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Farmers not waiting for politicians

by James Topham

Reuters

When it comes to trade policy, Prime Minister Shinzo Abe faces a choice between the fears of an aging farm lobby and the hopes of suburban families lined up at a 20-meter-long meat counter in a Chiba mall showcasing Australian beef.

When Aeon Co. set out to open a flagship shopping mall just outside Tokyo, it wanted the scale to dazzle urban shoppers. The 3-month-old Makuhari New City mall is almost four times larger than the 55,000-seat Tokyo Dome.

At the mall’s supermarket, the daily specials include beef shipped directly from Aeon’s own feed lot in the Australian state of Tasmania — an arrangement that reduces prices and skirts a politically strong agricultural cooperative system that many see as an outdated relic of Japan’s postwar revival.

Even as the Abe government rebuffs international pressure to scrap import tariffs on food items, including beef, some domestic farmers are stepping outside the heavily protected cooperative system anyhow, worried that the biggest threat is not trade liberalization but Japan’s rapidly aging population and its changing tastes.

“I don’t think Japanese agriculture will collapse because of participation in the TPP,” said rice farmer Toru Wakui, referring to the Trans-Pacific Partnership trade talks. “If it happens, it will be from an internal collapse.”

This quiet but significant shift suggests the government’s tough TPP stance aimed at protecting domestic farmers is losing some of its foundation as more commercial pressures come to bear, and farmers and their buyers work around an inflexible traditional system.

In Japan, the average farmer is 66 years old, the amount of farmland has dropped by a quarter over 30 years and the food self-sufficiency ratio — the share of consumed calories produced at home — has dropped to 39 percent, the lowest among major developed economies.

Tastes are also changing and moving away from polished rice, which is protected by an import tariff of up to 778 percent. Yet the amount the average family spends on bread surpassed rice for the first time in 2010, government statistics show.

Meanwhile, the average farm covers just two hectares — about 1 percent of the size of the average U.S. farm. The amount of Japanese farmland that has gone uncultivated is now as large as the cities of Tokyo and Osaka combined. Government subsidies account for over half of farm incomes, the third-highest ratio in the OECD behind Norway and Switzerland.

The farm ministry estimates joining the TPP could cut the value of agricultural production by another $30 billion, although the economy would get a net boost of around $30 billion, mostly through lower prices for consumers.

But the agricultural lobby — known as JA-Zenchu — has presented more than 11 million signatures from voters opposed to Japan’s participation in the TPP, talks that involve 11 other countries including the United States and Canada.

The lobby’s ads denounce the talks as a threat to food safety, farm incomes, rural medical care and even the government’s ability to keep more than 400 far-flung islands populated and under its economic control.

Fears about the sustainability of the network of individual farms, which date back to the end of the war, were part of the reason Aeon, the nation’s top retailing and supermarket chain, set up its own farming unit in 2009.

The operation now includes 14 farms and slightly more than 200 hectares. The company aims to have 500 hectares under cultivation by 2015. It has set a further goal of self-sourcing 40 percent of its vegetables, up from less than 1 percent now.

It also makes commercial sense, argues the head of Aeon’s farming unit. “When products are sold directly to merchants . . . farmers and producers can use the responses of consumers and build on that information,” Yasuaki Fukunaga said.

Enlarging corporate involvement in agriculture is one of Abe’s goals, along with lifting farm income and increasing food exports. In June, the government is set to consider reforms intended to reduce barriers to winning local approvals for transfers of farmland, making it easier for entrants like Aeon.

“Against the backdrop of a decrease in the number of agricultural workers, an increase in their ages, and with the amount of abandoned farmland on the rise, whatever happens with the TPP negotiations, it is extremely important to revitalize domestic farming,” farm minister Yoshimasa Hayashi said during questioning in the Diet on Monday.

In November, Abe’s government surprised many by announcing it would phase out a 40-year-old rice-protection policy known as “gentan,” under which the government paid farmers — mostly individuals with small plots — in exchange for reducing rice output.

But while industry watchers point out that many of Abe’s goals to make agriculture more competitive are not new and that ending the gentan program coincided with an increase in subsidies for a rice-to-feed program, some experts say the winds are changing.

“With Japan’s big financial deficit, there is certainly thinking that, down the road, subsidies could be lowered,” said Hiroyuki Kawashima, an associate professor in the global agriculture department at the University of Tokyo, in reference to the rice-for-feed program.

Against that backdrop, some small farmers are looking for a niche market — rather than a government subsidy — as their best hope for the future.

That includes Noboru Tsukahara, who has farms in Ibaraki Prefecture and northern Hokkaido. He believes he is the world’s only commercial provider of the purebred “meishan” breed of pork, considered a premium delicacy.

When JA quoted Tsukahara a low price for his pork, since it was classified outside of its grading system, he opted out to win distribution contracts on his own with high-end department stores, including those run by Isetan Mitsukoshi Holdings, and Michelin-starred restaurants.

“It is no longer the era of mass production and mass consumption. With Japan’s population falling, it’s the reverse, so I feel unique products that are not found everywhere will be what appeal to consumers,” he said.

In Miyazaki Prefecture, Kenji Okumatsu was able to use a connection to sell his mini-tomatoes at the local airport. They were a hit, and food buyers later discovered his farm, which now has annual sales of almost $5 million and 40 employees.

“The era of being a farmer because you are from a farming family has passed,” Okumatsu said. “What is needed is not just farmers, but farmers with an entrepreneurial spirit.”