Taking a stake in the farming company Sungraise (2006)

To own, or to support

The character of this decision differed somewhat from what the phrase “vertical integration” suggests. Putting up a majority of the capital while holding voting rights to one-tenth, and leaving management to the producers’ side, followed the constraints of the Agricultural Land Act — and at the same time declared a position of supporting growing regions rather than controlling them. There is a distance between the direct motive of growing the tomatoes it kept running short of and the stated purpose of revitalising producing regions, and that distance is arguably what led to the venture being designated for national subsidy support.

The difficulty of being the supporting party did remain. Output from the company’s own farms plateaued at around 10% of what it uses, and the earnings burden has stopped new ventures being founded. Even so, the work of thickening relations with contract growers continues, and the product strategy of fresh vegetables as the signature has never wavered. Do you secure stable supply by taking the source onto your balance sheet, or by the quality of the relationship? This decision tested in the field, early, a question that recurs whenever a restaurant company reaches upstream into its ingredients.