Farm Business Model on Smart Farming Technology for Sustainable Farmland in Hilly and Mountainous Areas of Japan

Abstract

Farmlands in Japan’s hilly and mountainous (HM) areas face the critical challenges of aging farmers, depopulation, and disadvantageous conditions for farm management and economic performance, leading to the abandonment of farmland. Rice farming in HM areas is rarely profitable; however, it occupies 40% of Japanese agricultural production and affects food security. We proposed a farm business model to utilize smart farming technology (SFT) for rice production in the HM areas and analyzed the financial performance of the case study. The farm business model applying SFT has three stakeholders: collective activity by the farmers, farm operations by the enterprise, and a government subsidy. The model conceptualizes diversifying farm business into rice farming and other business units. Three scenarios of SFT in the farm business model consist of combinations of conventional and SFT machines: conventional machines, intermediate SFT, and advanced SFT. The results of the financial analysis on the case study were consistent with the theoretical framework of farm business models. This study revealed that the elasticity of labor productivity on fixed assets of advanced SFT (0.94) was more productive than intermediate SFT (0.63). To utilize SFT to sustain farmland in HM areas, balance between financial security and profitability, and linkage of the enterprise and community are indispensable.