Reform of the nation's agricultural cooperative system, billed by the Abe administration as one of Japan's "bedrock" institutions it wants to crack in its economic growth strategy, has finally begun to move forward as revision of the law governing the operation of farm cooperatives came into force in April. Both the government and leaders of the farm cooperatives should rack their brains to achieve the goal of the legal revision — boosting farmers' income. Agricultural cooperatives need to depart from their conventional ways of thinking and try new approaches in their operations.
Agriculture in Japan is in a difficult situation. The farming population, which topped 7 million in the 1970s, fell below 3 million in 2008 and has since further declined to dip below 2 million for the first time this year — to 1.92 million, a 8.3 percent fall from 2015, and it's now around 40 percent of the level a quarter century ago. The number of farmers aged 70 or older —who account for nearly half the farming population — fell considerably from last year, but more ominous is that the number of younger farmers, which the government seeks to increase, dropped sharply. The number of farmers under the age of 30 — who account for a mere 2.5 percent of the total — fell 24 percent. These data alone highlight the urgent need to halt the decline of the farming sector by making it a more attractive business.
One of the key measures incorporated in the revised law aims to weaken the power concentrated in the Central Union of Agricultural Cooperatives, better known as JA-Zenchu, and give more management autonomy to local cooperatives. JA-Zenchu's mandatory audit of and management guidance for local cooperatives will be abolished. Beginning in October 2019, local cooperatives will be able to choose either an audit firm splintered off from JA-Zenchu or certified public accountants for their audit. The question is how these reforms should help farmers become more competitive.