Farmdo Holdings’ pioneering agrivoltaics model is advancing agriculture, promoting renewable energy globally, and revitalizing Japan’s workforce and farming communities.
The aging population crisis in Japan affects many areas, but it has a particularly severe impact on farmers, where the average age exceeds 65, and less than 10% are under 50. This results in an aging, shrinking workforce, declining domestic base, and potential production bottlenecks. How is your company addressing this issue?
The population of agricultural workers is decreasing because the work is physically demanding and poorly paid. I was born into a farming family, but I didn’t continue the family business because it wasn’t attractive as a low-paying, hard-labor occupation. My two children also work in Tokyo.
This issue, I believe, stems from Japan’s post-WWII agricultural policy, which divided land into small plots. As a result, many children of farmers did not take over their parents’ land but instead joined large companies in urban areas like Toyota, which led to a population decline in rural areas.
Farmers who worked in the 1980s and 1990s clearly told their children, "Don’t take over the farm," and I share the same sentiment, so the population decline was inevitable.
In Hokkaido, for instance, land plots are as large as 50 hectares, so the farming population is actually increasing there. In areas like Gunma and Nagano, where farms specialize in cabbage and lettuce on plots of over 5 hectares, the yields are substantial and can be sold in the Tokyo area. Such farms earn over 100 million yen annually. While I don’t know the exact numbers, there are likely around 100,000 large-scale farmers like this. However, in other regions, the population continues to decline.
The best solution is for the government to lead the consolidation of farmland, increasing plot sizes by at least ten times. This would allow farmers to focus on larger plots of land. Another solution is to increase greenhouse facilities that incorporate the latest technology, such as IT and AI. These could be set up near large metropolitan areas like Tokyo. Agriculture will only be sustainable if incomes increase at least tenfold. Currently, livestock and poultry farmers are struggling the most, as feed costs continue to rise due to reliance on imports from the U.S. and a weak yen. Energy costs are also rising. COVID-19 particularly hit Wagyu farmers hard. Japan’s post-WWII policy of equality didn’t succeed in agriculture.
Farmdo, founded in 1994, is a relatively young company, but it has since become a leader in sustainable agriculture and renewable energy, combining farming with innovative solar sharing technology. Could you tell us about the main strengths and evolution that have built today’s Farmdo?
I became independent at the age of 38, starting from scratch. Initially, I ran an agricultural supermarket, offering feed, fertilizer, and pesticides at affordable prices. It was very successful, attracting many farmers who traveled far to buy from us. Over the next ten years, however, farmland continued to decrease, and home improvement centers started selling fertilizers, resulting in a drop in sales. This led local farmers to ask if we could sell the tomatoes and cucumbers they grew. These products were delicious and sold well in stores, allowing us to expand into Tokyo. For Tokyo residents, who couldn’t grow their own food, it was ideal to purchase fresh, safe produce.
After the Fukushima nuclear accident in 2011, however, Tokyo residents began avoiding vegetables from Gunma, located close to Fukushima. As a result, we had to close some Tokyo stores. Experiencing a blackout for the first time during the nuclear incident, I realized the vital importance of food safety and, even more, electricity. This led me to decide to enter the sustainable energy business. Solar power is very profitable. Competing in rice or vegetable farming is challenging due to established players, and young generations also tend to choose IT or other urban jobs over farming.
When I started solar power, I noticed many vacant or abandoned fields. Landowners were open to letting us use their land, allowing us to expand our bases. Today, we operate solar and wind power facilities across 255 locations, with plans to expand to 100 more locations.
Farmdo has pioneered with its patented solar power panel technology and aims to expand into overseas markets, holding patents for soil-based cultivation systems in the U.S. and Taiwan. The concept is about integrated small-scale operations. Why is this technology important, and how does it enhance your competitive edge?
Yes, we hold patents. We also have greenhouses for tomatoes and strawberries, which led us to develop translucent solar panels under which we grew hydroponic lettuce. Hydroponic systems use 70cm-high shelves, which are ergonomic and female-friendly. Many people believed vegetables couldn’t grow under solar panels, but our trials proved lettuce, tomatoes, and strawberries all thrived. Solar power, interestingly, generated over five times the revenue compared to vegetable farming by selling electricity to the grid.
Ultimately, vegetables, like humans, need a proper environment. They must be protected from excessive rain, wind, and pests, and require a steady supply of nutrients. We like to think of our company as creating living spaces for vegetables using AI. Amazed by the system's potential, I patented it, targeting markets in the U.S. and Asia. Our unique patents ensure we won’t face copyright issues in the U.S., ASEAN, or China. Securing patents cost 40 million yen, but I believed it was worth the investment.
AI and IoT play a significant role in transforming industries. From what we understand, your company uses numerous sensors to enhance irrigation control in hydroponic systems. What other initiatives are you undertaking to further strengthen your technologies and patents?
We haven’t fully achieved our goals yet. Three years ago, I wanted to visit an AI farm in Israel, but COVID-19 disrupted our plans. When COVID hit, our AI research paused. We have since acquired extensive land in Maebashi, where we plan to establish smart greenhouses using self-guided vehicles and drones with IoT sensor technology. The investment plan is 3 billion yen, with 1.8 billion for agriculture and 1.2 billion for solar panels. Agriculture might not be profitable initially, but solar panels will drive our revenue. Overall, we hope to cover the investment costs with solar power income.
This pilot project is scheduled to start by March 2025, and we are also considering making this a community-focused project with a smart agriculture environment featuring the latest AI and IoT technologies. We will set up shared spaces for locals and greenhouses where various fruits and coffee can be harvested year-round. This allows us to attract young people, providing training and job experiences for those interested in agriculture, whether Japanese or foreigners. We plan to collaborate with many Japanese companies on this project.
Your group consists of various segments, each handled by a different business entity. Which company or segment do you see as having the highest potential?
Our focus is on solar power, targeting emerging markets in Asia and Africa. We aim to concentrate on growth markets where power demand is increasing, allowing us to connect solar-generated electricity to the grid and sell it. Solar power remains the most affordable in terms of installation costs and profitability, making it economically advantageous. My strength lies in combining solar power with agriculture for a stable, high income.
As we understand it, 18.9% of solar power is recognized as renewable energy. Yet, there are still some challenges, including regulations, mountainous terrain, and resistance from some in society. How are you addressing these challenges?
The future of Japan’s solar panel power generation and energy mix will be determined by Prime Minister Shigeru Ishiba and the government. Currently, many farmers are aging, with no successors for their land, leading to many abandoned farmlands. By installing solar panels and converting idle land into productive fields, we can make these lands economically viable and revitalize local communities.
When I asked local governments in Gunma about energy sources, they were surprised, as they didn’t have knowledge about this in Gunma or Saitama. Biomass has an odor, nuclear power is dangerous, and hydropower is heavily regulated. I asked, "Given these factors, what electricity will you use?" No one could answer. Wind power generation, which accounts for only 25% of the necessary capacity, is absent in Gunma, Saitama, and Tochigi. Relying on fossil fuels is unwise. Given the high annual sunlight and abundant idle lands in the region, I believe solar power is the best fit.
Regarding international collaboration, we know about your projects such as the solar power plant in Mongolia and collaboration with the Ministry of Agriculture in Chile. You’ve also introduced solar and storage systems in Kenya. Could you tell us more about your overseas projects and potential expansion plans?
We aim to operate in countries through the Joint Crediting Mechanism (JCM). As the Japanese government is involved, the business remains stable. The government’s mission is to reduce fossil fuel usage by 70%. These contracted companies are related to Japanese firms, so my strategy is to work with JICA (Japan International Cooperation Agency) and the Ministry of the Environment. We aim to gain more credits by introducing eco-friendly methods and applying those credits to Japan’s CO2 reduction goals.
We are open to forming new partnerships under the Ministry of the Environment and the JCM scheme. We are hiring international personnel to strengthen our global business, particularly in the electricity and AI engineering departments. We are recruiting engineers from Myanmar, Indonesia, Vietnam, and India to bolster our human capital and enhance AI capabilities.
If we were to conduct this interview again on your last day as president, what goals or dreams would you hope to have achieved by then? What legacy would you like to pass on to the next generation of Farmdo executives?
I would like to introduce this system in Hawaii. Tomatoes in Hawaii cost 500 yen each because they are imported from the U.S. mainland or the Philippines. Hawaii, reliant on tourism, cannot use coal-powered electricity, as it requires smokestacks that would spoil the scenery. Nuclear power is also not permitted due to Hawaii’s high risk of natural disasters. Hawaii is an ideal place to sell vegetables and electricity at premium prices.
Financially, we have achieved sales of 10 billion yen and plan to increase this by 70% over the next five years. Profits will be reinvested to expand this system globally. The sun is our treasure. The Middle East was mostly desert until one day, they drilled into the ground and found a dirty liquid: oil. That oil powered the world’s energy, making countries like Saudi Arabia among the wealthiest. The sun offers similar potential, but as renewable energy, our success contributes to both agriculture and power generation. Sixty years ago, my house had a refrigerator, but in Africa, even today, owning a refrigerator is a dream. Converting solar energy into everyday usable power is socially meaningful work. Solar energy, after all, comes at no cost.
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