Japan Industry Watch: LED Lighting Plant Factories Drive Nearly 20 Billion in Economic Activity

Recently, Tagajo City in Miyagi Prefecture, Japan, publicly unveiled to the media the world's largest LED (light-emitting diode) artificial-light-type plant factory. Named "Mirai Hata," the factory covers an area of about 2,300 square meters, uses 17,500 LED lights, and can produce year-round, with an expected harvest of about 10,000 heads of lettuce per day. Not long ago, Fujitsu also announced that after about a year of preparation, low-potassium lettuce produced at its own plant factory has begun to hit the market.

A so-called plant factory is a cultivation technology that fully controls light, temperature, humidity, carbon dioxide concentration, water, and nutrients in a closed environment. Its biggest features are being unaffected by climate and the highly efficient, intensive use of water and land, with yields up to 100 times those of natural cultivation while using less than 1% of the water. Plant factories can also adjust the nutritional content of vegetables and fruits as needed. For example, the low-potassium lettuce produced by Fujitsu is mainly supplied to kidney disease patients at local hospitals, while Shiseido's affiliated plant factory specially cultivates vegetables carrying antibodies for use as raw materials in cosmetics and pharmaceuticals. According to Japan's Ministry of Agriculture, Forestry and Fisheries website, "factory vegetables" are little different in taste from naturally cultivated ones, and may even be better. Since 2009, Japan has seen a wave of "plant factory fever." According to statistics, as of March 2011, there were 93 plant factories in Japan, and by 2013 this number had risen to 304.

The rise of plant factories in Japan is no accident. Due to the declining birth rate and aging population, the average age of Japanese farmers is over 65. The number of households engaged in agriculture decreased from 6.06 million in 1960 to 1.7 million in 2009, and the total agricultural production value dropped from a peak of 13.7 trillion yen in 1990 (about 101 yen to the dollar) to 9.5 trillion yen in 2011. In 2009, the Japanese government eased restrictions on the transfer of agricultural land and encouraged corporate investment in agriculture. The Ministry of Economy, Trade and Industry and the Ministry of Agriculture, Forestry and Fisheries established a supplementary budget of 14.6 billion yen to support the construction of plant factories.

　　Another reason for the popularity of plant factories is that Japan's construction industry, hit by the economic downturn and reduced public construction projects, is eager to seek new development by investing in agriculture. Chain restaurants and supermarket companies hope to build their own vegetable bases to form a stable supply of raw materials. In the electronics industry, as manufacturing gradually shifts overseas, many clean rooms previously used to produce precision components such as chips have been left idle. These factory buildings can be converted into plant factories with only minor renovations. As a result, these three industries have become the most active pioneers in investing in plant factories.

　　According to statistics from the Yano Research Institute, in 2013, the domestic market size of artificial-light-type plant factories in Japan was 3.4 billion yen, while the market size of solar-light-type plant factories was 19.9 billion yen. With the development and popularization of technology, it is expected that by 2025, the scale of Japan's plant factories will exceed 150 billion yen. Currently, large electronics companies such as Showa Denko have listed equipment support and technology development for plant factories as R&D priorities. Japan also hopes to position plant factories as an important future export, breaking into markets in water-scarce regions such as the Middle East.

　　Despite the promising outlook, the development of plant factories still faces some "bottlenecks". For example, the initial investment is too large; an artificial-light-type plant factory producing 1,000 heads of lettuce per day generally requires an initial investment of 80 million to 150 million yen. Even with a 50% government subsidy, it usually takes 5 to 7 years to achieve profitability. Compared to the price of naturally grown lettuce at 300 to 600 yen per kilogram, "factory lettuce" sold at 1,100 to 1,500 yen still lacks appeal. In addition, the cultivation techniques of the factory agriculture era are still immature, and related quality control and logistics sales models are also being explored.