I f If there is one topic that has been catching a lot of attention lately, it is the global rise in prices for resources, especially the most precious resource of all: food.

While gas prices may force drivers to reduce their time behind the wheel, rising food prices really hurt.

Already, riots have occurred from Haiti to Bangladesh due to the lack of such staples as rice and corn. Japan is not entirely exempt from the trend either, considering it produces less than 40 percent of the food it consumes. The Agriculture, Forestry and Fisheries Ministry issued a white paper last month warning that due to rising demand overseas, Japan is prone to food shortages.

So with the threat of scarcity in the background, last month's European Union conference on the question of agricultural subsidies has enhanced significance. European countries, like most other developed nations, have been offering generous subsidies to their farmers for decades.

Under the title of the Common Agricultural Policy, the EU sought to rebuild the farming industry in the aftermath of World War II. But since that time, and in light of the more than ample recovery that has taken place in the region as a whole, critics now argue the system is not only outdated, but also harmful to world trade.

Subsidized European farmers produce crops that farmers from developing countries cannot compete with in terms of price or quality. But in African nations, the combination of subsidized European competition and droughts has been devastating to local agriculture.

Not only is the CAP seen as detrimental to international trade, it is also argued that it only makes products more expensive for Europeans. The EU budget for 2007 was 100 billion euro, of which 40 billion euro was used for farming subsidies. Completely eliminating the subsidies would mean much lower taxes.

But removing all subsidies is not really an option the EU seems likely to consider — at least not now. Although countries like the U.K., Sweden and Denmark are pushing in this direction, others, notably France and Germany, are content to preserve a certain status quo.

Nevertheless, the EU has announced some major changes to the CAP, including a 10 percent reduction in direct payments to individual farmers. These payments are to be channeled into a rural development fund for environmental projects.

This reduction in payments is a major milestone, as it has been revealed in the past that some very wealthy individuals have benefited from these payments, including Prince Charles and the Queen of England, who together received 1.5 million euro in subsidies over a period of two years. When "farmers" like these are getting such payments, it's a sure sign the system isn't working like it should be.

To some extent, it is similar to the situation in Japan, where there is some distortion in the relationship between farmers and their markets.

After embarking on a plan of rapid agricultural growth following the war and through the 1950s and 60s, the Japanese government launched an farmland reduction program in 1971, whereby farmers were paid not to cultivate.

This was combined with very high subsidies for rice production, which led to today's situation in which Japan is completely self-sufficient in rice but lacking in a wide range of other foods.

Many analysts look at Japan's agricultural policy and scratch their heads, since it has failed to produce a vibrant sector and instead coddled a small portion of the entire industry. But the rice-growing lobby is so powerful that even the Japan Business Federation (Nippon Keidanren) backed off last year from making proposals that would allow shareholder-owned firms to engage in agriculture.

Exactly why farming commands such political clout remains a mystery to those unfamiliar with the special voting power wielded by rural Japan; all the more so in view of the fact that it only generated 1.4 percent of Japan's GDP and employed less than 5 percent of its workforce in 2005. Moreover, the average age of farmers is rising, with 60 percent of them already 65 and over.

Likewise in the EU, farming's share of overall GDP is small, at about 1.3 percent, and also employs just 5 percent of the workforce. Despite this relatively small representation, however, the farming lobby in the EU is also a strong one, and arguments over agriculture quickly get emotional. France, for example, is often the scene of strong protests against any dismantling of the CAP.

Looking at the United States, who one would expect to be a strong supporter of free-market initiatives, a rather contrary trend can be seen emerging. Last month, Congress voted in favor of a farm bill calling for nearly $300 billion in spending over the next five years.

In past world trade talks, the EU and the U.S. looked at each other's farm subsidies a bit like nuclear weapons. If one region had them, so must the other. But now with the EU slowly but deliberately moving to wean itself off these supports, pressure will build on the U.S. — and Japan — to react in kind.

The outcome is of huge importance to many developing countries but far from being clear. What is also uncertain is the situation in Japan. Will the government's taps run dry and put an end to Japan's already aging agricultural industry? Or, conversely, will we see a revival of government-sponsored and heavily subsidized farming against the background of global food shortage?

Dr. Jochen Legewie is president of German communications consultancy CNC Japan K.K.