Survivability from a Managerial Economic Perspective: Dairy Farming and Rice Farming in Japan

Abstract

Over the past few years, Japanese agricultural holdings have been facing challenging conditions in terms of fluctuating food demand as well as a decline in food prices. This paper clarifies managerial survivability from two standpoints: temporary and permanent, applying two analytical methods. First, we employ ‘Expense-income analysis' to investigate temporary managerial survivability (TMS), which is realised when an agricultural holding's gross income is above or equal to operating expense. Second, we employ Minimum Required Operating Scale (MROS) analysis to investigate permanent managerial survivability (PMS), which is realised when a holding can afford one additional unit of the scarcest resource. We analyse the dairy and rice farming sectors in Japan. Our findings reveal that it is not only imperative for holdings to enlarge their farming scale, but also to more essentially take into account improvements in managerial environments.