The Upper House passed a revised farming law Wednesday to revitalize the agricultural sector by making it easier for corporations to lease farmland.
The change is expected to take effect in December.
The number of farmers has declined significantly and total farmland acreage has shrunk by some 24 percent over the past 50 years.
The main purpose of the original law was to protect landowners. Now the emphasis is on promoting effective use of farmland. Leases will be extended to 50 years, up from 20 years.
The revision removes a limit that corporate entities can only lease land designated by municipal governments. This was a major factor making corporations reluctant to get into agriculture because the designated land was often in poor condition and abandoned by farmers.
Since it was enacted in 1952, the Agricultural Land Law contained a phrase saying it is “most desirable” that farmland is owned by people who actually engage in farming operations. This phrase was eliminated from the revised law.
Under the old version, a company could own no more than 10 percent in an agricultural concern. When the change takes effect, the limit will be raised to just under 50 percent. The company will be required to use its technology and sales network for the farming business.
The revision includes a new rule to prevent small farms from being pushed out of business. The rule states that a corporation leasing farmland should have at least one of its managers wholly involved in farming operations.
If a corporate leaseholder uses land for purposes other than farming, it could be fined up to ¥100 million, an increase from the maximum fine of ¥3 million.
The law was originally aimed at preventing disorderly diversion of and speculative investment in farmland.
Corporate leasing of farmland began in 2005. As of last September, there were about 320 farming corporations across the nation. The government aims to increase the number to 500 by the end of March 2011.
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