The purpose of this paper is to analyze the formation process of The Fundamental Structure of Japanese Agriculture by Hakuju KURIHARA with special reference to his observation of the Hokkaido agriculture. Our analysis is based on the recognition that the Hokkaido agriculture played an important role in his detecting the so-called “peasant standardization” in his work.

　Therefore, we first clarify that KURIHARA's original intention was detection of the capitalistic development of Japanese agriculture and that he had assumed agriculture in Hokkaido the forerunner of this trend. In spite of his expectation, however, KURIHARA found through his study on the farming structure that the Hokkaido agriculture should also be analyzed within the “peasant category”. This is the conclusion of our second analysis and is also the most important point of the formation process of The Fundamental Structure of Japanese Agriculture.

　Lastly, we point out that KURIHARA seemed not to deny his original intention entirely even after drawing the conclusion, that this duality of his understanding in the Japanese agriculture was to play a significant role in his theoretical development later on.

　This paper aims to clarify the production structure of Japanese fruit farming, that is experiencing over-production, by comparing tangerine orange with apple. The structure is viewed from points of the productive power of fruits farming and the law of motion of commercial farming.

　Up to the 1960's the development of the productive power of fruits farming shifted its stage from increasing yield to saving labor, while the differentiation between labor-saving orange farming and labor-intensive apple farming progressed. Both farming major producing areas, on the one hand the tangerine farming in Kinki region pursuited a scale merit in marketing through large fruit cooperatives and mechanical selection systems, and on the other the apple farming in Tohoku region pursuited quality of fruits through intensive marketing such as fruit collection merchants and hand-selection systems.

　As for class differences among fruit farmers, the upper class farmers with an excessive size of orchard scamps their farm works while losing their economic advantage. In contrast, the middle class farmers' position is improved through saving labor, under an adequate size of orchard and with skilled labor.

　As for farm organization, excessive specialization in fruit production was inconsistent with overproduction. Especially, in the case of dwarf apple cultivation that easily exploits soil fertility, it must be necessary to establish a soil-fertility-reproduction system under diversified farming. Systematic regional farming is promoted by farming farmers'organizations, such as joint use organization of large mechanical sprayers. It would also be promoted, by reorganizing regional land use systems, for which collective land control is necessary.

　The rates of return on capital in Japanese agriculture have been considered fairly low. However, the unprofitability of capital is not consistent with the fact that the agricultural real capital formation increased drastically over the period of the high economic growth especially during the late 1950s through the 1960s. The main purposes of this paper are to present estimates of the rates of return on investment in both real and nominal terms, to compare them with the rates of return on capital, and to clarify the dominant factors for the rapid increase of capital formation.

　In this paper, the internal rate of return method is applied to estimate the rates of return on capital and investment. The rate of return on capital is defined as the rate of gross profit to gross fixed capital. In the case of the estimation of the rate of return on investment, both the real and nominal rates are estimated by different appropriate specifications.

　Among the findings, three points are worth noting. First, the real rates of return on capital formation are higher than the market rates of interest, whereas those on capital are lower. Second, the nominal rates of return on capital formation are higher than the real ones. Third, the real rates of return on capital formation and inflation rates are good indicators to explain the rates of growth of real capital formation. During the period from 1960 to 1979, the wage rates increased while the relative prices or capital goods decreased. On the other hand, the real gross value added of agriculture was rather stagnant. These may have been the factors which resulted in the conspicuous differences between the rates of return on capital and on investment. Nevertheless, the above results suggest a more important point that the adjustment of fixed capital input to changes in relative prices requires a notable time lag.