Latest / The Demographics Podcast with Fexingo: Aging Populations, Birth Rates, and Economic Impact / How Falling Birth Rates Reshape the Food and Agriculture Industry
Transcript
- Lucas: So we've spent a lot of episodes talking about how falling birth rates hit specific industries — toys, hotels, cars. But today I want to talk about something more fundamental: food. The entire agriculture and food supply chain is about to get reshaped by demographics, and we can already see it happening in one country in particular. Luna: Japan, I assume? That seems to be the case study for everything on this show. Lucas: Japan is the leading indicator, yes. But the pattern is repeating in Italy, South Korea, even parts of rural America. Let me give you the headline number: Japan's agricultural workforce has shrunk by sixty percent since 1990. The average age of a Japanese farmer today is sixty-seven years old. Luna: Sixty-seven. So the typical farmer is closer to retirement than to middle age. Who's going to replace them? Lucas: That's exactly the question. Young people in Japan are not moving into farming. The pay is low, the work is hard, and the social status has declined. So the government and private companies are turning to technology. The poster child for this is a company called Spread Co. They operate a vertical farm in Kyoto called Techno Farm. Luna: I've heard of vertical farms — indoor, stacked trays, LED lighting, all that. But I thought they were mostly a Silicon Valley vanity project. Expensive lettuce for Whole Foods. Lucas: That's the reputation, and some startups deserve it. But Spread Co. has been at this since 2006, and they claim to be profitable. Their farm produces thirty thousand heads of lettuce per day. The twist is that almost every step is automated: seeding, transplanting, harvesting, packaging. They use robots and AI to monitor plant health, adjust lighting and nutrients. They need less than ten human workers per shift. Luna: So the workforce shrinks, but the output stays high. That's the demographic adaptation: machines replace the people who aren't there. Lucas: Exactly. And this isn't just a niche. Japan's Ministry of Agriculture has a target: by 2030, they want twenty percent of all leafy greens to be produced in vertical farms. That's a major shift from open-field agriculture. And it's driven purely by the fact that they don't have enough young farmers. Luna: But lettuce is one thing. What about staple crops like rice? You can't grow rice in a warehouse. Lucas: No, and rice is a huge part of Japanese culture. But even rice farming is changing. They're developing autonomous rice transplanters and combine harvesters. The company Kubota has self-driving tractors that can plow, plant, and spray with GPS precision. The farmer supervises from a tablet. It's not as dramatic as a vertical farm, but it's the same principle: fewer people, more technology. Luna: Let's talk about the demand side. Birth rates fall, populations age — what happens to what people actually eat? Lucas: Great question, and this is where it gets interesting from an economic perspective. Older people eat less in terms of sheer volume. They also shift toward softer foods, more processed items, more nutritional supplements. The demand for fresh produce doesn't disappear, but the mix changes. In Japan, sales of baby food are declining, while sales of elderly nutrition products — think nutrient-dense purees and meal replacements — are growing at about eight percent per year. Luna: So the grocery store of the future in a low-birth-rate country looks different. Less space for family-pack items, more single-serving packages. Smaller portions overall. Lucas: Absolutely. We're already seeing it. In Japan, the average household size is down to about two point three people. That means fewer families buying the big bags of rice or the jumbo packs of meat. Supermarkets are adjusting. They're stocking more half-portions, more ready to eat meals for one person. The entire supply chain has to adapt — from the farm, where you grow smaller batches of more diverse crops, to the processing plant, to the shelf. Luna: And this is happening in Italy too, right? I read that Italy's birth rate is now one point two children per woman, one of the lowest in Europe. Their agriculture sector is heavily reliant on migrant labor because young Italians don't want to farm. Lucas: That's an important point. In many countries, the immediate solution to a shrinking native-born farm workforce is immigration. Italy's fruit and vegetable harvests depend on workers from Eastern Europe, North Africa, and South Asia. But immigration is politically contentious, and it's not a permanent fix if birth rates also fall in those source countries. So the long-term answer has to involve automation. Luna: Let's zoom out. What does this mean for global food prices? If countries with shrinking workforces have to invest heavily in automation, does that make food more expensive? Lucas: In the short term, yes. The capital expenditure for a vertical farm or a fleet of autonomous tractors is huge. Spread Co. spent about twenty billion yen, roughly one hundred and eighty million dollars, building Techno Farm. That cost has to be recouped. But over time, automation can lower the per-unit cost, especially if labor becomes scarce and wages rise. The bigger risk is that some types of food simply become unprofitable to produce domestically, and countries will import more. Luna: Which shifts the burden to countries with younger populations — India, parts of Africa — that still have labor surpluses. So global trade patterns change. Lucas: Right. And that has geopolitical implications. Food security becomes a bigger concern. Japan already imports about sixty percent of its calories. South Korea is similar. China, despite its own demographic slowdown, is trying to maintain self-sufficiency in staples like rice and wheat. But if you can't grow enough, you have to buy from somewhere else, and that makes you vulnerable to price shocks or supply disruptions. Luna: One thing I find fascinating is the cultural dimension. Food is so tied to identity. In Japan, rice is central to the cuisine. In Italy, pasta and olive oil. If those become more expensive or harder to produce because of demographics, does the culture change too? Lucas: It's already changing. Japanese consumption of rice has fallen by more than half since the 1960s. Younger generations eat more bread and pasta. That's partly due to globalization, but demographic factors amplify it. When grandparents don't teach their grandchildren how to cook traditional dishes, tastes shift. And the food industry follows. Luna: So we're looking at a world where the food system is being pulled in two directions: toward high-tech indoor farming in aging rich countries, and toward traditional labor-intensive farming in younger but poorer countries. That's a massive disparity. Lucas: It's a split. And it raises big questions about equity. If Japan can afford to build robot farms but the Philippines cannot, then food security becomes a function of wealth as much as demographics. The countries that need the technology most may not be able to pay for it. Luna: Before we go further, I want to take a quick beat. Lucas, we've been doing this show for a while now — sixty-nine episodes. And we've never run ads. We keep it that way because listeners like you support us directly. Lucas: Yeah, it's a couple of dollars a month from people who find these episodes useful. That's genuinely what keeps the podcast going. If you've gotten something out of walking through the economy with us, you can find us at buy me a coffee dot com slash fexingo. No pressure, just if it's made a difference. Luna: And it means we can stay independent, focus on the topics that really matter. So thank you if you've already contributed. Lucas: Alright, back to food. Let's talk about what happens to the restaurant industry specifically. We've covered restaurants in a previous episode, but I want to tie it to agriculture. Luna: Go ahead. Lucas: Restaurants are a major channel for agricultural products. In Japan, the number of restaurants has been declining since 2015, partly because the overall population is shrinking, but also because older people eat out less. That reduces demand for certain types of produce — like fresh salad greens, which are popular in younger, urban demographics. So the vertical farms that grow lettuce might need to pivot to supplying processed food manufacturers instead. Luna: Or they export. I've seen Japanese fruit — like those luxury melons — being sold in Singapore and Hong Kong at huge markups. High-quality produce becomes an export good. Lucas: Exactly. And that's a strategy Japan is pursuing: premium agricultural exports to wealthier Asian markets. But it's not a volume strategy. It's a niche. For the bulk of calories, the future is more processed, more shelf-stable, and more uniform. That's easier for automation to handle, by the way. A robot can pack a perfectly identical meal tray every time. Luna: There's also the issue of waste. In an aging society, people cook less. They buy more prepared food, which often has more packaging and preservatives. The environmental impact is non-trivial. Lucas: Right. Smaller households generate more packaging waste per person. And if you're relying on long supply chains for imports, the carbon footprint grows. So there's a tension between the demographic imperative — we need automation to feed ourselves — and environmental goals. Some of these vertical farms are actually more water-efficient and use less land, but they consume a lot of energy for lighting and climate control. Luna: Let's bring it back to the core question: will technology solve the food problem created by falling birth rates? Or will we see a world where some countries just can't produce enough? Lucas: I think the answer is 'both.' Countries with capital and infrastructure will adapt reasonably well. Japan will probably figure out how to feed itself, even if the diet changes. But poorer countries that are also aging — like Thailand or China — face a harder road. China's farm workforce is shrinking fast, and they're investing heavily in automation, but they're also buying up farmland in Africa and South America to secure food supplies. That creates a whole new set of geopolitical tensions. Luna: So the food we eat in twenty years will be a product of demographics as much as climate or technology. And maybe more. Lucas: I think that's right. When I look at the data, the single biggest driver of change in the food system over the next generation isn't climate change — it's who is doing the farming, and how many of them there are. Birth rates are the silent variable. And we're just starting to see the menu change.