Deceptive rice price reforms viewed as too late for industry

Toru Wakui, 65, is a rice farmer who has defied the government’s blanket control of rice production since the 1970s. But many other farmers who seek the right to freely grow rice based on their own business decisions regard him as a hero.

Wakui has continued his campaign to defy the mandatory quota-based program of controlling prices through production over the past four decades.

The program, called “gentan” (paddy reduction), is designed to keep rice prices artificially high. Gentan has long been recognized as a symbol of the government’s policy of benefitting vested interest groups, namely rice farmers and politicians living in rural areas.

Wakui’s long-held dream is now about to materialize after the farm ministry in November announced plans to abolish the government’s rice production quotas in five years.

Despite all the media hype over the reported abolition of the program, Wakui didn’t look very happy when asked for comments earlier this month by The Japan Times.

“It’s too late,” Wakui said in his office in the village of Ogata, where he started cultivating and growing rice in 1970.

“I’m 65 now, and the average age of farmers is now about the same. (Most of them) will just all quit working in five years at any rate,” he said.

“Farmers have few successors,” he added.

Wakui was pointing to the most fundamental problems the rice industry faces — the aging of its workforce and the overwhelming shortage of young workers, problems that are likely to push it into extinction.

According to the ministry, in 2012 the average age of agricultural workers was 65.8 years. The average age of rice farmers in 2010, however, was even higher at 69.9 years.

The age problem has raised serious concerns about the immediate future of rice farming here. Indeed, the total number of rice farmers has fallen rapidly in recent years due to a lack of young, able people interested in carrying on the tradition.

As of 2010, a total of 1.2 million families were growing rice in Japan, down 17.3 percent from five years earlier and 33.5 percent from 2000.

“The number will fall to half over just the next 10 years,” warned Kazunuki Oizumi, a professor at Miyagi University who is an expert on agricultural policies.

Wakui lamented that the government’s decades-old effort to protect the domestic rice industry, including the gentan program, have undermined the farmers’ competitiveness so much that full-timers can’t survive without subsidies.

“Few young people are willing to work for an industry like that,” he said.

The origins of the rice control system date back to 1942, a year after the war began. The wartime government brought production and sales of all major agricultural products under government control.

But even after the end of the war, the postwar government maintained strict control over rice because the nation was still suffering from food shortages.

In the 1960s, however, domestic rice production surpassed consumption and urban wages were passing that of farmers.

The food management system introduced in the postwar years then gradually morphed into a program to provide subsidies to farmers and protect farmers’ groups and rural politicians.

In 1970, in a bid to keep rice prices artificially high to protect the farmers, the government launched the mandatory gentan program to force farmers to reduce rice output based on state-set production quotas.

This meant imposing penalties on farmers like Wakui, who did not want to follow the quota rules.

Farmers united under the regional agricultural cooperatives also applied pressure on the noncomformists.

Meanwhile, a majority of other rice farmers just shipped their rice to local agricultural cooperatives, who sold it to the government.

The agricultural cooperatives, represented by Zen-Noh group, a national federation of agricultural cooperatives, worked as election and fundraising machines for the ruling Liberal Democratic Party, which in turn kept rice prices artificially higher.

Having lost contact with consumers’ needs, many farmers also lost their entrepreneurial spirit and instead focused only on political campaigns to pressure the government to keep rice prices high, experts say.

“Allocating production quotas (to farmers) means you just promote rice production not based on market mechanisms,” Oizumi, of Miyagi University, recently told a government panel on deregulation.

Ogata was originally developed in 1967 by the state by reclaiming land from Hachirogata, then the country’s second largest lake, as a model for building large-scale paddies to increase rice for domestic consumption.

But as early as 1970, the government started forcing Ogata’s farmers to reduce production by imposing quotas.

“The rice reduction program started in the year when I moved to the village. I was 21 at that time,” recalled Wakui, who said he was verbally harassed by government officials and agricultural cooperatives for not following the gentan program. For example, the central government threatened him, saying it would forcibly buy back his rice paddies because the district was originally developed with money provided by the state.

For years the farming community of Ogata village was split between those who followed the quotas and those, like Wakui, who defied it.

Wakui, unable to sell his rice through the official government-controlled distribution channels, started selling high-quality rice directly to consumers.

Having become sensitive to the needs of consumers, Wakui set up a firm and started producing processed food, including pasta made from rice flour, special types of rice and rice-based emergency foods. He believes that producing quality products is the key to rice farmers’ survival.

Facing criticism from overseas, including U.S. farmers, for its artificially high rice prices and an ever-increasing amount of black market rice, Japan revised laws in 1994 to stop buying all domestically grown rice except for certain stockpiles and liberalized sales of rice grown here.

Then, in 2010, the government, led by the Democratic Party of Japan, abolished the penalties, which included not allocating various infrastructure subsidies to local communities where such farmers who did not follow the gentan program lived and farmed.

In November, the administration of Prime Minister Shinzo Abe finally announced plans to abolish state rice production quotas in 2018.

But some experts — and many farmers — suspect that abolishing the quotas will fail to streamline the rice industry as expected.

Now the government plans to abolish, in five years, a direct payment subsidy introduced by the DPJ that helps farmers who curtailed rice output based on the gentan goals. That payment is based on a rate of ¥15,000 per 1,000 sq. meters of rice paddy.

But the government will still retain incentives for planting crops for human consumption other than rice to keep rice prices higher.

Abe’s Cabinet is even likely to create a new set of subsidies to help farmers maintain infrastructure in rural communities by diverting money allocated to the DPJ’s direct payment subsidies.

Those subsidies will allow Japan to maintain its inefficient rice-farming industry, including the numerous part-timers and their small paddies, said Kazuhito Yamashita, research director at the Canon Institute for Global Studies.

“This reform, in a nutshell, is a fake,” Yamashita, who was formerly a senior official at the ministry, told reporters in a recent news briefing.

Hajime Kobayashi, chairman of the local agricultural cooperative in Ogata village, said he wasn’t impressed by Abe’s announced plans to abolish the gentan program.

“The government will just keep doing the same thing, which is to keep high prices of rice for human consumption,” Kobayashi said. Japan is now involved in negotiations in the Trans-Pacific Partnership free trade talks, which Koyabashi believes could eventually force Japan to drastically cut its 778 percent tariff on rice.

But Abe’s reform plan does not include any measures for the post-TPP era, Kobayashi said.

Sooner or later, Kobayashi believes, the government will have no choice but to come up with more radical changes for its agricultural policies once the TPP negotiations are concluded.

“I want the government to draw up long-term policies for the next 30 years and middle-term policies for the next 10 years as well. Otherwise, you can’t invest in agriculture,” he said