September 22, 2015


Reviving a Village by Giving it a Corporate Structure -- Efforts of Abamura LLC in Tsuyama City, Okayama Prefecture

Keywords: Civil Society / Local Issues Newsletter 

JFS Newsletter No.156 (August 2015)

Many villages and towns in Japan have disappeared as a result of consolidation under the national government's policy on municipal consolidation promulgated in 1999. The number of municipalities decreased by nearly half from 3,232 as of March 31, 1999 to 1,727 as of March 31, 2010.

Against this backdrop, people in the Aba District of Tsuyama City, Okayama Prefecture, which used to be an independent municipality, have been working to implement their "Abamura Declaration" in an effort to restore the community, which they consider their true home. Local residents provided the capital to establish the "Abamura Limited Liability Company (LLC)" as a way of passing on Abamura District as a discrete entity to future generations. What kind of roles is this company playing in the community?

The Abamura Declaration

Aba Village as a municipality was consolidated into Tsuyama City in 2005. What happened to the Aba District thereafter? The decade since consolidation is described in detail in the Abamura (literally "Aba Village") Declaration, published in April 2014. The declaration statement is introduced below.

The Abamura Declaration Statement

A decade after consolidation - Dawn of new village community

Due to the Great Heisei Consolidation, Aba Village in Okayama Prefecture was consolidated into Tsuyama City in 2005, ending its 115-year-old history as a "village."

Ten years have passed since then.

The population decreased from 700 at the time of consolidation to 570. The 140-year-old elementary school was closed, the kindergarten was temporarily closed and the only gas station in the area went out of business. The local administrative office was scaled down. The district was facing all kinds of adverse challenges.

These challenges have already begun to shape a future in the midst of adversity. A non-profit organization (NPO) established by local residents is promoting mutual cooperation to help residents make a living and producing rice and vegetables using environment-friendly, natural farming methods. The closed gas station will be revived through the Limited Liability Company (LLC) established with residents' investments.

We launched full-scale operation of firewood boilers to re-heat hot spring water using wood thinned from local tree plantations, aiming at local production for local consumption of energy. We are determined to create a new "village community" on our own, involving not only local residents but also supporters and young migrants from outside the community.

Here we declare our place to be "Abamura."

Aba is no longer an official village municipality, but "Abamura" continues to exist as a new form of autonomy and as our true home.

Abamura may be an inconvenient and isolated place surrounded by mountains with only one accessible route, but it also has many resources important for living humanely.

We declare that we commit ourselves to sharing the Abamura way of life in harmony with nature with many different types of people, and to preserving it and passing on its lifestyle and landscape to our offspring.

This is the dawn of a new community ten years after the consolidation.

Tsutomu Ogura, Chairman, Abamura Management Council April 2014

Closure of the gas station opened up "Abamura"

As noted in the Abamura Declaration, after consolidation, Aba District's population declined and its school was closed. In the spring of 2013, the only gas station in the district was informed by the Japan Agricultural Cooperative that it was to be closed. Automobiles are an important means of transport in this area as it is a considerable distance from central Tsuyama City. Moreover, residents need kerosene for heating in winter. A gas station is a must for the life of the community. A survey was conducted and results revealed that up to 70 percent of the residents wanted the gas station to continue operation.

Residents discussed how to keep the gas station, and concluded that they would establish a company as company members (equal to investors under the Japanese Companies Act). It was a unique way and they chose it because they wanted to hold on to the notion of solving the problem by themselves.

On February 6, 2014, a total of 134 residents in Aba District became investors in Abamura LLC. Currently, it has 170 individual and group members. It is considered one of the bigger firms in northern Okayama Prefecture.

What is a Limited Liability Company (LLC)?

Let us briefly describe the features of a Limited Liability Company (LLC), one form of corporation. A Japanese LLC is established exclusively by company members (investors) who bear indirect limited liability for their investment.

It is similar to a limited company, but in a limited company the president is the representative and entity empowered to operate the enterprise. In an LLC, all the investors are representatives and can choose a person to operate the enterprise. In a limited company, profits are distributed in proportion to the amount of investment, whereas in an LLC, this is decided at will. Therefore, compared to a limited company, an LLC incorporates elements similar to those of a cooperative.

Expansion of Abamura LLC's service

In addition to the operation of the gas station, in September 2014, Abamura LLC started a door-to-door service to deliver merchandise from a supermarket. Prior to the delivery, it distributes catalogs to households with single persons or elderly couples. After collecting their orders by telephone, etc., Abamura LLC compiles and sends the total order to the supermarket. Abamura LLC staff split up and deliver the merchandise sent from the supermarket. Although the merchandise prices are the same as those charged by the supermarket, Abamura LLC receives a separate 10 to 20 percent commission. The company's monthly income was around 100,000 yen (about US$820) at the beginning, and surpassed 200,000 yen (about US$1,640) in December 2014. The demand of the service is growing.

Abamura LLC is also engaged in a "Wood Station Project" to use forest thinnings and unused timber by processing it into wood chips for fuel for a spa used by the local community. About 94 percent of Aba Disctrict's area is mountainous forest. However, much of this forest land was abandoned partly due to a drop in wood prices. Timber from thinning these forests was just left where it fell, or in some cases, the thinning operation itself was not carried out. Against this backdrop, Abamura LLC started to seek a way to utilize this timber by processing it into chips for consumption within the local community. Currently, Abamura LLC is planning to expand its timber collection points to outside the district, and to process it into firewood to sell to households with wood-burning stoves, etc.

In addition to projects pursued by Abamura LLC, a wide range of other initiatives are also being conducted in the Aba District. Growing organic rice is one of these. This project is promoted by the Eco Village Aba Promotion Council, which was established in 2008 as part of an effort to build an environmentally sustainable village by growing rice while raising ducks in the rice paddies. Ducks eat weeds and insects while providing manure in the form of droppings.

Why Abamura's initiatives are significant

Japan is facing depopulation. As JFS has reported many times in our newsletters so far, many local governments and communities are in danger of disappearing if they do not take countermeasures. The initiative in the Aba District of establishing a company with residents' investment illustrates a new model for governing and keeping a local community alive.

Japan's Depopulating Society: Population Concentration in Tokyo and the Disappearance of Local Municipalities
Part 1
Part 2

Moreover, when local people run a local business, the money generated circulates within the community rather than flowing outside the area. The importance of economic circulation is often noted in the context of local community revitalization. Initiatives in the Aba District are very important from this viewpoint as well.

Taking the gas station as an example, when a company with headquarters in Tokyo runs a gas station, part of its sales revenue is absorbed by headquarters. It is also probable that companies outside the community would be in charge of the maintenance and accounting operations of the gas station.

On the other hand, in the case of a local business created by resident investment, a higher proportion of sales revenue remains in the local area. With this kind of system, the money does not leak out of the community as easily. Even more money circulates within the area if local companies take charge of maintenance, accounting, and other services for the gas station. As for the "Wood Station Project," part of the money paid for wood fuel resources remains in the district so it may also be used within the area. This too is important in terms of economic circulation.

We welcome your input on these initiatives in the Aba District to keep the local community together through capital investment by local residents. The JFS plans to introduce a variety of initiatives by local communities in this newsletter.

Written by Naoko Niitsu