Japan’s economic engagement in the Middle East and North Africa (MENA) has largely focused on crude oil. But in recent years, the country has taken steps to diversify trade relations with the MENA region, sharing agricultural strategies and technological innovation to tackle the challenge of long-term food security. Food insecurity is deeply entwined with national security, as seen in the lead-up to the Arab Spring or anti-government protests since then in places such as Sudan and elsewhere. The COVID-19 pandemic and border closures highlighted the vulnerability of food systems and how supply chain disruptions along with panic buying can lead to food shortages and price volatility.
Japan and the MENA have import dependent food systems and they both face common food security challenges characterized by shrinking domestic agricultural output as well as land and resource constraints. However, the risk to food systems in Japan and the Middle East are also underpinned by a host of contrasting supply and demand side factors. For instance, the total population in the MENA region is forecast to almost double from approximately 484 million in 2018 to 724 million in 2050[i]. Japan, on the other hand, has a rapidly aging population which could fall by as much as 50 percent from 126.5 million in 2018 to 59.77 million by 2100[ii]. Meanwhile, there is only five percent[iii] of arable land available in the MENA from a total area of 15 million square kilometers compared to 12.1 percent[iv] in Japan from a total land area of 364,500 square kilometers. While water is relatively abundant in Japan, the Middle East is the most water stressed region in the world. At present, 70 percent[v] of the agricultural sector in MENA is rain-fed and highly exposed to the worsening extreme heat, drought, and aridity forecasted under climate change.
The agricultural sector in MENA is in need of radical transformation and there is plenty of scope for improvement[vi]. The fate of food systems in the MENA depends on raising domestic agricultural production by the integration of smart agriculture and Internet of Things (IoT) in agriculture such as data collection and digital technology. The Middle East not only represents a market to expand Japan’s burgeoning smart agriculture technology but Japan’s struggling agricultural sector has created significant avenues to advance agricultural innovation which could be beneficial to regions such as the MENA facing overlapping agricultural challenges. Japanese startups can contribute in terms of improving water and farmland management in the form of new land use models and landless food production such as vertical farming which offers communities protection from economic distress caused by extreme weather events and drier conditions.
The Common Challenge of Food Security in MENA and Japan
The MENA was once an ancient leader in agricultural innovation but the region is now contending with major geographic and demographic challenges which is further compromising the agriculture sector’s capacity to feed the local population. Before the global COVID-19 pandemic, agricultural output in MENA had been struggling to keep up with the region’s rapid population growth. Moreover, agriculture is dependent on water and MENA receives less than 300mm of rainfall annually[vii]. But climate change and unsustainable farming practices has triggered additional risks such as flooding in coastal areas, unpredictable precipitation, worsening higher temperatures, desertification, soil salinity and land degradation that will add further pressure on the region’s scarce water supply of which approximately 85 percent is allocated to the agriculture sector. The limited availability of arable farmland teamed with existing water scarcity could also increase import dependence. The World Bank predicts that MENA will experience the highest economic losses from climate-related water scarcity at about 6 to 14 percent of their GDP by 2050 – the highest in the world[viii].
MENA’s dependency on food imports increased from 10 percent in the 1960s to 50 percent in 2018 as the population grew from 100 million to 530 million during the same period of time[ix]. Currently, the region imports half of its staple grain, wheat and barley mainly from the U.S, Europe and more recently South America. Similarly, Japan recorded its lowest food self-sufficiency rate of 37 percent in fiscal year 2020[x] which is the lowest figure since keeping records began in 1965. Japan is the world’s largest meat importer in terms of volume with an import ratio of 53 percent and the fourth biggest import country for dairy products. The MENA region fares better with a meat self-sufficiency ratio of 77.5 percent but it is also experiencing a dietary transition towards a higher intake of protein from animal sources similar to Japan but on a slower pace. This is largely due to subregional income differences in MENA.
In Japan, the agricultural workforce is rapidly aging and the sector is grappling with an acute labor shortage and a lack of successors in farming households. In the coming years 70 percent of farmers will be aged over 60 years old. What’s more, the modern Japanese diet has also shifted in favor of high fat foods and larger quantities of meat through the popularity of western cuisine. Similarly, the MENA region is also experiencing a boom in fast food restaurants, particularly in the Gulf countries such as the UAE and Saudi Arabia. The shift in food preferences is anticipated to accelerated with the fast food market poised to almost double over five years reaching $59 billion in 2026[xi]. Japan’s modern diet cannot be maintained without importing large quantities of food from overseas which leaves the country vulnerable to trade friction, exchange rate fluctuations and import competition. Japan’s GDP from agriculture has been shrinking by two percent each year and population decline will see domestic demand for rice fall on average 1.1 percent annually through to 2025[xii].
Japanese Agribusiness and Opportunities for Expansion in MENA
The Japanese government has positioned domestic agriculture as a potential source of economic growth and is focusing on overcoming structural challenges by becoming less dependent on manual labour with the help of agritech solutions. It has sought to lift the nation’s food self-sufficiency rate to 45 percent as a policy goal and has launched various subsidy programs to help boost domestic agricultural output. But at the same time Japan is facing growing international pressure to deregulate its agricultural sector by removing tariffs on Japanese rice, meat and dairy. The Strategic Innovation Promotion Program (SIP) is a national program launched in 2014 to encourage new technology to solve Japan’s most urgent social problems, including $450 million worth of private sector grants for RnD in the agriculture sector. The program effectively kickstarted the smart agriculture sector and spearheaded private sector RnD in agriculture alongside government organizations. Japan’s smart agricultural market is expected to grow to over 60 billion yen by fiscal 2027[xiii].
In addition, Japan’s reputation for its traditional and healthy cuisine and high quality can be leveraged to gain economic momentum in markets in MENA countries. Japan has sought to promote exports of farm produce particularly from the disaster-stricken Fukushima region following the 2011 earthquake and tsunami disaster but the campaign has been hampered by the global COVID-19 pandemic. But the latest data by the Japan External Trade Organization (JETRO) highlights that ‘new industry’ made up of IoT, AI, robotics and startups shows the most promise for future business in the Middle East[xiv].
Agricultural production in the MENA and Japan is marked by low productivity. While the Middle East is rich in oil it lacks water and agricultural potential. Water scarcity and inefficient water use is a major contributor to low agricultural output in MENA. Smallholder farmers in MENA produce the main bulk of the region’s staple foods. But only farmers who have off-farm income or access to land with mixed rainfall and irrigated water live in moderate poverty as opposed to extreme poverty[xv].
The Gulf Cooperation Council’s past approach to food security was aimed at self sufficiency and overseas farmland investment but this failed to produce significant agricultural gains[xvi].
Japanese companies can play an important role in reversing the trend of food insecurity abroad by facilitating the transfer of technology and improved farming techniques with the help of IoT and devices to collect data to ensure water efficient cultivation. Vertical farming in particular has been praised as the farm of the future and a solution to water shortages. It involves growing crops in vertically stacked layers in a carefully controlled environment often combined with autonomous agricultural robots and machinery to maximize yield while allowing for minimal human intervention. Japan is seen as an industry leader in vertical farming with over 200 vertical farms in operation. In 2017, Japan’s largest vertical farming company Spread, which boasts an automated farming system and advanced water recycling capable of producing as many as 30,000 lettuce heads daily, will build Techno Farms in the United Arab Emirates and as many as twenty facilities across the Middle East.
However, the full potential of rainfed farming has yet to be exploited. The MENA region has enormous potential to harness smart farming technology. It is also widely recognized that greater contributions by smallholder farmers through improved efficiency would address food insecurity and national economic stability. The MENA has a mix of upper middle, middle, and low income countries, which will require varying degrees of mechanization and technological adaptation. This is a golden opportunity for Japanese smart agriculture to cater to a range of environmental factors affecting food systems in MENA. For instance, agricultural robots ranging from assistive eco-skeletons to harvesting robots, autonomous drones and driverless tractors have been developed to address acute labor shortages and reduce the burden of repetitive, labor intensive tasks on farmers. It also allows harvesting at night and zero supervision. But agricultural robots only represent less than two percent of the smart agriculture market in 2016. This is largely due to farmers in Japan owning relatively small-scale plots of farmland and safety regulations. Similarly, the majority of agricultural production in MENA is grown by family operated farms due resource constraints. This is a drastic difference from the vast amounts of grassland and cropland which underpins large scale agribusinesses in Europe.
Climate smart agricultural and urban farming has the potential to encourage young people to enter the agriculture business as the technology allows even inexperienced farmers to carefully manage overusing water and fertilizer. Japan’s aging farmers have shown some reluctance to adopting advanced AI and mechanical technology based on setup cost or gaps in digital literacy. But MENA’s long-standing high youth unemployment could benefit from the introduction of next generation smart agriculture across the entire food system.
Nonetheless, massive corporations such as Panasonic, Ericsson Japan, CKD Corporation and SoftBank have also invested in data collection and IoT farming by creating sensors that monitor climate conditions such as temperature, humidity, soil, CO2, and solar radiation to predict environmental conditions as well as an AI based automation system that can control pumps, sprinklers, generators and windows to enable optimal crop yields. Support for low income smallholder farmers can start with the adoption of IoT and AI which allows farm data to be measured remotely to make way for optimal planting and harvesting times as well as digital advisory systems such as early weather information which are sent directly to farmers mobile phones by an app.
The Japanese RnD sectors face fierce global competition from Europe and the U.S and will need to maintain innovation in the long term amidst a rapidly evolving smart agriculture sector. Smart agriculture technology in Japan remains under-developed and has yet to be widely commercialized. The MENA region is always seeing a hive of local startups approach water scarcity from a variety of angles, leaving Japan’s smart agricultural industry a step behind the trend. For instance, Morocco has embraced IoT driven precision farming with the help of a local agritech startup. Egypt, the MENA’s most agriculturally productive country, has started digitizing irrigation systems, allowing farmers to check soil moisture levels on their mobile phone. Tunisia, Lebanon and the UAE have also welcomed smart farming to centrally monitor and manage irrigation, soil nutrients and water usage. MENA is fast becoming a hotspot for smart agriculture and with Japan tackling a similar issue of low agricultural productivity, its technological advances in urban farming, IoT and automation to lift agricultural output makes it an attractive partner for future technological transfers.
Technological change does not translate into increased production until it is widely adopted by farmers. An integrated approach to water management can help prevent the deterioration of good productive land, which includes addressing the current lack of water governance in the region. But introducing smallholder farmers to IoC digital agriculture will bring about significant gain in terms of water conservation, cutting costs and higher profitability which will pave the way for further smart farming opportunities.
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[ii] Asahi Shimbun (2021). ‘Japan a century from now: what will it look like?’, Retrieved from https://www.asahi.com/ajw/articles/14381373
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