Japan should position its agriculture as an industry with potential for growth that can compete internationally, a Tokyo-based think tank said in a report released Wednesday.

For that to happen, the government needs to radically overhaul farmland policies and the rice production quota system, introduce incentives to expand food production and link the nation's agriculture to global markets, said the report by the Japan Forum on International Relations.

Even as the world faces food shortages amid structural changes in global supply and demand, Japan's farm policy continues to evolve in total disregard of such developments, with rice production restricted through cuts in land for paddies and main farm products shielded from the international markets due to high tariffs, the group said.

The think tank said Japan's agricultural sector, which holds the key to revitalizing rural economies, has failed to reach its full potential because farmers have not been given enough opportunities to use their technical and managerial skills.

The recent rise in global interest in agriculture as a solution to hunger "presents Japan with an opportunity to globalize" its farm sector, it said. Consumer worries over safety of imported food are also creating an opportunity to add value to domestic farm products, it added.

Arguing that current agricultural policies hinder assembling large tracts of farmland for more efficient production using advanced technologies, the report calls for liberalization of roughly one-third of farmland for prioritized expansion and investment.

The report also calls for accepting 50,000 foreign workers as farmhands under a government-regulated program to deal with the labor shortage, which it said would also help reduce costs.