Aeon to enter farming business amid rising consumer demand for safety+

TOKYO, July 22 Kyodo -
Supermarket chain operator Aeon Co. said Wednesday it will enter the farming
business and grow lower-priced fresh vegetables from September amid rising
consumer demand for food safety.

With recent easing of regulations over Japan's agricultural sector, industry
observers said Aeon's move may make it easier for other companies to enter the
farming business as they seek to boost their cost performance.
Aeon, the operator of Jusco, Saty and MaxValu supermarket stores, said it will
borrow land from Ushiku city in Ibaraki Prefecture to farm private brand
vegetables that will be priced about 20 to 30 percent lower than regular
products. It will eventually aim to sell the vegetables on a nationwide scale.
The company will secure about 2.6 hectares of farming land through a subsidiary
created earlier this month to grow cabbages and other vegetables through garden
farming or other leafy vegetables like komatsuna and mizuna in greenhouses.
Aeon aims to produce around 300 tons for the first business year and expand the
farming land to about 15 hectares in the next three years. It will begin
selling the vegetables at around 15 Jusco supermarkets based mostly in the
Kanto region including Chiba and Ibaraki prefectures.
The Chiba-based retailer has been selling private brand agricultural products
by outsourcing production.
Aeon aims to further cut costs and increase transparency of its production
processes by taking control over all phases including production, processing to
retail.
''We will be able to fully disclose to the public all our records from
production to retail,'' Yuichiro Okauchi, Aeon's executive officer, told
reporters.
It hopes to eventually set up its own farm in each of eight regions nationwide,
including Hokkaido, Kanto, Kinki and Kyushu.
Other players in the retail, food and restaurant industries are also beginning
to penetrate the farming business.
For example, rival retailer Seven & I Holdings Co. set up a farming corporation
with an agricultural cooperative last August in Chiba and now sells vegetables
through its stores in the prefecture. It plans to increase the number of places
for its farming operations to 10 by fiscal 2010.
==Kyodo