Regional Sustainability from the Perspective of Eco-Agriculture Product Distribution

ABSTRACT

Sustainable development, a primary issue of the 21st century, is a particularly urgent concern with respect to the rural regions of the country. The establishment of a sound domestic supply system for value-added agricultural products that are safe, reassuring, and low in environmental cost will lead to the economic revitalization of rural areas while helping to conserve the land, and is thus a potentially effective means toward enhancing regional sustainability. The effectiveness of environmental-friendly agriculture (eco-agriculture) in this respect will very much depend on the policy support of the government in boosting supply, and the role of mass retailers in shaping the distribution and marketing methods of the products.

In terms of distribution methods, the practice of directly distributing to mass retailers, i.e. bypassing the wholesale market, has spread as mass retailers have grown in capacity and popularity. The scarcity and high price premiums for eco-agricultural products, particularly organic products, are part of the retailer incentives for direct contracts with producers.

Approximately half of the major mass retailers are adopting private brand strategies for their eco-agricultural products. They are marketing them as high value-added products and intend to expand their market shares in the commodity composition. To promote their private brands, mass retailers have established individual quality control standards between themselves and the contracted producers, and work to provide consumers with more disclosure of product information.

As the number of private brands increase, however, it is feared that the private brand strategy will lose its cost-effectiveness. Not only retailers but local governments, farmers, and regional farmers associations have also begun to create their own private brands causing consumer confusion and making it difficult to establish product differentiation. What's more, the lack of domestic suppliers makes increasing sales volume difficult, and foreign importation, particularly in the case of organic products, impossible to avoid.

The private brand strategy has its merits in the fact that it is responding to consumer demand, implementing a sustainable business strategy, and promoting food consciousness. However, the foreign procurement and product captivity, due to the scarcity of eco-agricultural suppliers, are problems that threaten the success of the regional sustainability that it is intended to promote.

In order to boost the supply of eco-agricultural products, and simultaneously ensure effective environmental sustainability, it is necessary that the changeover to eco-agricultural practices take place not plot by plot, but through large areas of land, or "ecosystems." Thus, policy driven support is indispensable. In regard to small hold and side-work farmers, the government should take on the leadership role of integrating their farmlands. As for large-scale farm management, the government should play a supportive role, encouraging private led initiatives to consolidate and implement eco-agricultural practices. It is also important to establish an evaluation scheme for the level of contribution that the production, distribution, and sales of agricultural products make to regional sustainability, a scheme that has yet to be fully developed in Japan. Finally, it is hoped that the mass retailers, as leaders of the market, actively participate and cooperate in the efforts to proliferate eco-agricultural products.