I had this same problem. I don't remember whether the quest states it plainly or not, but to get Crunchy to appear you have to rebuild the scarecrows. To do this, you have to pick up the heads laying on the table and place them on the scarecrows.

I too was stuck on this, and the "hint" about the scarecrows needing heads was too subtle for me - I "cheated" and looked up the quest in the wiki where amidst the Japanese there is a picture of a scarecrow head which gave me enough of a clue - thanks to the wiki authors :)

Ya, I think the way the quest read, it sounded like Crunchy Bite needed to be killed so that the farmers could safely repair the scarecrows, not the other way around.

Had problems with it as well. But yeah, if you put the head to all of the scarecrows
Crunchy Bite will appear.

NOTE TO DEVS:
I suggest you change the quest description to let us know to take the scarecrow heads from the table and put them on the scarecrows. The sentence "What would you do?" does not really convey the message; perhaps you could change it to "Take these scarecrow heads from the table and put them on our scarecrows".

It doesn't even have to be that obvious about it. It could say, "Every time we get the scarecrows built, Crunchy Bite returns. There doesn't seem to be any reason to continue fixing them until he is taken care of."