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Business trends

Vietnam's rice paddies offer Japan's farmers chance to grow

Local cultivation in emerging Asian markets proves cheaper than exports

A woman wearing a traditional hat sits in a rice field outside Hoi An, Vietnam.   © Reuters

NIIGATA, Japan -- Japan's rice farmers are venturing into the rest of Asia to grow their crops locally. Supported by an increase in the number of Japanese restaurants across the region, the farmers are teaming up with locals to apply their expertise, hoping to ride the strong brand power that Japonica rice enjoys.

The trend lets locals indulge their taste in high-quality Japanese rice without paying stratospheric prices for imported versions, as some wealthy Chinese are doing.

In mid-November, Ofukuro Tei, a Japanese restaurant in Hanoi, began selling rice grown in Vietnam but developed by Japanese rice producer Ajichi Farm. Three types of rice -- Akisakari, Koshihikari and Hanaechizen -- were selling for about 500 yen ($4.41) per 2kg, less than half the price of the export variety.

Ajichi Farm, based in Fukui Prefecture, started test cultivation last spring, setting up Inakaya, a joint venture with a Vietnamese agricultural corporation in autumn. The company has started growing rice in Nam Dinh Province, about 100km southeast of Hanoi.

Due to higher temperatures than in Japan, the company decided to double-crop rice in February-June and July-November. It has also chosen suitable varieties like Koshihikari. Inakaya will use a local partner's facilities to dry and polish the rice.

Rice grown by Fukui-based Ajichi Farm is sold at a Japanese restaurant in Hanoi in mid-November.

Takenori Ito, CEO of Ajichi Farm, visited Vietnam almost every month to ensure that strict soil management and other cultivation technologies were being implemented. The company also had Vietnamese managers visit paddy fields in Fukui.

Ajichi Farm faced a number of problems, such as rice grains not developing properly, due to differences in weather between Japan and Vietnam. According to Ito, this is not an insurmountable problem, and he noted, "Local farmers know how to grow rice, so we can [help them] grow Japanese varieties."

Starting last summer, Ajichi Farm increased rice acreage in Vietnam from 1.5 hectares to 10 hectares and started selling its product in the country. "We want to tap the Vietnamese market using the brand power of Japanese rice," said Ito. The company aims for annual production of 10,000 tons and annual sales of 2 billion yen.

The growing popularity of Japanese food has prompted Japan's agricultural corporations and food-processing companies to boost their rice production in other Asian countries. There were about 69,300 Japanese restaurants in Asia in 2017, up 50% from 2015, according to data from the Ministry of Agriculture, Forestry and Fisheries.

"Ajichi Farm's rice is cheaper and of better quality than rice imported from Japan," said Keiichi Miyata, president of Japanese restaurant Ofukuro Tei. "We will serve it at our restaurant if we can purchase it in bulk."

Rice-producing areas in Japan are trying to boost exports on the back of government support. However, in Vietnam, where transportation costs and customs duties are high, rice imported from Japan is four to five times more expensive than locally grown rice. In addition, quarantines have made exporting rice to certain countries difficult.

"There is not enough Japanese rice to cater to the booming demand from Japanese restaurants across the world," said Shoichi Ito, a professor at Japan's Kyushu University. "Growing rice overseas is becoming an attractive option for Japanese farmers," he added, but noted that there is not enough information for farmers to make the leap.

In an industrial complex near Manila in the Philippines, a low-protein rice named Echigo is being produced for people with kidney diseases. The rice has a 10% lower protein content than regular rice.

The producer is Biotech Japan of Niigata Prefecture, whose CEO Kiyosada Egawa moved to the Philippines to oversee the project. "There are an increasing number of patients in Asia with kidney disease, who are required to limit their intake of protein. So the market for our product is expanding at a fast pace," he said. The company plans to export the product to Thailand and other countries.

"There is great demand in Southeast Asia, where medical environments are different from Japan and there is no low-protein rice available," said Egawa.

Other Asians eat much more rice than Japanese. Starting this year, Yamagata-based rice wholesaler Ask and others will contract with Indian farmers to grow rice, betting that demand will increase due to diversified diets as Asians' living standards improve.

Yamazaki Rice in Saitama Prefecture, near Tokyo, is mulling a partnership with an agricultural corporation in China to start mass production in that country as early as this year.

"The rest of Asia has greater potential for sales of rice and rice-flour bread than in Japan, where rice consumption remains sluggish," said Ito.

Niigata-based Forica Foods plans to partner with a local company in Thailand this April to start production of low-protein rice. If the company has success with it overseas, it could be successful in Japan as well.

In August, Alpha Food, based in Shimane Prefecture, began market research in India to explore the possibility of entering the market with products inspired by the Indian stir-fried rice dish Biryani. The new rice products are made using dehydrated alpha rice technology. The project is supported by the Japan International Cooperation Agency.

Meanwhile, Kazuhito Yamashita, a research director at Japanese think tank Canon Institute for Global Studies, warned of the difficulties of overseas production. "Japanese rice tastes good because of the sharp differences in temperature between seasons. If Japanese rice is grown in a different environment, the quality could be bad, ultimately hurting the brand," he said.

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