The partners are considering environment-friendly farming techniques, such as using dung from dairy cattle for manure and wind and solar power for watering.
A joint company, to be capitalized at 1.5 billion yen, will be established in Shandong province as early as April.
"This will be the first time for Japanese companies to operate a full-scale farming business in China," an Asahi Breweries official said.
The three companies plan to secure about 100 hectares of farmland to raise dairy cattle and grow produce, including lettuce, corn and strawberries.
They are expected to produce 7,000 to 8,000 tons of milk each year, as well as 2,000 tons of vegetables and 600 to 700 tons of fruit.
The companies expect sales to grow to 700 million to 800 million yen in the fifth or sixth year of operations, considering the growing demand for expensive and safe produce in China.
The distribution system will be designed to keep the produce fresh to market.
Sumitomo Chemical will provide fertilizer, manure and other resources, while the trading company Itochu will help develop distribution channels and other aspects.
Asahi Breweries will put up 1.1 billion yen of the joint venture's capital, while 250 million yen will be shouldered by Sumitomo Chemical and 150 million yen by Itochu.
The Shandong provincial government in 2003 asked Asahi Breweries to cooperate in modernizing agriculture.
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