Tackling the Challenges of Business Assessment from Agriculture.

"I can't get a loan because I have no collateral" -- we have heard such voices many times in the agricultural field. Proving the "true capabilities" of the agricultural field, which cannot be seen through financial statements or physical collateral, with data.

Farm Alliance Management Co., Ltd. (Location: Shino Building 4F, 1-20-11 Hamamatsucho, Minato-ku, Tokyo; Representative Director: Kazunori Kobayashi, hereinafter referred to as FAM) will begin a proof of concept (PoC) to solve the challenges of business assessment in the agricultural sector, which has extremely high information asymmetry, triggered by the Business Loan Promotion Act (Establishment of Corporate Value Security Rights) enacted on May 25, 2026.

Many Japanese agricultural managers possess "on-site capabilities" that cannot be fully expressed through financial statements or physical collateral. However, these capabilities have been difficult for financial institutions to access and have been subject to "information asymmetry" in financial terms. This research aims to address the structural challenge of "mid-term monitoring" that financial institutions face in adapting to the new law, by using empirical data, with the concept of capturing "currently ongoing changes (processes)" rather than "past results (financial statements)."

Photo is for illustrative purposes.

Background: The Challenge of "Mid-term Monitoring" Brought About by the Business Loan Promotion Act The enforcement of this law has created "Corporate Value Security Rights" that assess the future potential and intangible assets of a business as collateral. On the other hand, in the field of regional financial institutions, how to continuously grasp the actual business situation after lending is increasingly recognized as a new practical challenge. While the importance of business assessment is widely recognized, standard practical protocols for continuously and objectively grasping business changes after loan disbursement have not yet been sufficiently established, and the development of objective benchmarks is required.

Agriculture is the most challenging field where these issues are most prominent. The condition of a business operator often changes by the time financial statements are prepared. Despite the fact that the "quality of management processes," which do not appear in financial statements, affects the sustainability of agricultural management, practical methods for continuously and objectively observing these changes in the agricultural sector have not been sufficiently established.

Overview of the Proof of Concept (PoC): Back-testing with 3-5 Years of Raw Data This proof of concept will be conducted with the full cooperation of 10 advanced agricultural corporations (multiple cropping patterns) primarily in the Kyushu region. We will analyze the "management records," "work records," and "harvest data" of the target companies over the past 3 to 5 years to verify the effectiveness of a mathematical model that captures signs of business change and recovery from daily work processes before financial statements deteriorate.

Proof of Concept Period: July 2026 - November 2026

Target: 10 agricultural corporations (advanced agricultural management entities cultivating multiple crops, primarily in the Kyushu region)

Production Cropping Patterns: Open-field vegetables, greenhouse cultivation, grains

Data Used: Management records, work records, harvest data from the past 3-5 years (varies by corporation)

Research Content: Research on methods for observing continuous business changes in agricultural management. An approach that captures "the process of change" rather than "the results."

Technical Details: Non-disclosure for intellectual property protection (patent application in preparation)

This research is not a proposal for an automated loan approval system, but rather an examination of the potential for an "objective method for observing business changes" to facilitate ongoing dialogue between financial institutions and businesses.

Future Outlook: Joint Verification with Financial Institutions and Application to Other Industries Data analysis for this PoC will begin sequentially from July 2026. In the future, we plan to refine it into a reliable protocol that can be used in the field through joint verification with regional financial institutions and others interested in this research.

We will proceed with the proof of concept limited to the agricultural sector first, and based on the knowledge gained, we will cautiously consider the possibility of applying it to other industries that depend on capital investment, such as manufacturing and small and medium-sized enterprises in general, in the future. We believe that if this dynamic observation method is established in the agricultural sector, which is considered the most difficult field for business assessment in Japan, valuable insights will be gained for verifying its applicability to other industries.

About Farm Alliance Management Co., Ltd. We provide services aimed at solving issues in the agricultural field, from production to distribution, including support for obtaining international certification GlobalG.A.P., wholesale and sales of fresh produce, and provision of agricultural ICT tools. Through our unique research and development, which aims to connect the field data accumulated through solving agricultural management challenges with financial practices, we aim to provide a new perspective on business lending practices in Japan from the agricultural sector.

Farm Alliance Management Co., Ltd.

105-0013 Shino Building 4F, 1-20-11 Hamamatsucho, Minato-ku, Tokyo Phone: 03-5422-1922 FAX: 03-5422-1921 Email: support@farmalliance.net