As economic development proceeds, the contents and style of people's meal has changed. Accordingly, household demand for rice has been declining and thus the percentage of rice in gross agricultural output has declined to about 25 percent. On the other hand, rice demand of the food service industry and the home-meal replacement industry has increased. As a result, a market where there are a variety of consumers who have different tastes has emerged. By this market, the demand for Hokkaido's rice that is in low price range has been maintained. In Hokkaido, farmers have done contract farming with those food industries under increasing risk of selling rice. In contract farming, risk of selling rice decrease. So this thesis analyzed quality competition between Hokkaido and Honshu, growth of the food service industry and demand for rice, determinants of contract farming in Hokkaido rice farming and determinants of farmer's adoption of a new rice variety under contract farming. Results are as follows: (1) Japanese rice market is vertically differentiated by grade and rate of contained protein and amylase of rice. That Hokkaido rice farming has survived until now would be largely due to vertical differentiation. (2) As a result of the cost function analysis, under depression of Japanese economy after 90's, large food service industries that serve food in a low price had substituted labor with capital due to low interest rates in the 90's and increased demand for rice largely. (3) From the statistical data, from 80's to 90's, the quality of Hokkaido's rice had risen rapidly, and a number of large common-use drying and preparing facilities had been constructed simultaneously. As a result, provision of rice which has stable quality and in a large lot has been insured. (4) As a result of econometric analysis of the determinants of contract production in Hokkaido's rice farming, adoption rate of good quality new rice variety, rate of production of high quality rice, diffusion rate of commonly used large facilities has influenced positively and significantly on the rate of contract. (5) Contract production has influenced positively and significantly on the rate of farmer's adoption of new rice variety in Ishikari and south Sorachi area by panel data analysis. Under the situation that agricultural income grows at a low rate, farmer's strategy in product differentiated market and the method of transaction of output will be more important.
