Challenge to large-scale livestock production by recycling

resources and in coexistence with local community - based

on the merchant spirit pursuing the common happiness for three

parties (consumers - producers - local community)

Kaneko Farm, Co., Ltd

Kaneko Farm, Co., Ltd., (represented by Mr. Haruo Kaneko, CEO, 58 years old) is the largest cattle fattening farm of a grand scale in Aomori Prefecture, raising a total of about 8,300 heads of beef cattle consisting of breeds of Holstein, hybrids, and Japanese shorthorn, on the land of about 130 ha in Shichinohe Town in the livestock production zone of Prefecture. The annual amount of proceeds of the company reaches about 240 million yens.

Although the company has grown to the present scale after overcoming many difficulties, based on natural excellent gift for business operation and extraordinary efforts, the pursuit of profit is not the sole objective of company activities, but the principle lying at the base of business has been, consistently since its initiation, "Provision of animal products trusted by consumers by insisting on safety and reliability". Moreover, Mr. Kaneko, native to the neighboring village of Rokkasho, believes in the concept that business should be closely linked to local community, and as its practice, is devoting his efforts to promote such initiatives as: "respect for environmental conservation"; "challenge to livestock production based on the principle of resource recycling"; and "collaboration and integration with local community", all representing the attitude really deserving praise.

(1)

Insistence on safety and reliability

In order to practice the principle of provision of animal products trusted by consumers by insisting on safety and reliability and prioritizing product safety over business efficiency, the farm fatten the cattle by feeding silage prepared from in-house grown maize of dent corn varieties, in-house blended formula feed without any additives of antibiotics, and roughages based on rice straw hay produced in the Prefecture. Having also introduced early the traceability system, the farm is presenting an exemplary case of attitude in the approach to securing product safety which should be emulated by others and appreciated highly.

Particularly with respect to the company’s own brand breed of Holstein, "Ken-Iku-Gyu" (health-growth-cattle) that has already become established as the signboard product of the company, the company sticks to the procedures of quality control beginning from the acquisition of feeder stock by introducing the cattle solely from reliable breeder farmers under contract, based on the concept that "Healthy and vigorous growth leads to safety and reliability".

(2)

Respect for environmental conservation

As a practice of business operation closely linked with local community, the company has so far been actively tackling the issue of environmental conservation through such measures as the installation, in a proactive manner, of the state-of-the-art facilities for manure processing.

(3)

Challenge to livestock production based on resource recycling

The farm is trying to establish a livestock production system embodying the principle of resource recycling through relevant procedures such as "cattle manure processing→ soil making → cultivation of forage maize and rapeseed (rapeseed oil cake) → cattle rearing", which is to be verified by applying in-house processed manure to field plots of a former ranch of racehorses located in Shichinohe Town, the land of which was purchased in 2006.

(4)

Collaboration and integration with local community

In the former racehorse ranch which the company purchased and succeeded to in 2006, there are found eight valuable buildings of historical importance, registered as tangible cultural heritage, including the reportedly oldest surviving stable in Japan, in the style of traditional rural house of L-shaped plan, used for raising young colts, and a Matoh Kannondo (temple of horse-head deity of mercy), etc. In addition to having, on its own, taken charge of repair and maintenance of these cultural assets, and offering a recreation area to the townspeople, the company is committed to collaboration and integration with local community by organizing every year the annual festival and other festive events in which the people of neighboring community are invited to participate. Such a stance of the company is worthy of high praise.

Meanwhile, Mr. Kaneko holds an important public office, as vice-president of the Association of Fund for Price Stabilization of Formula Feed in Aomori Prefecture, deeply committed to smooth working of the Association faced with full of difficulties in the midst of steep rise of feed prices, thus contributing as well to the development of livestock production in the Prefecture.

The above describes generally the points for which the performance of Kaneko Farm has been appreciated. However, the essential fact is that Mr. Kaneko, while he is a farmer, is still committed to considering the three elements, "consumers, corporate person as producer, and contribution to society". In other words, he wishes to run his livestock farm by prioritizing the construction of relationship of trust, without forgetting the guiding principle for the vocation of merchant, namely, "Pursuit of happiness for three parties". His ideals are about to be thoroughly inherited by the successor who is looking out for the next generation of business, letting us anticipate to a great extent the sustainable development of the company in the future as well.

(1)

Shichinohe Town is located in the eastern part of Aomori Prefecture, constituting an inland administrative unit neighboring to Tohoku Town (former Kamikita Town) on the north and the east, Aomori City on the west, and Towada City on the south. The Town has been created since 2005 by amalgamation of 2 former administrative units: former Shichinohe Town and Tenmabayashi Village.

Trunk road network consists of the national route 4 traversing the town from south to north which is crossed by the national route 394 running from east to west, and a toll road called "Michinoku Highway" connecting with Aomori City. Other major municipal roads and prefectural roads constitute a network of radial pattern to connect with neighboring municipalities. The Town is, therefore, endowed with good conditions for communication over an extended area.

Besides, additional development projects are scheduled to be implemented, namely, the construction of a new railroad station of Tohoku Shinkansen near the town center and the improvement of the section between Misawa and Tenmabayashi of the ordinary national route 45 in the eastern part of the town. Such factors and geographical conditions make the Town a strategic communication hub in the region and the key area for comprehensive development of prefectural territory.

The principal industry of the town is agriculture. In terms of output value, the leading commodities are vegetables mainly composed of root crops such as Chinese yam and garlic (2.73 billion yens), that are followed by rice (1.76 billion yens), and livestock products (1.58 billion yens), in total amounting to 6.3 billion yens.

Regarding livestock production activities, although both the number of farms rearing animals and that of livestock heads had been on the decrease due to the impact of BSE in 2001 and the recent steep rise of feed prices, the trend has been stabilized in the past few years.

Number of days engaged in farming (day)
In animal sector

3) Land ownership and utilization (Unit: ha)

Total yield
(t/ha)

Outline of farming operation

Productivity

(1) Details of treatment

Fermentation by facilities for accelerated fermentation comprising vertical augers (2 buildings)
Fermentation by composters of closed vertical tank type

Details of business operation and production activities

"challenge to livestock production based on the principle of resource recycling"; and "collaboration and integration with local community".

In the meantime, the company has experienced difficulties such as the first oil-shock and BSE but managed to overcome them and increased the number of heads of herd and the farmland area to arrive at the present operational scale.

Moreover, it is committed to not only raising cattle but also to the mission of offering without charge the place for people to learn about the importance of multiple functions of agriculture and the preciousness of life. It is also actively engaged in the conservation of cultural assets, and practices the farming that is closely linked with local community, contributing greatly to the regional development and presenting a model for others to emulate.

The signboard of Kaneko Farm is the company’s own brand breed of Holstein, "Ken-Iku-Gyu" (health-growth-cattle).Based on the concept that "Healthy and vigorous growth leads to safety and reliability", healthy feeder stock (6-7 months old) are introduced from contracted farms in Hokkaido. They are subsequently fattened on the formula feed of the company’s original formulation without any additives of antibiotics and on roughages composed of in-house grown forage maize (dent corn varieties) and rice straw hay from the Prefecture, to transform the cattle into safe, reliable and good beef produced in Japan.

The cattle of "Ken-Iku-Gyu" are sold to large meat processing companies that acknowledge the product’s taste, quality and safety, and are requesting the farm to boost the supply. The dressed meat is also distributed to cooperative stores within the Prefecture and enjoying popularity among consumers. The company has lately diversified its activities to the area of meat processing for such products as beef jerky and curry in a pouch that are sold over the Internet as well as in the local roadside station "Shichinohe".

Based on the philosophy that "the prosperity of the company cannot be realized without understanding and cooperation of the people of local community", the company has been tackling the issue of environmental conservation by such measures as the installation in a proactive manner of the state-of-the-art facilities for manure processing.

Prompted by the new acquisition in 2006 of parcels of agricultural land in the same town that used to be a ranch devoted to raising racehorses, the farm has launched an initiative to establish a livestock production system based on resource recycling, which is an advanced phase of activities developed from the preceding initiative for environmental conservation.

In more concrete terms, the farm started to grow forage maize (dent corn) on the land of former racehorse ranch by applying the in-house processed compost. The maize crop was processed into wrapped silage for feeding "Ken-Iku-Gyu" cattle to complete the material flow cycle of the system.

Furthermore, since 2008 the company has started to grow rapeseed that is one of industrial resource crops by applying only the compost of cattle manure and without agricultural chemicals on the parcel of about 7 ha in the same former racehorse ranch. The planted rapeseed crop has recreated the former cultural landscape of pretty mustard flowers and enabled the expression and sales of edible oil (product name "Ranch Rapeseed oil" and the production of single-flower honey derived from mustard flowers. Moreover, rapeseed oil cake is utilized as cattle feed, thus enabling the realization of the veritable livestock production system embodying the principle of resource recycling: cattle → soil → crops (forage maize, rapeseed) → cattle.

As an extended endeavor along the axis of insistence on safety and reliability as well as along that of challenge to the livestock production based on resource recycling principle, the farm started in 2007 to raise Japanese shorthorn cattle that are a local specialty of the northern Tohoku district. On a downward trend of the number of heads of this breed, the farm currently rears a herd of 160 heads, becoming the largest producer in the Prefecture as a private enterprise.

Kaneko Farm intends to increase the herd size in the future as well based on the belief, "The breed has strategic advantages such as high capacity for consumption of roughages, high tolerance for low quality feed, and capability for fattening even while it is reared on grazing. It is attractive to us particularly under the present harsh business environment including the steep rise of feed prices."

As previously described, since Mr. Kaneko is an incomer from another neighboring village, he considers that it is important to establish the environment promoting collaboration and integration with the inhabitants of local community so that he is able to maintain large-scale livestock farming on a sustainable basis, and therefore he takes particular care in ensuring the measures to conserve environment by making the utmost efforts in adequate processing of manure and the production and supply of high quality compost, and thus integrating his farming business organically into the overall structure of regional agriculture. Moreover, as also mentioned before, in the challenge to livestock production based on resource recycling principle, he recreated the pretty cultural landscape by planting rapeseed, providing pastoral solace to the local community, and has diversified the company activities by launching the processing of beef and direct sales of the products.

In addition to these initiatives, he is dedicated to the effort for fostering successors by accepting as trainees the students of Prefectural Farmers Academy. Moreover, Mr. Kaneko holds an important public office as vice-president of the Association of Fund for Price Stabilization of Formula Feed in Aomori Prefecture, and is deeply committed to smooth working of the Association faced with full of difficulties in the midst of steep rise of feed prices, trying to raise the rate of participation in the fund and to promote mutual conciliation among members, despite busy engagement with his own farm.

In another aspect of social contribution, as he purchased in 2006 the land of former racehorse ranch mentioned previously, he named it "Happy Farm" and opened a "Petting Ranch" where miniature horses, sheep, racehorses, etc are reared. He has constructed a public restroom there which goes well with surroundings, offering the entire ground to townspeople as a recreational area. Other area of activities into which Mr. Kaneko devotes his efforts also is to let the public understand better about the livestock production through learning about the importance of multiple functions of agriculture and the preciousness of life. For that purpose, he offers the facilities of the Ranch as a place for field trips of pupils of elementary schools and junior high schools in their classes of integrated study, or as that for opportunities of exchange with consumers.

As policy in general, in the future as well the entire personnel of the farm will make the utmost effort with flamboyant fervor and their whole heart like the gigantic lantern of "Aomori Nebuta" festival, in the continuous pursuit of "Safety", "Reliability" and "High quality". Besides, the company carries out the activities of production by prioritizing the food safety over the efficiency of production, since it is charged with the task of production of food that is essential for human life. Profitability is not the sole objective. In this context, it will be the key policy of the company to try to communicate with consumers adequately, by disclosing all the relevant information concerning production.

The company will continue to maintain in the best condition the "Happy Farm" that has been established as a recreational area for townspeople and historical buildings, in order to inherit faithfully the traditional culture of the local community. The company intends to strive for the collaboration and integration with the local community by recognizing that the farm is able to survive only through the existence among the people there. As problems needing solution, there are worries caused by external factors such as the steep rise of feed prices and falls of the wholesale price of beef due to economic depression. However, such factors cannot be controlled by the company itself, and the only possible way to cope with them is to strive as best as it can for solutions that it is able to find by itself step by step. The company will sustain, as heretofore, its policy for running business, "Chisoku-Anbun" (virtue of satisfaction with what one actually has), i.e., "action based on down-to-earth reality".

In conclusion, the company will pursue the way of livestock production business which values the construction of mutual confidence as the most important matter above anything else, without forgetting, despite the position as a farmer, the spirit of merchant that is "Happiness for three parties", caring about the well-being of three elements, namely, consumers, producers including the company, and the contribution to the society.