Seedling Business: An Infrastructure Industry Supporting Agricultural Success
The seedling business is not simply a trade of selling 'baby plants.' The initial stage from seed to transplanting is vulnerable to pests, diseases, and environmental stress; if one stumbles here, subsequent yield and quality will struggle to improve no matter how much effort is put in. Therefore, seedlings function as an infrastructure product that absorbs failure risks in agriculture at the pre-process stage and increases the probability of cultivation success. By purchasing seedlings, farmers externalize initial risks and labor, allowing them to focus on transplanting and harvesting. This article explains the essence of the seedling business and its future prospects, based on domestic and international data and the latest technologies.
Market Size and Background
The total market size of the domestic seed and seedling industry (including seeds and seedlings) is estimated at approximately 260 billion yen, with vegetables accounting for about 169 billion yen. While vegetable and flower seeds account for more than half of seed and seedling sales, fruit trees and bulbs also hold significant shares. According to a survey by Yano Research Institute, the total domestic seed and seedling market in fiscal year 2022 was 228.9 billion yen, with the seed market estimated at 118.7 billion yen and the seedling market at 110.2 billion yen. Due to labor shortages caused by an aging population and the trend toward labor-saving, a shift from seeds to seedlings is progressing; however, demand for fruit tree and turf seedlings is sluggish, keeping the overall market flat.
The home gardening and gardening market also serves as an important support for the seedling business. In a 2024 report by Yano Research Institute, the gardening and home vegetable garden market (based on producer/manufacturer shipment value) is projected to be 232.1 billion yen in fiscal year 2023 and 233.4 billion yen in fiscal year 2024, a slight increase. While the core customer base of those in their 60s and 70s is aging, acquiring new customers in their 30s to 50s has become a challenge due to the opening of urban-style stores and the spread of urban farming, leading to a demand for flower seedlings that are easy to grow and bloom for long periods, as well as low-maintenance vegetable seedlings.
Japan's seed and seedling industry has high international competitiveness, with Sakata Seed Corporation and Takii & Co., Ltd. ranking among the world's major seed and seedling companies. As the domestic market remains sluggish, expanding exports and overseas operations are keys to corporate growth.
From a global perspective, seed and seedling trade and market size are larger than one might imagine. According to data from the Ministry of Agriculture, Forestry and Fisheries, the global trade value of seeds and seedlings has expanded rapidly since the late 1980s, reaching approximately 14.4 billion USD (about 1.79 trillion yen) in 2019. The global seed and seedling market size is estimated to be around 45 billion USD, with the United States and China holding large shares. Looking at the sales of major global seed and seedling companies, multinational corporations such as Bayer (formerly Monsanto), Corteva Agriscience, and Syngenta occupy the top positions, with Sakata Seed and Takii & Co. from Japan entering the top 10. Sakata Seed has a high global market share of approximately 65% for broccoli, 75% for eustoma, and 30% for pansies, while Takii & Co. boasts a global market share of approximately 70% for cabbage in Indonesia, 50-60% in Thailand, and 70-80% for ornamental sunflowers and ornamental kale. Given the sluggish domestic market and intensifying international competition, expanding exports and overseas operations is becoming increasingly important for Japanese seed and seedling companies.
Types of Seedlings and Technological Evolution
The seedling business varies in characteristics by crop and generally falls into the following types:
・Vegetable seedlings: Grafted seedlings are highly valuable for fruit vegetables such as tomatoes, eggplants, cucumbers, and bell peppers. By joining a disease-resistant rootstock with a high-yielding scion, resistance to continuous cropping disorders and soil-borne diseases is imparted, increasing productivity. Grafting technology that balances vegetative growth and yield has been used in Japan for over 100 years, and in recent years, its use has increased due to the breeding of disease-resistant rootstocks and the simplification of grafting methods.
・Flower seedlings and home gardening seedlings: Bedding seedlings such as pansies, violas, and petunias, as well as herb seedlings, are provided for consumers, with an emphasis on ease of growth and appearance. Although the market is sluggish, new customers are being acquired through the development of weather-resistant varieties that bloom for long periods, dark-colored varieties, and proposals for interior greenery.
・Fruit tree seedlings and saplings: Fruit tree seedlings such as grapes and apples are used for a long time once planted, so the quality of the seedling has a significant impact. There is a strong connection with variety rights and regional strategies, making the management of seedling distribution important.
・Strawberry seedlings: Since seedlings are propagated from runners, virus-free management and variety rights management are important. They have become infrastructure products that influence the competitiveness of production areas.
In recent years, seedling production technology has also evolved. In vegetable seedling production, cell-molded trays have become widespread, and labor-saving is progressing by automating tasks from sowing to planting. Mericlone seedlings (seedlings produced by sterile tissue culture) have no quality differences and can be mass-produced, and are widely used for foliage plants and flowers. Furthermore, 'vaccine-inoculated seedlings' applying plant vaccine technology have also appeared. This uses the virus interference effect between plants to inoculate a weak virus first, preventing the invasion of strong viruses that might infect later. Developed for cucumber mosaic virus and others, there are reports that inoculated seedlings increased yields by approximately 1.6 times compared to normal seedlings. Because farmers can reduce disease risk without significantly changing cultivation methods, it is attracting attention as a new technology with low environmental impact.
Revision of the Plant Variety Protection and Seed Act and Rules on Self-Propagation
As a movement in the legal system related to the seedling business, the revision of the Plant Variety Protection and Seed Act enacted in 2020 was a major turning point. Before the revision, the act of farmers sowing seeds from harvested crops for the following year (so-called self-propagation) was generally considered not to be subject to the effects of breeder's rights, and many farmers did so as a matter of custom. However, under the revised law, seed and seedling production activities, including self-propagation, are subject to breeder's rights, and permission must be obtained from the breeder's rights holder to propagate seeds and seedlings of registered varieties. This revision was enforced on April 1, 2022, and the system for protecting the intellectual property of seeds and seedlings was strengthened.
However, this does not mean that all self-propagation is prohibited. According to the explanation by the Ministry of Agriculture, Forestry and Fisheries, most varieties currently in use are general varieties, and self-propagation can continue to be done freely. Under the revised law, permission is only required for registered varieties developed by national or prefectural research stations, and self-propagation is possible if permission is obtained. The background to making self-propagation of registered varieties subject to a permission system is that there have been cases where new varieties created by the efforts of breeders were propagated without permission and leaked overseas, and it is necessary for rights holders to grasp the actual state of propagation and manage it appropriately.
In addition, cases where self-propagation is not restricted are clearly indicated. In a pamphlet by the National Agriculture and Food Research Organization (NARO), it is shown that self-propagation is not restricted for native varieties, varieties for which the registration period has expired, varieties that have never been registered, home gardening and hobby use, and breeding purposes. Also, self-propagation refers to farmers cultivating seeds and seedlings purchased legitimately and using the harvested products as seeds and seedlings for the next crop within their own management, and self-propagation of registered varieties is permitted only if they do not belong to designated plants. It is also clearly stated in the FAQ of the Ministry of Agriculture, Forestry and Fisheries that home gardening and hobby use are outside the scope of the legal revision.
Regarding the permission fees and procedures that farmers are concerned about, the current system explains that 'neither permission nor permission fees are required for general varieties, including native varieties.' Even for registered varieties, it is unlikely that variety developers would set high permission fees that would hinder farmers' use, and it is also possible for agricultural organizations to collectively undergo permission procedures. Thus, the revision of the Plant Variety Protection and Seed Act is intended to protect the rights of new varieties and prevent overseas leakage, and does not deprive farmers of traditional agricultural practices or the freedom of home gardening.
Main Players and Business Models
Japan's seedling business is supported by diverse players such as seed and seedling companies, specialized seedling companies, JA seedling centers, and gardening stores/home centers. Berg Earth, one of the largest vegetable seedling production companies in Japan, has set 'further expansion of the seedling business and strengthening of profitability' in its 2024–2028 medium-term management plan, with a goal of acquiring a 25% share of the domestic major fruit vegetable grafted seedling market. The company is incorporating strategies such as expanding production capacity through nationwide farm development, developing vaccine-inoculated seedlings and biostimulant seedlings, and introducing AI-utilized equipment. Major seed and seedling companies Sakata Seed and Takii & Co. are ranked among the top in the world and have high global market shares in specific items such as broccoli and cabbage. Since seedling production and distribution are compatible with mass production, investment in production facilities and logistics networks, and cooperation with JA and agricultural corporations are keys to competitiveness.
The seedling business is growing as a service model that includes proposals for variety selection and cultivation planning, rather than just 'sell-out' product sales. In grafted seedlings, the combination of rootstock and scion and proposals for cropping types become value, and by providing seedlings, cultivation manuals, and data management as a set, farmers' success probability can be increased. Also, for home gardening, businesses that package seedlings that are easy to grow and fun to harvest, appealing to SNS-worthiness and experiential value, are spreading.
Market Trends and Challenges
Response to Labor-Saving and Labor Shortages
The number of domestic agricultural workers has decreased from approximately 3.67 million in 1995 to 1.92 million in 2024, and the population is aging. Expectations for the seedling business as a technology to realize labor-saving are rising, but DX (Digital Transformation) efforts across the industry are still only about 12%, which is late compared to other industries. In seedling production sites, there are many processes that rely on manual labor such as sowing, watering, grafting, and quality sorting, making it difficult to secure human resources. If the introduction of AI-based grafting robots, automatic transport systems, and environmental control systems progresses, labor-saving and quality improvement can be achieved simultaneously, so digital investment can be said to be an important theme for the future.
Disease Risk and Inventory Management
Seedlings are living things and cannot hold inventory, so demand forecasting and production planning are life-or-death. If too many are made, waste occurs, and if too few, shortages will collapse farmers' cultivation plans. Also, if a disease enters the seedlings, there is a danger that the damage will spread to the farmers' fields, so hygiene management and inspection systems are essential. JA Saitama Chuo recommends the use of 'grafted seedlings that can withstand continuous cropping' for home gardening, explaining that using rootstocks with high disease and pest resistance can suppress continuous cropping disorders and pests. In this way, the supply of healthy seedlings has value not only for farmers but also for home gardening users.
Climate Change and Environmental Response
Due to climate change such as recent extreme heat and heavy rain, environmental management for seedling production is becoming difficult. Efforts to control temperature and humidity in closed seedling production facilities to stabilize seedling quality, facility operation using clean energy, and the development of seedling production technology that does not rely on chemical pesticides are also required. Berg Earth's medium-term plan sets out the development of CO2 emission reduction and SDG-compliant technologies, aiming for seedling production that suppresses environmental impact through the use of plant vaccines and biostimulants.
Future Prospects and Business Opportunities
There is still a lot of room for growth in the seedling business. The following points can be cited as future prospects:
1. Popularization of custom-made seedlings: 'Prescription-type seedlings' that customize seedlings according to region, cropping type, and soil conditions are in demand. Differentiation is possible by designing seedlings that meet the requests of farmers and home gardeners, such as for high-temperature periods, low-temperature periods, or for beginners.
2. Data-driven seedling production: A mechanism that links data such as sowing date, seedling environment, and watering history to seedling lots and improves the next seedling design by linking with farmers' cultivation data is expected. By introducing sensors and cloud management systems, seedling quality management and demand forecasting can be made highly accurate.
3. Packaging of varieties, seedlings, and cultivation support: There is a possibility that service models where seed and seedling companies or seedling producers provide variety selection, seedling supply, cultivation guidance, and sales channel proposals for harvested products all at once will spread. This significantly reduces farmers' management risks and has room to develop into a performance-based business.
4. Response to home gardening and urban agriculture: Due to the spread of urban farming and balcony gardening, demand for seedlings that are easy to grow in small spaces and enjoyable to look at is increasing. Sales strategies linked to SNS and experiential services are also effective.
5. Technology emphasizing environment and health: Disease control technology that does not rely on chemical pesticides, such as plant vaccine-inoculated seedlings, and technology that improves heat resistance through biostimulants, which reduce environmental impact while improving yield and quality, will be differentiation points in the future.
Perspectives on the Seedling Business to Utilize in the Field
With an understanding of the seedling business, we will organize the points that farmers and home gardening users should keep in mind when actually purchasing and using seedlings.
1. Early reservation and demand forecasting: Once the season starts, popular seedlings quickly become in short supply. JA Saitama Chuo calls for making arrangements for grafted seedlings that can withstand continuous cropping early. This is important for aligning the producer's production plan with the farmer's cultivation plan, and by making reservations based on demand forecasts, high-quality seedlings can be secured at the appropriate time.
2. Check seedling quality and hygiene management: It is difficult to judge seedlings by appearance alone, and the development of the root ball and the presence or absence of pathogens greatly affect growth. Suppliers who provide uniform quality seedlings invest in hygiene management such as soil management and tray disinfection, so it is important to purchase from reliable suppliers.
3. Proper use of grafted seedlings and self-rooted seedlings: If continuous cropping disorders or soil-borne diseases are a concern, grafted seedlings using highly disease-resistant rootstocks are effective. On the other hand, if the soil is healthy, self-rooted seedlings have lower costs and are easier to manage. Use them properly according to the crop and soil conditions.
4. Understand legal precautions: As mentioned above, permission is required for self-propagation of registered varieties, but self-propagation can be done freely for general varieties and home gardening. It is necessary to check whether the purchased seedlings or seeds are registered varieties and use them appropriately.
5. Utilization of digital tools: Using apps or cloud services that record sowing dates, watering, and environmental data allows for the accumulation of seedling growth status and yield data, which is useful for the next variety selection and seedling ordering. Precisely because it is a field where digitalization has not progressed, individual farmers can differentiate themselves by utilizing data.
In this way, the purchase and use of seedlings is not just material procurement, but is directly linked to management planning and environmental management. Securing high-quality seedlings and using cultivation data for the next improvement leads to stable production and profit improvement.
Conclusion
The seedling business is an infrastructure industry that processes seeds into semi-finished products called seedlings, increasing the probability of success for farmers and home gardening users. It can be paraphrased that seeds sell 'possibility,' seedlings sell 'probability of success,' and cultivation support sells 'results.' Although the domestic market is mature, many challenges and opportunities such as labor-saving, environmental response, and digitalization coexist. For operators, high value-added through technical capabilities and data utilization, and a shift to service models that meet customer needs are keys. For farmers and home gardening users, by choosing and utilizing seedlings well, they can reduce the risk of cultivation failure and lead to a fun and rich dietary life.
