Farm reform: too much or too little?

JIJI

The Abe administration is moving ahead full-bore to revitalize agriculture, ending government control of rice output in five years, reforming subsidies for farmers and introducing measures to promote large-scale farming.

All this change comes as the agricultural sector struggles with the rise in the average age of farmers and labor shortages, while it also braces for a possible surge in imports of cheap foreign products if the Trans-Pacific Partnership free trade deal ever comes to fruition.

In recent interviews, three experts assessed the policy changes by Prime Minister Shinzo Abe and the future course of agriculture in Japan.

The administration’s decision to end government control of rice output is a “correct policy shift,” said former vice agriculture minister Yuki Takagi, now president of the Japan Professional-Agriculture Total Support Organization, or J-PAO.

“When I headed the former Food Agency and served as vice agriculture minister, I believed that bringing an end to output control would strengthen rice farming,” Takagi said. “But we couldn’t make it happen.”

Takagi said “fear of overproduction” foiled his efforts, pointing out that the government has spent as much as ¥3 trillion to take care of overproduced rice.

However, now there are concerns about possible production shortages, given the aging of farmers and the increase in abandoned farmland, Takagi said.

While leaving production decisions to farmers, the government could help them get a better grasp on demand by developing sound rice cash and futures markets, Takagi said. Income insurance and other safety nets for farmers will also be needed, he said.

Shigeo Fuji, senior executive director of the Central Union of Agricultural Cooperatives, or JA-Zenchu, an umbrella body of Japan Agricultural Cooperatives, said rice output controls will effectively continue, led by cooperatives and other private-sector bodies, instead of the government.

“Overproduction is inefficient. It’s important to produce what is needed in the amounts needed,” Fuji stressed.

He proposes that agricultural co-ops and other bodies, in cooperation with municipal governments, take over the role of production planning based on output, sales and inventory data.

Kazuhito Yamashita, director of research at the Canon Institute for Global Studies, said the government’s output control to keep rice prices from falling has resulted in a drop in rice consumption and prevented farmland consolidation.

Government subsidies for rice farmers who cooperate with its output control, together with high rice prices, have annually cost taxpayers about ¥1 trillion, Yamashita estimates.

And yet the Abe administration has only decided to end the income support introduced during the previous administration led by the Democratic Party of Japan and has not changed the overall rice policy aimed at maintaining prices, Yamashita said.

Preparing for possible overproduction after the rice output controls come to an end, the government is encouraging farmers to shift their focus from rice for human consumption to rice for livestock feed.

“Both the government and farmers need to accelerate efforts to compete with cheap imported corn in the feed market,” including farmland consolidation and the development of rice varieties with high yields, J-PAO’s Takagi said.

“Otherwise, the public would call on the government not to spend taxpayers’ money any more on livestock feed,” he said.

To promote the shift to rice for livestock feed, JA-Zenchu’s Fuji underlined the need to devise a system connecting rice producers and livestock farmers.

“It’s necessary to ensure that rice farmers will earn sufficient income from rice for livestock feed,” Fuji said. “A stable distribution system is also necessary for livestock farmers to use rice without anxiety.”

With a stable supply system, roughly 1 million to 1.2 million tons of rice a year, twice the current level, are “sure to be consumed” as livestock feed, Fuji said.

Yamashita of the CIGS criticized the government’s plan to raise subsidies to increase production of rice for livestock feed with the aim that it would replace imported corn. “This policy is nothing but distorting the market,” he said.

Yamashita pointed out that the United States, a major corn exporter, would retaliate, such as by tightening restrictions on Japanese car imports.

Meanwhile, Fuji said that “even if its corn exports to Japan decrease by some 1 million tons, this wouldn’t matter to the United States, given increasing corn use for biofuel in the country and rapidly growing corn demand in China for feed.”

Boosting rice exports is the only way for the Japanese agricultural sector to survive amid falling domestic demand on the back of the aging society, Yamashita stressed.

“Japan’s agriculture will not survive without concentrating production on full-time farmers, strengthening international price competitiveness and boosting exports,” he said.

Fuji described a future agricultural community in which a small number of large-scale rice growers collaborate with many vegetable or other types of farmers.

He also underscored the need to increase agriculture-related employment and farmers’ income by promoting the so-called sixth industry in which farmers are also engaged in processing and sales of farm products.

Government agencies should cooperate to offer comprehensive support for farmers, instead of sticking to their own territories, Takagi said. Agriculture could be a catalyst for revitalizing communities, he said.