Case Study: Japan's Vertical Farming Story

Japan's agricultural sector eyes vertical farming as a solution to face its challenges

Inside Spread, A Vertial Farm In Japann

Image provided by Spread

Japan's agricultural sector is at a critical juncture, facing challenges that threaten traditional farming methods.

With urbanization, industrial development, and an aging farming population, innovative solutions are essential for food security. Vertical farming offers hope and potential for part of its agriculture industry.

In this editorial, we explore the landscape of vertical farming in Japan, discussing initial costs, energy consumption, scalability, labor dynamics, robotics integration, and the potential for new crops.

Japan Facing Challenges In Agriculture

Japan’s agricultural sector faces many challenges that make traditional farming increasingly unsustainable. Only 20% of Japan’s land area is currently used for agriculture, with vegetables being the predominant crops. As urbanization and industrial development encroach on agricultural land, the availability of arable land is steadily diminishing. This reduction in available farming space necessitates innovative solutions like vertical farming to maximize productivity and ensure food security.

One significant issue is the aging farming population. According to Statista, the average age of farmers in Japan has reached 69. This demographic shift is coupled with a broader aging population and a declining birth rate, leading to a shrinking labor force. Young people are generally uninterested in the labor-intensive and often low-paying nature of traditional farming, resulting in abandoned farms and decreased agricultural productivity. As the population decreases, this problem is only expected to worsen, making adopting advanced agricultural technologies more crucial.

The number of farms in Japan has plummeted over the past 40 years, exacerbating the situation. Although the government heavily subsidizes the agricultural sector—covering costs related to training, transitioning from rice to other crops, and other expenses—these measures have not reversed the declining trend. While essential, subsidies are insufficient to tackle the root causes of the sector’s struggles.

Japan’s urbanization level is extraordinarily high, reaching around 92%, according to Statista. This high degree of urbanization further limits the space available for traditional farming, pushing the agricultural sector to explore vertical farming as a viable alternative. Vertical farming can thrive in urban environments, utilizing available vertical space in buildings and other structures to grow crops efficiently.

Natural challenges also plague Japanese agriculture. As an island nation with numerous mountains, Japan has limited cultivable land. Furthermore, unpredictable natural disasters, such as earthquakes, typhoons, and tsunamis, can devastate agricultural production. These factors make traditional farming not only challenging but also risky. Vertical farming, with its controlled environments, can mitigate these risks by providing stable and predictable conditions for crop growth.

Climate change adds another layer of complexity. It affects the quantity and quality of agricultural produce and disrupts the traditional harvesting cycles. This unpredictability makes it difficult for farmers to plan and manage their crops effectively. Vertical farming can offer a solution by providing a controlled environment less susceptible to external climate variations.

Japan’s dependency on food imports is a significant vulnerability. The calorie-based self-sufficiency rate stood at 38% in fiscal 2021, one of the lowest among developed countries. This dependence on imports makes Japan susceptible to global supply fluctuations, as seen during the COVID-19 pandemic. Increasing domestic food production through vertical farming could enhance food security and reduce reliance on imports.

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The Birth of Local Champions

Successful Models

Spread Co.

Spread Co., Ltd., headquartered in Kyoto and led by CEO Shinji Inada, has become a prominent player in Japan’s vertical farming scene. In 2022, the company secured approximately $30 million in a Series A round, marking the largest fundraising event in the Japanese foodtech sector. This funding came from business companies and angel investors, underscoring the confidence in Spread’s innovative approach.

Spread Co. has developed the Techno Fresh processing method, which significantly extends the shelf life of cut lettuce by up to two times while maintaining its freshness, taste, and quality. This innovation is being utilized in the first large-scale salad processing plant, Techno Fresh Hadano, near Tokyo. Furthermore, the cumulative sales of their vertically farmed lettuce, Vegetus, exceeded 100 million servings by November 2022, highlighting their commercial success and consumer acceptance.

In addition, Spread Co. has made strides in sustainable finance. On December 27, 2022, they secured a sustainability-linked loan (SLL) of $4.6 million (600 million yen) from SHIGA BANK, LTD. This loan, the first SLL for a vertical farming company in Japan, emphasizes Spread’s commitment to sustainability and financial innovation.

Alesca Life's Latest Partnership

Alesca Life recently launched a significant vertical farm project for its customer HICOM in Osaka. This farm includes storage and food processing facilities, enabling the customer to manage the entire process from seed to branded packed salad within a single warehouse. Ahmad Hammoud, Head of Operations at Alesca Life Technologies, expressed pride in the team’s rapid project completion. The farm, which produces over 100 kg of vegetables per day, is roughly the size of 10-12 standard freight container farms (122-146 m²), demonstrating significant efficiency in space and operation.

Ginza Itoya

In the bustling center of Tokyo, the historic stationery chain Ginza Itoya has dedicated the entire surface area of its eleventh floor to a vertical farm. This farm produces a variety of leafy vegetables, including frisée lettuce, rocket, mint, and kale. The produce is used directly in the menus of Café Stylo on the twelfth floor, embodying the concept of local production for local consumption.


Mirai is another pioneer in Japan’s vertical farming sector. Their farms produce approximately 700-800 kg of vegetables per day. Mirai’s continued success demonstrates the scalability and practicality of vertical farming in urban environments.

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Challenges and Opportunities

Initial Costs

One of the foremost challenges in the vertical farming industry in Japan is the high initial investment required for setting up such farms. Unlike traditional farming, which relies heavily on natural resources such as land and sunlight, vertical farming demands substantial infrastructure. This includes state-of-the-art lighting systems, climate control mechanisms, and advanced hydroponic or aeroponic systems. The cost of these technologies can be prohibitive, especially for small-scale farmers or startups. Furthermore, integrating sensors and IoT devices to monitor and optimize plant growth adds to the expense. These initial costs can deter potential investors and limit the expansion of vertical farming in the country.

Energy Consumption

Energy consumption is another significant concern associated with vertical farming. The reliance on artificial lighting, heating, and cooling systems results in a considerable demand for electricity. This high energy consumption can be a major drawback in a country like Japan, which already faces energy challenges due to its limited natural resources and reliance on imported fuel. Efforts to incorporate renewable energy sources, such as solar panels and wind turbines, into vertical farming systems are underway but are not yet widespread. The high energy usage not only impacts operational costs but also raises questions about the environmental sustainability of vertical farming.


Scaling vertical farming to meet national food demands presents a unique set of challenges. While vertical farms can produce high yields in a controlled environment, expanding these operations to a level that can significantly contribute to the country's food supply requires substantial investment, innovation, and infrastructure. The limited availability of urban space for large-scale vertical farming facilities is another hurdle. Moreover, the logistics of distributing produce from these farms efficiently across the country must be carefully managed. Achieving scalability will require strategic planning, government support, and collaboration between private and public sectors.


Japan's decreasing population poses both a challenge and an opportunity for vertical farming. Traditional farming relies heavily on manual labor, which is becoming increasingly scarce. Vertical farming, with its reliance on technology, requires less manual labor, which can be an advantage in a shrinking labor market. However, the industry must still attract skilled workers who can manage and operate the sophisticated systems. This shift in labor requirements also presents an opportunity to create more attractive jobs for tech-savvy younger generations who may be more inclined to work in a technologically advanced environment.


The integration of robotics in vertical farming is a promising solution to the labor challenges faced by the agriculture sector in Japan. Robotics can handle various tasks such as planting, harvesting, and monitoring crops precisely and efficiently. This reduces the need for manual labor and increases the consistency and quality of the produce. Additionally, robotics can make agriculture more appealing to younger generations, who are more comfortable with technology and may view robotic-assisted farming as a high-tech career option. Adopting robotics in vertical farming can thus address labor shortages and enhance productivity.

New Crops

Vertical farming allows Japan to diversify its agricultural output beyond traditional staples like rice. The controlled environment of vertical farms allows for cultivating a wide variety of crops, including leafy greens, herbs, and even exotic fruits that are not typically grown in Japan. This diversification aligns with government initiatives to reduce dependency on imported produce and enhance food security. Moreover, the ability to grow crops year-round, regardless of weather conditions, can lead to a more stable and varied food supply. By exploring new crops, vertical farming can contribute to Japan's more resilient and self-sufficient agricultural system.

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