Norinchukin Bank outlines Japan’s biggest challenges in sustainable agriculture

Japan faces many problems related to food sustainability and security, which include a limited amount of arable land, a growing loss of biodiversity and an aging population that has been declining since 2008.

These are the types of challenges that have led the island country Norinchukin Bank to join as a sponsor of AgFunder’s flagship food and agtech investment fund. The bank joined Fund IV’s first $60 million close which is expected to close at $100 million by the end of the summer.

Norinchukin Bank is a $1 trillion financial institution for the agriculture, fisheries and forestry sectors in Japan. As one of the largest institutional investors in the country, it helps advance these industries through lending and investing globally.

Minoru Oishi, General Manager of Overseas Business Development (MO) of Norinchukin Bank, recently spoke with APN to discuss the institution’s broader goals to build a more sustainable food system in Japan, and why it decided to invest in AgFunder Fund IV.

APN: What are the biggest challenges facing the food industry in Japan today?

MO: Sustainability is definitely crucial for agriculture. The Japanese government recently set the [long-term goal] to promote Japanese agriculture, fishing and forestry, and they named several challenges.

The first is the depopulation and aging of [farmers]. This is a very political issue as the amount of food produced has decreased over time. Second, stagnant rural communities; there are not many young farmers to do the work, so sustainability is very difficult in rural areas. How can we revitalize these rural areas is a very important challenge in Japanese society.

Number three again relates to sustainability; we must tackle climate change. Recently in Japan we have had quite a lot of natural disasters such as heavy rain [and] typhoons. How to set up a resilient agriculture in the face of such natural disasters?

Number four is that because of Covid-19 we have a disrupted supply chain.

Finally, there is the achievement of the SDGs [UN Sustainable Development Goals]. This is of course a very important issue for Japanese agriculture.

APN: What impact do these challenges have on working at the bank and what do you think of your business?

MO: We are now trying, by 2030, to reduce greenhouse gas emissions by 50%. So for our investments and our own dealings with our customers, it’s number one.

Second, we are trying to increase the income of Japanese food producers such as farmers, fishermen and foresters.

We are also trying to execute our sustainable finance transactions up to 10 trillion JPY, which is almost equivalent to $85 billion.

These are our three important missions via the central bank, to be accomplished by 2030.

APN: Where did the investment in AgFunder’s latest fund come from and why did you start looking into venture capital?

MO: This is related to our attempt to increase the income of farmers, foresters and fishermen in Japan.

In terms of agtech or foodtech, Japan is behind the United States and China. We need to have sufficient knowledge and understanding of the most advanced technology in these areas, so we see our investment in the AgFunder fund as a way to do this and we would like to have access to [its] portfolio companies. If we find an attractive technology in the wallet, we would like to connect it with our cooperative members, and maybe it will be a win-win situation.

Also, durability. We understand that AgFunder is very committed to the issue of sustainability, so we would like to find useful technologies to reinforce our commitment to sustainability through our investments. [via] AgFunder.

APN: Did you talk about many other agrifoodtech capital funds during this process?

MO: Yes. To be frank, we have had a lot of discussions with many agribusiness and agribusiness venture capital funds. AgFunder was clearly the leader for many reasons, but we particularly appreciate their extensive network and strong industry presence. The investment team also has a very strong and unique sourcing system using artificial intelligence. Management is also essential [team].

APN: What agricultural and food technologies are you most passionate about?

MO: We like any kind of agtech if it can solve the problems of Japanese agriculture. Many of our clients have strong interests in agtech or alternative proteins related to sustainability, or for some, increasing the productivity of agriculture.

In some areas, we have advanced technology in Japan. Unfortunately, Japan has a limited amount of land available, so it is very difficult to [farm the same way as in] North America. That’s why it’s a very big challenge for Japan: how to establish efficiency or productivity to manage the limits of available land.

APN: Do you think automation is important on farms in Japan?

MO: Absolutely. In fact, our affiliate organization, which is called ZEN-NOH, is the commercial faction of our agricultural cooperative system. They are now doing very diligent research on how we can establish more efficient agriculture. To do this, robotics is definitely the key.

APN: What are the main areas of intervention in fisheries? Which technologies do you think would be most relevant there?

MO: Using alternative proteins to feed fish [in aquaculture so it’s] less impacted by natural disasters and more stable in terms of price. Fish farming is relatively large in Japan, so automating fish feeding is important. In addition, traceability is quite important, from the coast to the supermarket.