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Abe’s deceptive rice reform

At a press conference Dec. 9, shortly after an extraordinary session of the Diet adjourned, Prime Minister Shinzo Abe emphatically declared, “We have abolished gentan, a feat many said could not be accomplished by our Liberal Democratic Party.” Gentan refers to the government’s decades-old policy of curtailing rice production by encouraging farmers to reduce the acreage of their rice paddies in exchange for subsidy payments.

Apparently realizing that he was addressing a press corps rather than making a speech at a political rally, he corrected his statement by saying, “We have decided to abolish gentan.” Nothing symbolizes the Abe administration’s rhetoric on the subject better than this “minor correction.”

Although the prime minister’s headquarters stresses a shift in the nation’s agricultural policy, what the government has actually done is make a broad decision to abolish gentan five years from now. This is just putting off a true decision and in fact means that the existing gentan scheme will be strengthened, instead of being abolished.

About two weeks earlier, on Nov. 25, a meeting was being held at the Liberal Democratic Party headquarters to decide on the party’s farm policies.

A preliminary decision to raise subsidies for planting rice for use as animal feed from the current ¥80,000 per 10 ares (1,000 sq. meters) to ¥100,000 met strong opposition from legislators representing Akita, Miyazaki and other farming prefectures. The amount of subsidies was eventually raised to ¥105,000 per 10 ares.

This represented recurrence of a scenario dating back to the days before the LDP had to give the reins of government to the Democratic Party of Japan for the 2009-12 period. In those days, the government had first presented tight limits on farm subsidies, only to meet strong opposition from lawmakers representing farming interests, and eventually raised the amount little by little to a level that satisfy them.

Although there have been reports that lawmakers with vested interest in agriculture, forestry and fishery have lost some of their political influence, they still continue to maneuver behind the scenes.

Major news media reported in unison that the gentan scheme would be abolished five years hence. But in reality the government’s decision will only reinforce, rather than abolish, the scheme.

Understanding the misleading rhetoric of the Abe government on this subject requires understanding the difference between gentan and production adjustment. Production adjustment is common not only in agriculture but also in other industrial sectors as a means of preventing excessive production from causing price falls. In the manufacturing sector, this is done by such means as plant closures and shorter operation hours.

In the case of rice production, a large-scale gentan started in the 1970s. It consists of reduction of areas of rice paddies in which rice as staple food is planted, thus idling certain paddies in return for government subsidies.

To use such land more efficiently, measures were taken in later years to encourage use of such idled rice paddies for cultivating other crops like wheat, barley and soybeans. But because there is difficulty in growing dry-field crops in former rice paddies, the government started a new scheme in which farmers can choose the types of substitute crops they want to grow.

The DPJ government (which took power in 2009) began attaching importance to growing rice that is processed into various products or used as feed for animals as a substitute crop for ordinary rice.

Thus it is clear that gentan is just one of means for production adjustment. The Abe regime’s farm policy clearly testifies to this.

Under the Abe regime, subsidies for growing rice as feed for animals will be greatly increased to ¥105,000 per 10 ares. Income compensation for individual farmers introduced by the DPJ government will be halved from ¥15,000 to ¥7,500 per 10 ares. But a new system of making direct payments to farmers will be instituted.

Although Abe claims to have reformed the government’s farm policies, much stronger measures are being taken to curtail production of rice for human consumption by encouraging farmers to grow more rice for use as animal feed.

As if these measures were not enough to protect farmers, the Ministry of Agriculture, Forestry and Fisheries raised the government’s purchase of rice produced in fiscal 2013 for strategic emergency reserves from the original plan of 200,000 tons to 246,000 tons. Even though the increase may look small, it will have the effect of adjusting the supply and demand balance for rice through an increase in the amount of rice the government purchases. This constitutes de facto price support by the government and could trigger condemnation from other members of the World Trade Organization for violating its rules.

Great confusion has resulted from the major news media reporting that gentan will be abolished, instead of reporting that the production adjustment for rice has been shifted toward a policy of producing more rice for animal feed.

With the next elections of both the Upper House and Lower House unlikely to be held for two and a half years, farmers will enjoy generous protection during this period. This in turn will strengthen the farming bloc as a support base for the LDP.

In big cities, the LDP has been trying to create an impression that it is reform-oriented by emphasizing the “Abenomics” — economic policy named after Abe — with its implementation of “three arrows” — an aggressive monetary policy, carrying out a flexible fiscal policy and pursuing a growth strategy to encourage private sector investments.

In rural areas, however, the LDP has pledged to mobilize everything in its power to enrich farmers, foresters and fishermen. This led to its overwhelming victories in the Lower House election of 2012 and the Upper House election of 2013.

Although this may sound like a joke to city dwellers, the LDP distributed posters in agricultural villages that described “15 arrows.” The basic message was that the LDP would do anything for the sake of farmers. This is simply pork barrel politics and has no principles or strategies.

The LDP has been able to act so recklessly because it has continued to command majorities in most local legislatures. Although control of the central government shifted from the LDP to the DPJ in 2009, little change took place on the local level before 2012.

The Abe administration is unscrupulous in deftly using reform and conservative policy lines for different purposes. It is a pity that major news media are incapable of comprehending its true nature and have reported only its reformist side. This is due to a near total lack of reporters who can understand complex agriculture policy. The failure to distinguish between gentan and production adjustment is just one example.

The biggest losers are the taxpayers and consumers. Taxes paid by the sweat of their brow are being showered by the LDP on farming villages to secure votes for its candidates in those rural areas. High import tariffs and virtual price support for farmers will be maintained, thus preventing rice prices and for that matter, other food prices from falling.

What the Abe administration and LDP are spoon-feeding to Japan’s urban residents is merely an illusion of “reform.”

This is an abridged translation of an article from the January issue of Sentaku, a monthly magazine covering Japanese political, social and economic scenes.

  • http://getironic.blogspot.com/ getironic

    You are far too optimistic.

    These “ideas” were never really “compromises”. This is a bit on the wordy side but: they are what they were understood that they would become — dressing up the same-old same-old. When one party is effectively the same as the next, and the public is unwilling to stomach any actual cuts, you can only re-brand to achieve the illusion of change, which is in reality more of the status quo.

    Someone who really wanted to change things would not accept a bastardized result. Someone whose primary orientation is around power and faking a sense of self-importance, would.

    Still, politicians can only spend other people’s money for a finite time, eventually it will run out, and bankruptcy or hyperinflation will be the result. This kind of unprincipled placation only delays the inevitable, and serves to make this hole a deeper one that our grandkids will have to dig themselves out of.

    • phu

      Wow, I can’t remember the last time I was called optimistic.

      I agree with you and it wasn’t my intention to imply otherwise. I don’t believe the initial legislation we’re seeing that’s starting these cycles is earnest in effort; I believe steps 2 and 3 (or whatever equivalent) are implied and understood by pretty much everyone involved in this process.

      Someone who really wanted change would get even less done — if that’s possible — because they’d push against the inevitable “well, let’s soften the blow” misdirection and either be forced out of office or marginalized.