%
Remain similar 32 22%
Marginal decrease 3 2%
Significant decrease 12 8%
Not reported 41 28%
2. The farmer specializes in the production of carrots and potatoes and can produce large
volumes ensuring the consistent supply of high quality crops
3. The farmer had the capital to buy water from neighbouring farmers during the drought,
whereas less capitalized farmers were compelled to withdraw from the cultivation of
crops due to insufficient water supply.
Organic producers planned considerable expansion of their operations over the three
years following the survey with generally high levels of expansion forecast in the horticul-
tural industries.
Table Table 6.2 showed a common strategy for farmers across most of the product groups
was to sell a small proportion of their produce direct to consumers and the rest to a single
intermediary.
6.2.3 Case study 3: Keilor Valley Gardens

Keilor Valley Gardens is a family owned company that specializes in the production of organic
salad vegetables, based on 50 hectares of farmland approximately thirty kilometres from
the centre of Melbourne and the Melbourne Fruit and Vegetable Markets. The company,
which is the largest commercial grower of organic salad greens in Australia, grows, processes
and packages organic salad greens for shipment to wholesalers, retailers and supermarkets
throughout Australia. The farm produces three different salad mixes and twenty varieties of
head lettuce. The salad mixes are based on leafy vegetables from several different families
of plant species including brassicas, spinach and lettuce. Keilor Valley Gardens is a family run
operation with its antecedents in 1946, when the grandparents of the current manager of the
company immigrated from Greece and commenced farming in Australia. In 2007, the gross
income of Keilor Valley Gardens was 5 million dollars.
The farm obtained organic certification in 2007. Initially the company had planned to
run a mixed organic and non-organic farming operation. However after encountering dif-
ficulties running both conventional and organic operations, the owners decided to certify
the entire property. The company initially obtained organic certification when the manage-
ment observed ”organics is one of the fastest growing markets.” In practising conventional
farming, the company had found itself on a chemical treadmill:
We ended up becoming a dog chasing its tail . . . . We applied more and more
chemicals in the false understanding we would achieve better crops. Better yields
never eventuated and we needed to use more and more chemicals and our re-
liance on the chemical industry and big business became greater and greater. We
had to break from that vicious circle. . . .
The manager was also concerned about the health effects of the chemicals used on the
farm before conversion:
In spring, we would spray our salads with the chemicals every second day – it
was to keep them clean so there were no aphids, no thrips, nothing. They were
totally sterile and clean but I would not take home salads for my family. My wife
would ring me up and ask me to bring some – and I just wouldn’t.
Prior to the conversion of Keilor Valley Gardens to organic farming, the farm operated a
network of 45 conventional farmers who produced salad vegetables under contract for the
farm. However Keilor Valley Gardens dissociated from the network of farmers after conver-
sion to organic farming. Keilor Valley Gardens is currently considering the formation of a new
network of contract organic farmers to expand its supply organic vegetables and meet the
demand for organic salad vegetables as the market grows.
The farm has a high degree of dependence on off farm fertilizers. To improve the soil and
increase productivity, four tonnes of an organic fertilizer, Dynamic Lifter, manufactured by
Yates, is applied per hectare, and six tonnes of purchased compost is used per hectares. Blood
and bone, fishmeal and seaweed, are the main components of the organic fertilizer while
the compost is comprised of wood chips and food scraps from the food service industry.
In addition to using off farm fertilizers, Keilor Valley Gardens grows green manure crops to
improve soil fertility. Keilor Valley Gardens acknowledge that reliance on off farm fertilizer
and compost is too high, and aim to reduce their use when the soil biology improves. The
CEO of Keilor Valley Gardens stated that the company has adequate farm holdings to carry
out a well developed system of green manure crops and fallowing, however water shortages
resulted in the farm postponing implementing such a system.
Under normal circumstances, irrigation water is pumped by the farm directly from the
Maribyrumong River and sprayed via a fixed irrigation system which is operated by fully
programmable controllers. However, restrictions on the use of river water for irrigation due
during the extended period of poor rainfall have forced the farm to use the town water
supply for irrigation, increasing costs and resulting in chlorine damage to soil and crops.
As part of an integrated pest management plan dill, sweet alice and other herbs are
grown on the banks of the farm, around the fence lines and perimeters of the cultivated
plots so as to attract beneficial insects. Keilor Valley Gardens manages pests as an alterna-
tive to spraying them. ”If we have a few too many rabbits then the idea of managing this
pest would be to increase the numbers of foxes and that’s what we’re doing with beneficial
insects.” The company works with an entomologist to produce beneficial insects. Bacillus
Thuringiensis (BT) sprays and pyrethrum are used only in instances when pests can not be
otherwise controlled.
To reduce labour and time costs in handling in mixing the leaves after harvest, many veg-
etables are grown in the field already pre-mixed. However due to variations in the growing
conditions and growth rates of the vegetables included in the salad mixes, it is not possible
to plant all of the baby leaf salads premixed in this way.
The company has also acquired a mechanical harvester to cut the baby heads at the
ground with a rotating band saw blade, preventing damage to the leaves. After being cut
by the harvester, the leaves are transferred onto a vibrating conveyor system which culls
the smallest ones and sends the remainder through an air jump, so that rocks and dirt fall
away, then mists them with water and drops them into bins in which the greens are then
transported to distribution centres by refrigerated truck. According to the CEO of Keilor Val-
ley Gardens ”these measures are aimed at one goal; becoming the low cost producer [sic] of
organic salad vegetables.”
Marketing practices
Ninety percent of the salad vegetable mix produced by Keilor Valley Gardens is sold to re-
tailers, supermarkets, and wholesale distributors and the balance is sold to the food service
industry in the Melbourne area. At the time of this survey, 38 per cent of the total output of
Keilor Valley Gardens was sold as organic and 62 per cent sold as conventional produce.
The largest single outlet for Keilor Valley Gardens produce is the Coles supermarket which
the farm supplies with packaged and branded salad vegetables under an annual contract.
The contract with Coles supermarkets, specifies neither prices to be paid nor volumes to be
delivered, but allows Coles supermarkets to pay spot prices for as much produce as Keilor
Valley Gardens is able to ship to the supermarket chain’s distribution centres. Keilor Valley
Gardens aims to supply Coles with salad mixes sufficiently cheaply that the supermarket
can retail the organic produce supplied by the farm at prices only marginally higher than
the supermarket sells conventional salad mixes. The CEO of Keilor Valley Gardens informed
this study that the strategy of the farm management is to expand the market for organic
salad greens and to concentrate on the capture of market share rather than the organic price
premium:
We have a partnership with Coles. We are aiming to put organic products on their
shelves which is only marginally more expensive than the conventional produce.
We actually stand to make our profits from the volumes.
Since the producer contracts with Keilor Valley Gardens are entirely volume based, the
prices the farm receives are generally based on supply and demand. Although Keilor Valley
Gardens is able to control to some extent the prices of its salad mixes, the farm-gate price of
unprocessed heads of lettuce can fluctuate from ”one dollar one day to 4 dollars the next”.
Labour practices
The company employs 20 people on a permanent part time basis, and 8 people on a weekly
casual basis.
Packaging
Fifty percent of Keilor Valley Gardens produce is sold to supermarkets and retail outlets pre-
packaged under the farm’s Ladybird Organics brand name. The Ladybird Organics packaging
is produced under contract by manufacturer that supplies the farm with biodegradable pack-
aging created from corn cellulose. By packaging the produce under the farm’s own label, the
company attempts to build its brand recognition in the market for organic salad mixes and
to capture an increased share of the value produced along the commodity chain.
Capitalisation
Keilor Valley Gardens was one of the most highly capitalised farms encountered in this study.
The farm machinery includes sowing machines, mechanical weeders, and a washing, spin-
ning, sorting and bagging facility. The farm also has a sophisticated and expensive pumping
facility for irrigation.
Implications for conventionalisation
The agro-ecological and labour practices of Keilor Valley Gardens do not radically distinguish
this farm from the other organic horticultural producers included in this survey. Although
fairly narrowly focused on the production of a few salad greens and heavily dependent on
off-farm sources for fertilisers and composts, the farm had at the time of this survey had a
program for integrated management of pests by growing plants to attract beneficial insects.
In comparison with less capitalised growers within the highly competitive Victorian hor-
ticultural organic sector, the scale, capitalisation, and productivity of Keilor Valley Gardens
appears to provide the farm with additional resources to devote to improving the sustain-
ability of particular aspects of the farm operation.
Keilor Valley Gardens is notably distinguished from the other organic horticultural grow-
ers in this survey by its attempt to move up the value adding chain into processing, and
6.3. Conventionalisation in the Victorian organic horticultural sector 133
by the creation of a brand name under which Keilor Valley Gardens product are marketed.
By capturing additional value in the processing nodes of the commodity chain than other
producers, Keilor Valley Gardens is able to forgo the premium prices associated with organic
produce and focus instead on increasing volumes and capturing market share:
Small farmers have had a stranglehold on the industry and it has not been able
to flourish. Part of the stranglehold these small farmers had because of more
demand and low supply, they could demand as high a price as they wanted to.
The high-volume and low-margin strategies of Keilor Valley Gardens suggest the potential
exists for the more highly capitalised and commercially oriented operators to capture and
then monopolise the lucrative segments of the organic horticultural sector, to the detriment
of smaller scale and less capitalised producers. In a market where large scale and capitalised
producers have the ability to influence prices and lower premiums, smaller scale producers
may find that contract farming to be an attractive option as large scale producers seek to
diversify their risks:
As our business grows, we will spread our risks and contract growers. Our chal-
lenge is to supply all our customers with a continuous supply of product. Before
we are an organic grower, we are a business. We have to make a profit.
6.3 Conventionalisation in the Victorian organic horticultural sec-
tor
This section refers to the summary of the case studies in Table 7.4. Our survey of Victo-
rian organic horticultural producers found that growers operate in highly competitive long
distance markets. The growers receive spot prices, which frequently fluctuate from day to
day, thus increasing the pressure on producers to specialise in the production of a few crops,
to create economies of scale, and to adopt practices of organic farming that are largely and
sometimes exclusively input based. Paradoxically, it was the larger scale and more capital-
ized producers in the survey who were observed to have the latitude to use mixed cropping
patterns, to apply crop rotations, and to integrate crop and livestock production or practice
integrated pest management. In this highly competitive environment, the smallest and least
capitalised grower in the survey, who specialised in the production of a single crop so as to
secure sufficient economies of scale, was nevertheless forced to live from hand to mouth.
It has been argued that CSA arrangements, or sales at a farmers’ market would give
farmers better prices than mainstream outlets such as supermarket chains and wholesalers
(Kloppenburg, Hendrickson, & Stenvenson, 1996); (Hinrichs, 2000). Although in many in-
stances this may be the case, our survey of organic vegetables growers in Victoria found that
farmers who sold their produce through CSA arrangements and at farmers’ markets were
highly capitalised farmers, who sold produce to supermarkets at the same time as they sold
directly to the consumer. In these cases, the volume sold through the CSA and farmers’
markets was only a small percentage of the farmer’s total output and the surveyed farmers
were trying to grow the direct sales channels to the consumer, stating that by doing this,
they would have something to ”fall back on when the supermarket finished them off.” Fur-
thermore, the farmers who sell their produce at farmers’ market frequently do not attend
the markets themselves, but rather employ workers to do the packing, transportation and
selling of the produce at the markets. A recent survey carried out by the Biological Farmer’s
Association of 299 organic vegetable growers revealed that shipped 50 per cent of the farm-
ers shipped produce to wholesalers, and in comparison only two per cent of farmers sold
produce directly to the consumer.
Buck et al. (1997) observed a practice among larger scale and more successful operators
in the more mature Californian organic salad greens sector to spread their risks through
contract farming, and to focus their activity on the processing and marketing nodes of the
commodity chain. In the Victorian horticultural sector, it appears that the differentiation
between producers whose primary concern is in growing and operators who concentrate on
the processing and distribution nodes, remains comparatively less advanced or pronounced.
Chapter 7
An assessment of surveyed organic farmers
7.1 Introduction
In this chapter, we have identified criteria to assess conventionalisation. We examine for
evidence of conventionalisation by assessing the data collected in our case studies of or-
ganic farmers in the organic sector in Japan and Australia. To examine for evidence of the
process of conventionalisation we assess the structural characteristics, marketing practices,
the labour practices, agro-ecological practices, reasons for farming organically, the degree of
corporate dependence and the economic characteristics of the surveyed organic farms. We
draw on the study of certified and non certified farmers in Texas by Constance (2008).
136
Table 7.1: A comparison of surveyed farmers in Japan
F1 F2 F3 F4 F5 F6 F7 F8 F9 F10 F11
Year organic 1982 1983 1982 1983 1980 2005 1998 2002 1998 2004 2007
farming began
Area of farm(ha) 1.5 1.5 1.3 1.5 2 5 10 4 15 77 9.5
Ratio of organic 100 50:50 40:60 50:50 100 100 30:70 10:90 30:70 NA 100
conventional
farm
Crop diversity 60 60 60 50 80 12 6 6 30 2 15-16
On farm compost Yes Yes Yes Yes Yes Yes No No No NA No
Livestock No No No No Yes No No Yes No Yes No
Gross Income 12,000 10,000 10,000 8,000 7,000- 30,000 30,000 25,000 56,000 170,000 24,000
8,000
(000 yen)
Production costs 40 40 40 40 40 60 60 60 65 NA 120
(%)
No. of part time None None None None None 3 10 3 15 21 10
employees

7. An assessment of surveyed organic farmers
F1-F5 = Teikei Farmers, F6 = Sanbu Yasai Network F7-F9 = Watami Contract Farmer, F10-F11 = Watami Farm
F5-chickens, F8- cows, F11- cows and chickens

7.2. Assessment of surveyed farmers in Japan 137
7.2 Assessment of surveyed farmers in Japan

We compare the data collected from the surveyed Watami Farms and contract farmers with
the data collected from the teikei farmers presented in the previous chapters. This discussion
refers to the summary of the case studies in Table 7.1 and Table 7.2.
7.2.1 Farming history

The teikei producers in the study have been practising organic farming for significantly
longer than the contract producers and the Watami company farm, the operations of which
are recently converted organic farming.
7.2.2 Farm size

According to the bifurcation thesis, the non teikei organic farmer should be larger than
the teikei farmer. The research in Ontario (Hall & Mogyorody, 2001) and New Zealand
(Coombes & Campbell, 1998) supported this position, while the later work in Australia
(Lockie & Halpin, 2005) did not. Our study found that Watami Farm and the Watami con-
tract producers run significantly larger scale operations than do the teikei farmers in the
study.
7.2.3 Agro-ecological practices

According to the conventionalisation thesis, the non-teikei farmers should employ a ”di-
luted” form or be less agroecological than their teikei counterparts. The surveyed farmers
were assessed on the degree of adoption of agroecological practices. The criteria for these as-
sessments were selected in consultation with JOAA and with reference to Guthman (2004a)
and Altieri (1995). The criteria by which farmers were assessed included:
• crop diversity
• degree and extent of on-farm fertility management;
• degree and extent of on-farm compost management;
• degree of on-farm biological pest management;
• employment of innovative weed control practices such as mulching;
• employment of integrated crop and livestock production;
• seed saving
The collected data shows that the teikei farmers grow a greater diversity of crops than do
the contract producers and Watami Farm. Watami Farm and the growers operating under
138 7. An assessment of surveyed organic farmers
Table 7.2: Assessment of surveyed farmers’ practices in Japan
F1 F2 F3 F4 F5 F6 F7 F8 F9 F10 F11
1. Structural Characteristics
Farm size less than 2 hectares × × × × × ×
2. Reasons for Organic Production
Concern for the environment
Concern for own or family’s health
Buyers requested it × × × × × ×
Risk free opportunity presented itself × × × × × ×
Demand is out there × × × × × ×
Teikei consumers asked for it × × × × × × ×
3. Agro-ecological Practices
Crop diversity × × × × ×
On-farm fertility management 4 × × × × × ×
The use of on-farm compost × × × × ×
Weed control practices × × × ×
On-farm biological pest management 4 × × × × ×
Retention of seeds 4 4 × × × ×
Livestock × × × × × × × ×
4. Labour Practices
No use of wage labour × × × × × ×
Use of family labour × × × ×
5. Marketing Practices
No Contract × × × × × ×
Outside wholesale 4 4 4 × × ×
Direct to retail × 4 × × × × ×
Direct marketing outlet × × × × × × × 4 × ×
Restaurants × × × × × × × ×
Direct to consumers × × × × × ×
Produce sold near farm × × × × × ×
6. Degree of corporate dependence
Non corporate dependence × × × × × ×
7. Economic Characteristics
Gross income × × × × × ×
less than 10 million yen
Production costs less than 50(%) × × × × × ×
No intention to increase farm size 4 × ×
F1-F5 = Teikei Farmers, F6 = Sanbu Yasai Network, F7-F9 = Watami Contract Farmer, F10 = Watami Farm
(Setana), F11= Watami Farm (Kyotango)

Table 7.3: Estimated proportion of organic produce sold through different marketing channels by
Japanese farmers (%)
1 2 3 4 5 6 7 8 9 10
F1 30 0 5 0 30 0 0 30 0 5
F2 30 0 5 0 30 0 0 30 0 5
F3 30 0 5 0 30 0 0 30 0 5
F4 30 0 5 0 30 0 0 30 0 5
F5 75 11 0 14 0 0 0 0 0 0
F6 0 0 5 0 20 15 15 39 5 5
F7 0 0 0 0 0 10 0 30 60 0
F8 0 0 0 0 0 10 0 30 60 0
F9 0 5 0 5 0 30 10 0 35 15
F10 0 0 0 0 0 0 0 0 100 0
F11 0 0 0 0 0 0 0 0 100 0
Key 1= Teikei Consumer, 2= Direct Marketing Outlet, 3= Speciality Shop, 4= Restaurants,
5= Consumer Co-ops, 6= Wholesale 7= Supermarkets 8= Third Party Distributors, 9 =
Food Service Industry, 10 = Other
contract to Watami and consumer cooperatives have specialised in the production of the
crops required in largest quantities by the consumer retailers and food service sectors. The
farms controlled by Watami have specialised in the production of crops that are particularly
easy to grow.
In Table 7.2, a grower who cover crops and purchases fertilizer from a supplier receives
a triangle, whereas a grower who provides all the farm’s fertility needs though on-farm
recycling and cover crops would receive a circle. A grower who purchased all fertility inputs
and took no affirmative steps to build fertility without dependence on off farm inputs would
receive a cross. Non teikei farmers plant few plant cover crops; instead they use purchased
fertility inputs. These farmers are tied to production contracts and thus do large plantings of
a single crop. While implementing a biological pest control of sorts, they do not plant non-
cash crops to act as trap crops, beneficial insect harbors, or fertility enhancements. These
non teikei farmers also had a greater dependence on plastic mulch to control weeds.
In this survey, the farmers that come close to the agroecological ideal are teikei farmers.
Their integrative production style is very much intertwined with their marketing strategy.
Direct marketing, through teikei arrangements, requires as diverse a crop mix as possible.
Additionally teikei farmers made a greater attempt to use seeds from their farms or that have
been obtained from an exchange with other teikei farmers.
In summary, the company farms and contract producers are distinguished from the teikei
producers by their relatively specialised cropping patterns and their heavy reliance on off-
farm fertilisers, composts and soil amendments. These farming practices which are depen-
dant on external inputs have been referred to as Organic ’Lite’ (jun yuuki nougyou) and
input dependant organic farming (shizai izon gata) by K. Nishimura (2007) and as shallow
and superficial by Masugata (2009). Masugata counterposes the organic farming techniques
which have emerged since the implementation of Organic JAS standards with the practices
of the organic farming movement.
7.2.4 Livestock
The study sought to determine whether there were differences in the extents to which the
different growers integrated livestock and crop production. Conventionalisation would sug-
gest that non teikei farmers specialized in crop production without a livestock component
(Hall & Mogyorody, 2001), our research does not lend support to this claim. Whereas as one
contract producer in Yuuki Seikatsu Aya and Watami Farm in Setana have both mixed live-
stock and crop operations, only one of the five teikei producers in the study currently raises
any livestock. The four farmers in Tsuchi to Midori no Kai, who did not keep any livestock
at the time of this study, had raised chickens until they were recently compelled to abandon
the practice by the closure of a local poultry abattoir. It is important to note that given that
the operation of organic farms is carried out on comparatively small acreages, the incorpo-
ration of livestock on organic farms has not been considered an important precept in organic
farming in Japan.
The research from California reports that the conventional organic farms employ more non-
wage labour than non-conventional organic farms, while the Ontario study notes no differ-
ence in labour use patterns, but a high dependence of family and non-wage labour by all
organic farm types. Our study found that while both teikei and non teikei farmers relied
on family labour, the relatively large scale operations of the contract growers and Watami
Farm are dependent on part-time and casual labour, whereas the small scale operations and
diversified cropping patterns allow the teikei growers to operate without the use of off-farm
labour. Further teikei farmers surveyed for this study stated that they were relunctant to use
contract labour, which is consistent with the original aims of the organic movement in Japan.
These findings support the conventionalisation thesis.
7.2.6 Marketing practices
While conventionalisation is predicted to lead to a bifurcation of market activity whereby

the lifestyle producers focus on direct markets and the conventional producers sell in indi-
rect markets, the literature is split on this point. Research from California and New Zealand
found this type of bifurcation while that in Ontario and Australia did not. To test this mar-
ket bifurcation assertion, farmers were first asked whether they rely on contracts or not.
Secondly the marketing arrangements of each grower were identified.
Marketing arrangements that do not rely on contracts may be beneficial to the farmer.
Via contracts, a farmer is often tied to produce specific crops or fixed volumes. In Table 7.2
farmers who are not tied to contracts are given a circle. Likewise farmers who ship produce
outside of wholesale markets are given a circle. A grower who ships produce by default (ie
if produce is not absorbed by the buyer) is given a triangle.
Marketing arrangements that are de-linked from the market such as teikei, restaurants
and direct marketing outlets may benefit growers and therefore farmers shipping produce to
these direct outlets are assigned a circle. Teikei arrangements allow growers to exert greater
control over what crops they grow and how they grow them, and also to capture a higher
proportion of crop value. In Japan for farmers, restaurants are also an important group of
buyers. The farmers interviewed for this study, supply produce directly to the restaurants.
The restaurants are not particular about what crops or varieties they desire, rather the grower
supplies the restaurants with a box of seasonal vegetables. Since the produce is used in the
restaurants, the produce that does not meet the high aesthetic requirements of the market-
place can be absorbed by the restaurants. Some growers also supply direct marketing outlets
with their produce. This means of marketing is also considered to be beneficial to the farmer
since the farmer is able to capture a higher proportion of crop value.
Tied to the bioregionalist critique of agricultural industrialization, claims about locality
of organic markets abound in organic discourse. From an agroecology perspective, shipping
food too far from the farm is energy intensive and contradicts the ideal of recycling energy
on or near the farm. Farmers in the survey who ship produce within the same locality or
prefecture as the farm are assigned a circle. Farmers who ship produce outside the prefecture
were assigned a cross. Although the literature on conventionalisation is thin on the topic of
food mileage, we found it was an important criteria for assessing the conventionalisation
process in Japan. Our results showed that there was a food mileage bifurcation between non
teikei farmers and teikei farmers.
In summary, our findings support the conventionalisation thesis. Teikei farmers sell a
significant proportion of produce to direct markets, while non teikei producers sell produce
in non direct markets (Table 7.3). Teikei farmers have more control over their marketing prac-
tices than contract producers, although as a result of a decrease in the number of consumers
participating in teikei arrangements, teikei farmers are gradually becoming integrated into
commodity food chains. Furthermore, the food mileage of produce from the farm to the
consumer is greater under non teikei marketing arrangements.
7.2.7 Degree of corporate dependence
Organic farming in Japan was seen as a means of allowing farmers to farm without depen-
dence on off farm capital, which was increasingly appropriating a growing proportion of
profits in the agricultural sector through the supply of inputs and the control over the pro-
cessing, distribution and marketing nodes of the food commodity chains (Kubota, 2008).
Surveyed farmers who attempt to utilize on farm resources, or materials from nearby the
farm as compost and fertilizers, and sell produce directly to consumers, local marketing
outlets, restaurants and outlets which give farmers control over the crop and volume to be
shipped and enable farmers to operate independently from market structures are assigned
a circle. Farmers who purchase ready made compost and fertilizer and ship produce to
downstream processors via contracts are assigned with a cross. Our findings suggest that in
assessing the conventionalisation thesis in Japan, the criteria of corporate control is impor-
tant given that operating independently from market structures and agribusiness dominated
commodity chains was central to the early organic farming movement.
7.2.8 Gross income and production costs
According to the conventionalisation thesis, the non teikei type organic farmer should have
greater gross incomes than the non teikei farmers. The research in Ontario (Hall & Mogy-
orody, 2001) and New Zealand (Coombes & Campbell, 1998) supported this position. Eco-
nomic bifurcation is significant with teikei farmers reporting 1 million or less in annual gross
organic sales while non teikei organic farmers reported more than 1 million yen. Low depen-
dence on off-farm labour may partially account for the low ratio of production costs to gross
income of the teikei growers in comparison with Watami Farm and the contract producers.
In summary, the polarization between the two groups regarding gross incomes supports the
conventionalisation thesis. However these results do not lend support to the California re-
search that the ”non-conventional” farmers are relegated to more marginal markets as part
of conventionalisation.
7.2.9 Reasons for organic production
The literature posits that conventionalisation will lead to a dilution of the ”deep organic”
philosophical underpinnings of organic organic production. The California research and the
early research in New Zealand and Australia supported this position. Although the Ontario
study found no difference on the philosophical motivations between the conventional and
lifestyle groups, a significant divergence was noted regarding economic orientation. Like-
wise, our research showed that while both teikei and non teikei farmers displayed a strong
concern for the environment and for their own or family’s health, non teikei organic farmers
showed a stronger economic orientation.
7.3. Assessment of surveyed farmers in Australia 143
7.2.10 Intention to increase farm size

Although two of the non teikei farmers reported that they would like to increase farm size,
the remaining farms did not have plans to increase farm size. Following the conventionalisa-
tion thesis, the non teikei farmers should be more likely to have expansion plans compared
with teikei farmers however we found that a significant number of both teikei and non-teikei
farmers stated that given time and labour constraints they could not expand farm size.
7.2.11 Summary
In summary, our research in Japan found that the ”teikei” versus ”non teikei” dichotomy
is another approach to the investigation of the conventionalisation thesis. Our research in
Japan provides support for the conventionalisation thesis. The surveyed non teikei farm-
ers are larger in farm size and have greater gross incomes from organic farming, use indi-
rect markets, and are economically motivated compared with their non-teikei counterparts.
They rely on part time and casual labour and practise a ”diluted” form of organic farming.
They are integrated into commodity chains controlled by off-farm capital to a greater degree.
However, there are no significant differences between the two groups regarding integrated
livestock and crop production and only a marginal difference in intentions to expand farm
size.
7.3 Assessment of surveyed farmers in Australia

In this section we analyse the data collected from the surveyed organic horticultural farmers
in Victoria which is summarised in Table 7.4 and Table 7.5. We attempt to discuss the con-
ventionalisation of the Australian organic sector by drawing on the present study as well our
findings in the study of organic grain and legumes farmers in the Darling Downs. We also
refer to the Lockie and Halpin (2005) empirical assessment of the Australian organic sector.
Lockie and Halpin (2005) conclude that their research in Australia provides some support
for the conventionalisation thesis but their research does not support bifurcation.
144
Table 7.4: Assessment of surveyed organic horticultural and grain and legume farmers in Australia
F1 F2 F3 F4 F5 F6 F7 F8 F9 F10 F11 F12 F13
Year organic 1990 1998 2007 1987 1999 1998 1990 1964 1997 2000 2006 1990 2003
farming began
Area of farm (ha) 5 200 50 147 520 782 416 2,530 1,676 413 26 455 256
Ratio of organic 100 100 100 100 100 100 100 100 100 100 100 100 100
conventional
farmland
Crop diversity 1 3 5 5 3 3 6 5 2 3 1 4 3
Livestock 0 Cows 0 Cows 0 0 Cows Cows 0 0 0 Cows 0
Gross Income 50 1,800 5,000 100 300 350 200 1000 50 300 50 300 200
(000 AUD)
No. of part time 3-4 26 28 0 10 7-8 0 0 0 6-7 3 5 5
employees
Source: Data collected in case studies.
F1-F3 Organic horticulture producers, F4-F13 Organic grain and legume producers
Although F8 does not use part time employees he is dependent on a sharecropper.

7. An assessment of surveyed organic farmers
7.3.1 Agro-ecological practices

In our study the three surveyed farmers engaged in organic horticulture production were
found to specialise in the production of a few crops, to create economies of scale, and to
adopt practices of organic farming that are largely and sometimes exclusively input based.
However, paradoxically, it was the larger scale and more capitalized producers in the sur-
vey who were observed to have the latitude to use mixed cropping patterns, to apply crop
rotations, and to integrate crop and livestock production or practice integrated pest manage-
ment. In this highly competitive environment, the smallest and least capitalised grower in
the survey, was found to specialise in the production of a single crop.
The survey of organic grain and legume producers indicates that a wide differentiation in
the degree to which farmers in the sector incorporate the agro–ecological precepts assessed
in the study. In particular, it was found that agro–ecological practices varied strongly with
the elapsed period since conversion to organic farming, and that farmers who have been
practising organic farming for longer tend to have taken more affirmative measures to cre-
ate integrated on-farm nutrient cycles and to have a lower dependence on off–farm inputs,
including fertilisers, compost and manure. Recently converted farmers in the survey tended
to have more restricted patterns of land use than the earlier entrants to the sector. Notably
in the survey, the early converts to organic farming have mixed livestock and crop farms,
enabling them to rotate land between livestock and crop production, whereas newcomers to
the sector tend to devote their land to the production of a more limited number of high value
field crops. Thus, as Buck et al. (1997) also observed in the context of the Californian organic
salad vegetable commodity chain, larger organic farms which are recently converted from
conventional tend to specialise in the production of a few high-growth, high-value crops,
and are more likely to follow production patterns similar to those found in conventional
agriculture.
The two longest established organic farmers practice the most diversified crop rotations
and land use patterns of the farmers in the survey cohort. Newer entrants to the sector have
less diversified cropping patterns.
As noted above, the survey indicates that the earlier entrants to the organic sector tend
to have more diversified land use patterns, including rotations between fodder and green
manure crops, livestock grazing and high-value field crops. It may therefore be expected
that the mixed organic farms in the survey with diversified land use patterns are less likely
to depend on off–farm inputs to maintain soil fertility, an expectation which is indeed borne
out.

The three organic horticulture farmers in the survey are dependent on hired labour. The
farmers use contract and casual labour on a seasonal or task basis to perform duties that
include weeding in addition to the task of harvesting. Since all three farmers specialize in
either the production of a few crops, or in the case of the tomato grower, one crop over a
large acreage, the tasks of intensive weeding or harvesting are required to be carried out
Table 7.5: Assessment of surveyed farmers’ practices in Australia
F1 F2 F3 F4 F5 F6 F7 F8 F9 F10 F11 F12 F13
1.Reasons for Organic Production
Concern for the environment 4 4 4 4 4 4 4 4
term viability of property
Concern for own or family’s health 4 4 4 4 4
Potential to increase increase income 4 4 4 4 4 4
Requested by buyers 4 4 4 4 4 4 4 4
Risk free opportunity presented itself × × × × × × × × × × × ×
2.Agro-ecological Practices
Crop diversity × × × 4 × 4 4 4 × × × × ×
On-farm fertility management × 4 4 4 × × × × × ×
The use of on-farm compost × 4 4 4 × × × × × ×
Employment of innovative weed × 4 4 4 × × × × × ×
control practices
On-farm biological pest × 4 × × × × ×
management
Livestock × × × × × × × ×
3.Labour Practices
No wage labourers × × × × × × × × × ×
4.Marketing Practices
No contract × × × × × × × × × × × × ×
Direct to retail × × × × × × × × × × × × ×
Direct marketing outlet × × × × × × × × × × × × ×
Restaurants × × 4 × × × × × × × × × ×
Direct to consumers × × × × × × × × × × × × ×
Produce sold near farm × × × × × × × 4 × × × × ×
5.Economic Characteristics
Gross income less × × × × × × × × × × ×
than 50 000 (AUD)
Production costs less × × × × × × × × × × × × ×
than 60%
No intention to increase farm size × × × × × × × × × × × × ×
Source: Data collected from case studies
F1-F3 Organic horticulture producers, F4-F13 Organic grain and legume producers
Table 7.6: Estimated proportion of organic produce sold through different marketing channels by
Australian producers (%)
Consumer Direct Local Wholesale Restaurant Processor S.market
sales Retail
F1 0 0 0 100 0 0 0
F2 0 0 0 100 0 0 0
F3 0 0 5 50 5 0 40
F4 0 0 0 0 0 100 0
F5 0 0 0 0 0 100 0
F6 0 0 0 0 0 100 0
F7 0 0 0 0 0 100 0
F8 0 30 0 0 0 70 0
F9 0 0 0 0 0 100 0
F10 0 20 0 0 0 80 0
F11 0 0 0 0 0 0 0
F12 0 0 60 0 0 40 0
F13 0 0 0 0 0 100 0
Key: F1-F3 Organic Horticultural Producers, F4-F13 Organic Grain and Legume Produc-
ers,
S. Market = Supermarket
in short bursts and are not be staggered throughout the year. On all three farms, itinerant
migrant workers are employed to fill this demand for short term labour.
Seven of the ten farmers in the survey employ hired labour, and one of the farmers in
the survey has a sharecropper on his land. The farmers use contract and casual labour on a
seasonal or task basis to perform duties that include weeding, which is particularly labour
intensive and made necessary by the prohibition of chemical herbicides on organic farms,
in addition to tasks such as harvesting and general farm maintainance. At the time of the
survey, none of the farms had any full-time employees except Producer 7 who, in addition
to using seasonal labour employs a “farm manager” whose regular duties include operating
farm machinery, planting and harvesting and general farm maintainance. Producer 4 uses a
range of expensive specialised equipment to perform otherwise labour intensive tasks such
as weeding and thus avoids the use of wage labour on his property altogether.
Although our conclusions are constrained by the size of the survey and the fact that the
farmers in the survey frequently appeared reluctant to be specific about their labour prac-
tices, the survey suggests that the sector is at best indifferent to questions regarding labour
and capital. Notably, farmers did not appear reluctant to use contract labour, a form which
gives workers less security and a weaker negotiating position than does full-time employ-
ment; nor did any of the farmers in the survey indicate that their labour practices differ
from the labour practices of their conventional counterparts, or that their labour practices
have changed for the better in any way since conversion. From the point of view of organic
farming as a social movement, it is highly significant that the certification standards and
procedures are indifferent to the labour question.
7.3.3 Marketing practices
None of the three organic horticultural producers surveyed for this study handled their own
marketing and did not actively participate in sales activities beyond arranging contracts
with wholesalers or supermarkets. All three growers were tied to production contracts with
wholesalers or supermarkets, although Keilor Valley and Wombat Forest Organics can pre-
sumably make up for the various handling fees and other extraction in sheer volume of sale.
Though a survey of this size cannot yield data sufficiently detailed to determine whether
farmers in the sector as a whole have control over their marketing practices, the 2007 BFA
survey of horticultural producers showed that on an acreage basis 80 per cent of organic
growers ship their produce through wholesalers. The production contracts with wholesalers
or supermarket revealed in this survey is a far cry from the control and immediacy assumed
to be intrinsic to organic markets. Our findings in this survey are consistent with our find-
ings from the survey of organic grain and legume producers. Likewise (Lockie & Halpin,
2005) found there was no significant relationship between size and type of market channel
and across all commodity groups, farmers sold the bulk of their produce to indirect markets.
Similarly the ten organic grain and legume farmers in the survey did not handle their
own marketing nor did they actively participate in sale activities beyond arranging contract
with processing entities (Table 7.6). The farmers in the survey, with the exception of Pro-
ducer 4 who is in the process of acquiring a grading and grinding mill, supply raw materials
to processors in the form of un–graded un–milled grains and legumes. Processing and ship-
ping entities which acquire un–processed grain and legumes from the organic farmers in the
survey are linked contractually or otherwise to manufacturers of speciality products in do-
mestic and international markets. Thus the substantial value adding which sector produce
undergoes between the farm gate occurs in nodes where control is exercised by non–farm
capital. Though a survey of this size cannot yield data sufficiently detailed to determine
whether farmers in the sector as a whole retain a significantly higher proportion of the final
value of their product than do non-organic grain and legume farmers, it is doubtful that the
higher prices paid by consumers for processed organic grains and legume products translate
solely to higher farm gate prices for raw materials and a lower rate of profit for post-farm
gate processing, distribution and marketing entities.
7.3.4 Reasons for organic production

Our research of organic grain and legume producers and horticultural producers found that
while longer standing organic producers were less likely to farm organically for economic
reasons, there was no significant difference between the groups regarding ideological orien-
tation and concern for the environment.
7.3.5 Intention to increase farm size

Consistent with the findings of (Lockie & Halpin, 2005) we found that all organic horticul-
ture farmers and organic legume and grains producers surveyed had expansion plans. We
found no evidence of increasing polarization into expanding large operations and marginal
operations; both types planned to increase. The overall expansion argument does fit the
”agro-industrialization thesis” (Guthman, 2004a).
7.3.6 Summary of surveyed farmers in Australia

Our findings in Australia support the conventionalisation thesis but not bifurcation. Al-
though we found differences in the agroecological practices between the new entrants and
the organic producers of longer standing in the organic grain and legume sector, and be-
tween large scale and small scale organic farmers in the horticulture sector, there are no
significant differences observed in labour practices and in marketing practices.
Chapter 8
Discussion and conclusion
Our study suggests that Japanese organic farming is characterised by a bifurcation between
producers and consumers that operate within teikei systems, and more recently converted
contract producers who operate largely within supply chains established by agri-business
corporations, third-party distributors, and consumer cooperatives. Australian organic farm-
ing on the other, does not have a significant basis outside of organic farmers who are em-
bedded in commodity chains that supply the retailing and processing sectors with organic
produce. Our study suggests that unlike the Japanese organic sector, a bifurcation between
farmers involved in small production under CSA arrangements on the one hand, and spe-
cialised large production for mainstream marketing outlets on the other does not exist in the
Australian organic sector.
Whereas Japanese organic farming has origins in sanshō teikei systems that represented an
attempt by alliances of economically and politically marginalised farmers with urban con-
sumers to de–link from the increasingly industrialised Japanese postwar agricultural system,
organic farming in Australia generally appeared an attempt by elements within the domi-
nant agro–food system to add value while remaining within the framework of the conven-
tional agro–food system. For these reasons, the patterns of distribution of organic produce
in Australia are influenced by the same factors that shape the distribution of non-organic
produce.
1. Like their conventional counterparts, organic farmers are unable to supply their pro-
duce to end consumers without intermediate distributors such as wholesalers or su-
permarket chains since, due to historical and geographical factors, direct links between
farmers and consumers are usually tenuous and frequently non-existent.
2. Australian organic vegetable farmers who produce under contract to retail outlets, par-
ticularly supermarket chains, produce under volume based contracts where the retailer
takes the produce at “spot” or “market” prices quoted by the retailer.
3. Australian organic vegetable farmers who supply wholesale markets, rather than re-
tailers, can only rely on the wholesaler to secure a “reasonable” price for their produce,
dependent on the market conditions at the time.
4. Organic vegetable producers in Australia are therefore embedded in commodity mar-

kets as suppliers of largely unprocessed raw materials to processors, wholesalers and
distributors.
152 8. Discussion and conclusion
Our study suggests that the agro-ecological practices of producers in the Japanese or-
ganic sector appear to be substantially distinguished according to whether they operate
within the teikei systems that pre-date the JAS organic standards, or within the recently estab-
lished corporate-organised systems of organic production, marketing and distribution. The
contract producers and company farms included in this study were found to have a sub-
stantially higher dependence on off-farm inputs such as fertilisers and composts than any
of the teikei produces surveyed. Additionally, while none of the corporate farms or contract
producers practised mono-cropping, each of these farms had lower crop diversities than any
of the surveyed teikei producers. Even in those instances in which the corporate farm or con-
tract producers did grow a variety of crops, this survey found that much of the land area of
the farm in question was accounted for specialised production of two crops in high demand
with the major downstream processor and distributor.
In contrast, the agro-ecological practices of producers in the Australian organic grain and
legume sector do not appear to be substantially distinguished according to scale of produc-
tion. Both large scale and small scale Australian organic grain and legume growers in this
study were observed to be dependent on agri-business for the supply of farm inputs, partic-
ularly fertilisers, composts and seeds. Differences in the degree of dependence on off farm
inputs were observed between the new converts and organic farmers of longer standing in
the organic grain and legume sector. In the study of Australian organic horticultural sector,
although differences in the agro-ecological practices of producers were observed according
to scale of production, all farmers had a high degree of dependence on off-farm inputs, par-
ticularly fertilisers, composts and seeds.
Our study found that the labour practices of producers in the Japanese organic sector
are substantially distinguished according to whether they operate within teikei systems or
corporate-organised systems of organic production. The relatively large scale operations of
the contract growers and Watami Farm were observed to be dependent on part-time and
casual labour, whereas the small scale operations and diversified cropping patterns allow
the teikei growers to operate without the use of off-farm labour.
The survey of Australian organic farmers suggests that the sector is at best indifferent
to questions regarding labour. Notably, farmers did not appear reluctant to use contract
labour, a form which gives workers less security and a weaker negotiating position than does
full-time employment; nor did any of the farmers in the survey indicate that their labour
practices differ from the labour practices of their conventional counterparts, or that their
labour practices have changed for the better in any way since conversion. From the point of
view of organic farming as a social movement, it is highly significant that the certification
standards and procedures are indifferent to the labour question.
By contrast with the Australian organic sector which is largely based on product differen-
tiation and value adding within the confines of the conventional agro-food system, Japanese
organic farming has roots in the social movements that contained a critique of the conven-
tional capitalist agro-food system. The growth in the proportion of women employed in non-
household wage labour, which began to reveal the limitations of teikei movements, occurred
at the same time as a diffusion into the broader Japanese society of the social movements’
153
critique of the post-war Japanese agro-food system. The diffusion of the critique of conven-
tional agriculture and the limits placed on the teikei systems by the increase in the number of
women employed in wage labour, allowed for the emergence of forms of organic agriculture
that were based on de-linking the questions of consumer health and food safety from the
social movements’ critique of the existing agro-food system. By the mid 1990s the expansion
of the Japanese organic production was principally occurring through the establishment of
production networks, parallel to and independent of the teikei systems, by third party dis-
tributors and consumer cooperatives. Unlike growers operating in sanshō teikei systems, the
newly converted farmers who produced under contract for the consumer cooperatives and
third-party distributors did not have direct links with consumers. The lack of direct links
between these producers and the consumers required the farmers to produce to in–house
standards established by the distributors and cooperatives. This trend towards organic pro-
duction outside the sanshō teikei systems accelerated after the institution of the JAS organic
standards in 2001, which enabled interests from the food services and retail sectors to estab-
lish sizeable networks of organic contract growers and corporate organic farms.
The implementation of JAS organic standards has resulted in a rapid growth in the off-
shore production of organic produce, a stagnation or decline of teikei groups and has pro-
vided off-farm capital with the opportunity to penetrate near and off-farm activities in the
Japanese organic sector.
Since their institution in 1992, our study has shown that the Australian organic standards
have facilitated the growth of domestic and international markets for Australian organic
produce and also enabled Kialla Pure Foods to expand into the processing and supply of
organic off-farm inputs. However, this study did not find vertical integration of the off farm
nodes of the organic horticultural commodity chains. Instead, supermarket chains, which
are the most highly capitalized actors in the organic horticultural sector, have so far restricted
their activity in the off-farm nodes of the sector to processing and distribution of organic
horticultural produce. Corporate dominance in the off-farm nodes of the horticultural sector
has therefore not been accompanied by vertical integration.
This study suggests that in establishing the right to market farm inputs as certified or-
ganic, the JAS organic standards have provided off-farm capital with the opportunity to
penetrate near and off-farm activities in the Japanese organic sector. One of the largest pro-
cessor and distributor of organic vegetables in Japan has also established itself as a supplier
of certified organic farm inputs and, in doing so, placed its contract growers in a position
where they are informally obligated to purchase inputs such as fertilisers, seeds, seedlings
and packaging from its supply network. The Japanese organic growers producing for the
corporate-organised organic commodity chains in this study were observed to be signifi-
cantly more dependent than their teikei counterparts on the agri-business for the supply of
farm inputs. On the other hand, Japanese organic producers working within corporate-
organised organic commodity chains were observed to be comparable with the Australian
organic producers in the extent of their dependence on off-farm inputs, particularly fertilis-
ers, composts and seeds.
Vertical integration of agro-food production, so that a monopsonistic purchaser of farm
outputs also supplies critical inputs, or through contract arrangements that links the grower
into a loop of inputs and outputs has been associated with increased corporate control over
the farming process and ”proletarianisation” of the grower (Lewontin, 2000). The instances
of contract farming accompanied by vertical integration of off-farm activities observed in
the Japanese organic sector in this study do not exhibit the same extent of corporate control
over the farming process as the cases of contract farming in the broiler chicken and tomato
canning sectors cited by Lewontin (2000); however there are parallels between the Japanese
conventional agricultural sector, wherein the JA Cooperatives acted as a monopoly supplier
of farm inputs and buyer of farm products, and the emergent Japanese organic food com-
modity chains in which a single agribusiness acts as both a major supplier of farm inputs
and a dominant force in the marketing and distribution nodes. Through vertical integra-
tion, the corporate agro-food chains in the Japanese organic sector have notably reproduced
characteristics of the Japanese conventional agro-food system, albeit on a smaller scale and
with a lesser degree of concentration of control over the supply and distribution nodes of
the agro-food system.
In addition to providing insights into the differing trajectories of the organic sectors in
Japan and Australia, the results of my research on Japan can be interpreted in terms of the
studies by Friedmann and McMichael (Friedmann, 1993; McMichael 2000, 2005) on the emer-
gence of a corporate food regime. Friedmann has made the case that the mercantile- indus-
trial food regime that was centered on the disposal of US agricultural surpluses, and the
adaptation by recipient countries of modes of agri-food production and consumption that
first appeared in the US in the post war period, including the food commodity complexes
based on mass produced and undifferentiated durable products, is being replaced by a bifur-
cated green capitalist food regime, which selectively appropriates demands of the various
social movements that mobilized around issues of environmental and food health and safety
during the mercantile industrial regime. The bifurcation in the emergent food regime corre-
sponds to the continued production, of standardized food commodities are a legacy of the
mercantile industrial food regime, and the establishment of corporate controlled agri-food
supply chains regulated according to privatize quality standards in excess of the minimal
public standards.
8.0.7 Implications of this study

Organic farming in Japan arose from social movements which articulated the dissatisfaction
of consumers and producers with the postwar industrial agro-food system. The bifurca-
tion observed in the Japanese organic sector today suggests that the demands of these social
movements for a socially and ecologically sustainable agro-food system, are being appro-
priated to underpin the growth of burgeoning niche markets in differentiated products. In
Australia, this study suggests organic farming emerged largely as a differentiated and value
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A Comparison of The Conventionalisation Processes in The Japanese and Australian Organic Sectors

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A Comparison of The Conventionalisation Processes in The Japanese and Australian Organic Sectors

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A Comparison of the Conventionalisation Processes

in the Japanese and Australian Organic Sectors

Supervisors: Professor Riichiro Iizawa and Professor Shuji Hisano

2 Rural Transformation in Japan 11

3 The Organic Sector in Japan 25

3.4 Organic certification and standards . . . . . . . . . . . . . . . . . . . . . . . . . 29

4 Watami Co. Ltd and the Organic Sector 65

5 Organic farming and agribusiness capital in the Darling Downs 97

5.7.4 Sharecropper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113

6 Organic farming and agribusiness capital in Victoria 121

7 An assessment of surveyed organic farmers 135

8 Discussion and conclusion 151

1.1 Conventional agro- food chains

1.2 Social movements and the agro-food system

1.2.1 The teikei movements

1.2.2 Local food and chisan-chiso movements

1.2.3 The organic movement

1. “appropriationism,” whereby off–farm capital usurps farm processes and reconfigures

3. “agro–ecological enfeeblement” where organic agriculture ceases to be substantially

4. “socio–political enfeeblement,” whereby social relations that are characteristic in con-

versus movement (Goodman, 2000); productivist/reductionist versus movement; ”productivist/reductionist”

1.3.1 Organic standards and certification

1.3.2 Agribusiness capital and the organic sector

4. the effect of national standards on the conventionalisation of the organic sector.

1.6 Outline of chapters

2.2 The mercantile-industrial food regime

2.3 Japanese agriculture under the mercantile-industrial food regime

2.4 The crisis of the mercantile-industrial food regime

2.5 Towards a green-capitalist food regime?

2.6 Corporate restructuring of Japanese domestic agricultural pro-

imported produce. Thus corporate farming domestically is variously distinguished from

2.6.1 Corporate farming bodies

Table 2.3: Types of business operation and corporations engaged in agriculture

Table 2.4: Number of off-farm corporations engaged in each agricultural sphere

Table 2.5: Farmland area leased to corporations (ha)

Table 2.6: Number of farmers over 65

3. regionally based companies financially dependent on government spending for public

2.6.2 Food service industry

2.6.3 Construction company interests in agriculture

scale difficult to achieve, construction companies rely on value–added agriculture to secure

3.2 Sanshō teikei: a response to the crisis of the conventional agro-

(i) The production of good quality and safe food.

(ii) Protection of the environment.

(iv) Local self sufficiency and local circulation.

(v) Building healthy soil matter.

(vi) Preservation of the bio-diversity of nature.

(vii) Guarantee of the rights of labour.

(viii) To advance organic farming through amicable relationships between producers.

In as much as it is possible to generalise, the archetypal teikei consisted of a farmer, or

3.3 Third-party distributors and the displacement of sanshō teikei

3.4 Organic certification and standards

1. the principle of domestic and local food self-sufficiency;

2. the agro-ecological principle of integrated farms based on poly-cropping;

3. utilisation of local and and on-farm resources;

4. restoration and maintainance of regional biodiversity;

5. repudiation of recombinant DNA technology;

6. reassessment of traditional farming techniques;

7. realisation of independent and cooperative labour in agriculture;

8. teikei or cooperation between consumers and producers.

6. Since a farmer seeking to produce Organic JAS certified produce on non-contiguous

3.5 Government promotion of organic agriculture

3.6 The current state of the organic sector in Japan

Table 3.1: Area under certified organic cultivation