A Finance Ministry panel will propose that the government end protective measures for farmers in a bid to bolster the competitiveness of Japan’s agricultural sector ahead of the Trans-Pacific Partnership, ministry sources said.
In a proposal to be finalized by the end of this month, the Fiscal System Council will also urge the Abe administration to make more efforts to cut government spending, including programs to protect the farm sector, the sources said Tuesday.
As Japan’s fiscal health is the worst among major industrialized nations, with public debt at more than 200 percent of gross domestic product, “it would be extremely difficult for economic growth alone to realize fiscal consolidation,” the proposal says.
The proposal is scheduled to be submitted to Finance Minister Taro Aso next week. It will be reflected in an initial budget draft for next fiscal year, which will be crafted and approved by the Cabinet in late December.
The panel says in the proposal that the government should “carry out structural reforms” to strengthen agricultural competitiveness amid the changing economic situation both at home and abroad.
It asks the Abe administration to do away with rice production adjustment subsidies provided to farmers participating in the government-led rice output reduction program to prevent prices from plunging amid a decline in consumption.
The move is expected to encourage ambitious farmers to expand rice acreage and promote intensive farming, which some experts say could help improve agricultural productivity and enhance international competitiveness in the field.
Concerns are lingering that participation in the U.S.-led tariff-cutting TPP pact would trigger an influx of cheaper farming products from overseas, damaging the heavily protected agricultural sector.
The panel, meanwhile, will call on the government to map out a concrete path on how to achieve its fiscal rehabilitation goal.
In August, Prime Minister Shinzo Abe’s Cabinet pledged in the medium-term fiscal reform plan to halve the ratio of the primary balance deficit to GDP by fiscal 2015 from the level in fiscal 2010 and turn the balance into a surplus by fiscal 2020.
A deficit in the balance means the country can’t finance government spending other than debt-servicing costs without issuing new bonds.