Innovation, Agricultural Productivity and Sustainability in Japan is a part of the OECD Food and Agricultural Reviews series. It examines the conditions in which farms and businesses in Japan undertake innovation in the food and agriculture sector to become more productive and environmentally sustainable. The review starts with an overview of the food and agriculture sector and outlines development challenges and opportunities (Chapter 2). It then considers a broad spectrum of policies according to the main channels or incentive areas through which they affect productivity growth and the sustainable use of resources (Chapter 3); the agricultural policy environment (Chapter 4); the agricultural innovation system (Chapter 5); and human capital development in agriculture (Chapter 6). Chapter 1 summarises the findings of this review and provides policy recommendations.

Until recently, Japanese agriculture experienced a long period of contraction. Since 1990, the value of Japan’s agricultural production has decreased by more than 25% and the number of commercial farm households and agricultural workers by more than 50%. The agricultural sector continues to be under pressure to raise its productivity, primarily to improve international competitiveness and thereby contribute to economic growth, in particular in rural areas. At the same time, intensive agricultural production contributes to a high level of environmental pressure.

This chapter presents the framework used in the report to analyse the extent to which policies in Japan are supportive of innovation and structural change, and the extent to which they affect access to, and use of, natural resources for productivity growth and sustainability. It also gives an overview of the review’s findings on a wide range of policies and develops specific recommendations for related policy areas.

This chapter describes the overall economic, social and environmental context in which Japan’s food and agriculture sector operates, and the natural resource base upon which it relies. It provides an overview of the general geographical and economic characteristics of Japan; identifies the main structural characteristics of the food and agriculture sector; provides an overview of the main food and agriculture outputs and markets; and analyses the main trends in agricultural productivity, competitiveness and sustainability. It finally raises a number of challenges the agro-food complex is likely to face in the future.

In Japan, agriculture has been treated differently from the rest of the economy based on the implicit assumption that small-scale family farms needed government support as they were disadvantaged within the economy as a whole. The evolution of the agricultural structure has shifted this policy paradigm towards developing policy and market environments that are more conducive to innovation and entrepreneurship. This chapter reviews how the general policy environment could be yet more conducive to innovation and entrepreneurship in agriculture, and more coherent with sustainability policy objectives.

Strengthening the sector’s capacity to innovate and improving environmental performance of agriculture will require the agricultural policy environment to be more conducive to innovation and entrepreneurship, as well as more coherent with sustainability policy objectives. The evolution of Japan’s agricultural structure and the global trend to more integrated value chains has diversified the types of policy support demanded by professional farms. This chapter provides an overview of developments in agricultural policies and discusses the likely impact of agricultural policy measures on structural changes, environmental performance, and innovation in this sector.

Innovation policy is moving beyond supply-driven approaches that focus on R&D and specific technologies to a network-based setting, in which a more inclusive, interactive, and participatory approach fosters greater innovation in response to pressing challenges facing the food and agriculture systems. This chapter describes the agricultural innovation system in Japan and outlines the recent changes it has undergone. It provides an overview of the general innovation system, presents agricultural innovation actors and governance of the innovation system, outlines changes in roles and themes of R&D, and presents the main policy instruments and monitoring efforts. It then reviews the main trends in public and private investments in R&D, the funding mechanism, as well as the means used to foster knowledge markets and networks.

Empowering people to innovate is one of the five priorities for government action identified in the OECD Innovation Strategy. People generate ideas and knowledge that power innovation, and they apply this knowledge and the resulting technologies, products and services in the workplace and as consumers. Innovation requires a wide variety of skills, as well as the capacity to learn, adapt or retrain, particularly following the introduction of radically new products and processes. Fostering the skills of farmers to innovate, to solve new problems and to engage with other stakeholders is at the heart of AIS and the improvement of education and training enables AIS to function effectively. Empowering people to innovate relies not only on broad and relevant education, but also on the development of wide-ranging skills that complement formal education. This chapter presents an overview of the development of agricultural education, extension and advisory system in Japan, and of the agricultural policies currently in place.