Multifunctionality And Farm Diversification: A Case Of Rural Tourism

Despite the growing interest in rural tourism in rural communities, there has been little investigation of how to introduce this
new activity into conventional farm management while taking advantage of agricultural multifunctionality. Considering rural
tourism as a new farm activity that internalizes the externality of agricultural multifunctionality, this paper examines the
evolutionary process of farm management by focusing on a farm household that operates a rural tourism business in
Hiroshima, a mountainous area in western Japan.

The following are the main points discussed in the paper:
1) To deal with farm diversification, we present a conceptual framework that characterises different markets: the urban market
for traditional farm products and the rural market for rural tourism. The latter is service goods and is gaining importance in
rural development. We should explicitly consider that the two markets exist in dealing with farm and rural diversification.
2) Health and recreational and educational functions are easier than other functions in a setting of multifunctionality to be
internalised into rural tourism activity by individual farmers. This is because these functions tend to be easily converted into
service goods that farmers can provide. Thus it is important to recognise the degree of difficulty for internalisation among
3) The examination of a farm household pioneering rural tourism clarified that rural tourism activity was a product innovation
in the farm activity whereas a traditional innovation in farming techniques was a process innovation. The former evolved from
an interaction between multifunctionality and rural tourism activity.
4) Therefore, we should shift policy emphasis from a traditional policy focusing on process innovation to a new policy
orientation towards promoting product innovation.

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Author(s): Ohe, Yasuo


Organizations(s): Department of Agricultural Economics, Faculty of Horticulture, Chiba University