Sustainable Agriculture, Fishery, and Forestry Industries and the Food and Agriculture Value Chain：Sustainability：The Norinchukin Bank

Increasing the Income of Farmers, Fishermen and Foresters

The Bank works on consulting activity for agriculture, fishery, and forestry (AFF) leaders who have encountered management issues, and we support the establishment of value chains by investing in and financing food- and agriculture-related companies.
Through consulting and other activities with the Bank's investment and finance clients, we set specific numerical targets for how to raise the incomes of AFF leaders and are actively working to achieve these targets.
We defined increase in the amount of value added as an indicator to capture income improvement of AFF leaders in a unified manner, and strive to achieve this goal after setting medium- and long-term target.
In this way, the Bank aims to make a sustainable contribution to improving incomes of AFF leaders.

Increasing Added Value

Efforts to Improve Incomes of AFF Leaders

The Bank is strengthening consulting activities for AFF leaders in cooperation with JA Shinnoren and Japan Agricultural Cooperatives (JA). We conducted 186 consultations in FY2021, 301 in FY2022, 306 in FY2023, and 349 in FY2024, proposing solutions to all kinds of management issues faced by AFF leaders. In addition, when consulting with stakeholders, we not only propose solutions, but also confirm the status of implementation, providing support to stakeholders in achieving solutions.

Supporting AFF Leaders by Proposing and Implementing Solutions

The Bank and Tochigi Kaitaku Agricultural Cooperative jointly provided consulting services to Isoshin Farm Co., Ltd., a client of the Bank’s Utsunomiya Branch. This enterprise applies its strength in circular agriculture to raising beef cattle in an integrated operation that incorporates paddy rice (including WCS*) and asparagus production. Through interviews with managers and financial analysis, we identified two key management issues: (1) preserving the founder’s farming techniques; and (2) determining the optimal scale of the business. To resolve these issues, we proposed: (1) formulating a long-term vision that includes a business succession plan; and (2) optimizing the planting area for each item based on an inventory of core business functions and an item-by-item analysis of income and expenditure. Currently, we are supporting the creation of a farming manual and providing follow-up assistance to ensure that farming techniques are passed on to the next generation. To further increase the income of the enterprise (i.e., increase added value), we will go on delivering financial and non-financial support through the Bank’s collaboration with the Tochigi Prefecture Kaitaku Agricultural Cooperative.

* Whole Crop Silage (course feed made from fermented rice plants). Rice ears and stalks are harvested together, rolled into bunches, and then lactic acid-fermented to produce beef cattle feed.

Supporting Food and Agriculture-Related Companies to Establish Their Value Chains

As a policy of encouraging an increase in the income of farmers, fishermen and foresters, the Bank works to support the establishment of food and agriculture value chains through investments and loans to food and agriculture-related companies.

Topics

Establishing New Value Chains that Utilize Local Products

Yukō Co., Ltd., is the company behind Akita Prefecture’s Kurakichi confectionery brand and handles all the stages of production from primary to tertiary processing. The company’s strength has always been in its sales channels through department stores in the Tokyo metropolitan area for its high-end products; however, there was a problem in that it had a limited product lineup, which was due to raw materials being mainly purchased from a small number of farmers in its home prefecture.
To address this, we coordinated a partnership between the company and JA Zen-Noh Akita in order to build an integrated value chain from sourcing to sales.
We also provided financing to support the company’s development of new products using raw materials from Akita Prefecture. This led to all Kurakichi outlets carrying new products made using Hokugen no Momo or “Northern Peaches,” which are grown by members of JA Kazuno (Kazuno City, Akita Prefecture).
We will continue to help maintain the agricultural production base and increase producer incomes by building new food and agriculture value chains that connect producers, manufacturers, and consumers.

Supporting the Establishment of Japanese Food and Agriculture Value Chains Through Investments in Overseas Food and Agriculture Private Equity (PE) Funds

The Bank has invested in an overseas food and agriculture PE fund that invests globally in ventures and medium-sized companies possessing smart technology and decarbonization solutions for the food, agriculture, and fishery industries.

The portfolio of investments includes the following types of companies with advanced technologies in the agriculture, fishery and forestry industries. The Bank supports these technological innovations and social implementation, and pursues the application of these technologies in the Japanese food, agriculture, and fisheries industries in the shift towards decarbonization.

Main technologies supported by the Overseas Food and Agriculture PE Funds

Regenerative farming practices, such as water conservation and soil improvement
Feed additives that reduce methane gas emitted from cattle burps and excrement
Alternative proteins
Freshness preservation technology for fruits and vegetables (food loss reduction, etc.)
GHG fixation on agricultural land

Contributing towards solutions to sustainability issues through the F&A Growth Industrialization Investment Framework

In order to increase the added value and productivity of the agriculture, fishery, and forestry industries, the Norinchukin Bank Group established the F&A Growth Industrialization Investment Framework with the aim of collaborating with industry members and businesses both within Japan and overseas, providing recipients with risk capital to support these activities. By investing in this framework, we are contributing towards solving sustainability issues surrounding the agriculture, fishery, and forestry industries.

Promoting logistics DX and automation in food distribution

As part of the agribusiness investment and development efforts of The Norinchukin Bank Group, we are promoting digital transformation (DX) and automation in the food distribution sector by investing in and collaborating with PAL Co., Ltd.
The logistics industry is facing numerous sustainability-related challenges, such as severe labor shortages and the so-called “2024 distribution problem” (due to stricter limits on the overtime hours of truck drivers), as well as the need to visualize and reduce GHG emissions to Scope 3 level. Consequently, efforts to boost productivity through digitalization and automation of entire supply chains have become increasingly important in recent years. Automation and digitalization of food distribution is considered particularly difficult due to the nature of the industry, such as the small quantities of highly diverse products, variability of weights, and the need to accommodate three distinct storage temperature levels.
PAL has built a strong track record in boosting the productivity of logistics facilities of food retailers and distributors, offering a wide range of solutions for the challenges faced at logistics sites, both in the food sector and other fields. For example, its “Digitrax Solution” visualizes truck operation status and work progress to identify inefficient delivery routes and freight wait times. This reduces the number of truck trips, thereby curbing logistics costs and reducing the burden on truck drivers.
Utilizing its network of cooperative organizations, The Norinchukin Bank supports the adoption of PAL’s logistics solutions to help make food distribution more streamlined and efficient. At the same time, it is helping to achieve the SDGs and shape a more sustainable society.

Revitalizing domestic timber distribution by building a timber information platform

The Bank’s agribusiness investment and development arm has invested in Shinmirai Inc., a company that holds up “Sustainable Forest” as its mission and aims to build a platform for aggregating all kinds of information related to forests, forestry, and timber.
Shinmirai is the developer and operator of eTREE, a timber platform for architects and designers that draws together information about timber. The company also coordinates sustainable forest-certified timber and timber with guaranteed traceability. In ways like this, Shinmirai is developing a timber distribution system that makes it easy for anyone to access and utilize timber, as well as ensuring that producers receive appropriate returns. This makes a significant contribution to forest sustainability.
By leveraging its networks of cooperatives to support the efforts of Shinmirai, the Bank is contributing to the sustainable development of agriculture, fisheries, forestry, and related industries in Japan, as well as to local communities around the country.

Contributing to a sustainable food supply

Effective use of local resources

In order to contribute to the efforts of Ogawa & Co., Ltd. (a company specializing in “flavors and fragrances”) to promote awareness of the agricultural products of Okayama Prefecture and revitalize the region, the Bank has concluded a business partnership agreement with the Okayama headquarters of the National Federation of Agricultural Co-operative Associations (Zen-Noh).
This initiative takes advantage of the JA Group’s networks to match Ogawa with producers that can supply unused agriculture, fishery, or forestry resources (e.g., fruit peel waste). The company makes use of such unused resources to develop fragrance or flavoring ingredients. Ogawa has already developed “Okayama Peach Blossom,” a flavoring made using peach flowers picked during the production of peaches, a specialty of Okayama Prefecture. It has also created “Okayama White Peach” and “Muscat of Alexandria” flavorings, made respectively from white peach skin and grape residues that were previously discarded in the processing of these fruits. The use of local specialty products as flavor/fragrance ingredients promises to boost awareness and brand recognition.
By utilizing previously discarded and unused resources, we are working together with local communities to increase the income of agriculture, fisheries, and forestry enterprises and workers and reduce environmental impacts. At the same time, through these flavor/fragrance ingredients, this initiative adds value to the products of these industries.

Source: Provided by JA Zen-Noh Okayama