Business

OECD report recommends Japan embrace technological innovation, entrepreneurship to expand agricultural productivity

by Eric Johnston

Staff Writer

With Japanese food products becoming increasingly popular with foreign tourists, especially those from Asia, the country’s agricultural sector has a bright future if it can change its policies to embrace technological innovation and entrepreneurship, an OECD report on the country’s agricultural productivity and sustainability has concluded.

“Our advice to Japan is: ‘You need to speed up the pace at which you move away from protection, invest more in sustainability, productivity, including research and development and other forms of innovation,’ ” said Ken Ash, director of trade and agriculture at the Organisation for Economic Cooperation and Development in an interview with The Japan Times just prior to the report’s release Saturday. And, he said, Japan must “prepare the agricultural sector for the unexpected shocks that are likely to become larger and more frequent with climate change.”

“We’re not ringing alarm bells. We’re doing something at an earlier stage. We’re saying that as the climate changes, governments need to get ahead of this and mitigate potential problems. Preventative actions will be cheaper and more effective than remedial actions. This is, fundamentally, the signal we’re trying to send to Japan,” Ash added.

The report notes that Japan’s agricultural sector has significant room for improvement in environment performance.

Japan has one of the highest nutrient surpluses among OECD countries. Runoff from overuse of fertilizers creates a nutrient surplus, which is not only economically inefficient but also risks polluting the air and water with chemicals like ammonia.

Other issues are affecting Japan, including its aging and declining population, which has hit its agricultural sector particularly hard. Currently, 56 percent of farm managers are now over the age of 65.

Ash noted that Japan’s farmers have always been old, partially because farms are small businesses and the intergenerational transfer (of farms) tends to happen within the family, often when the farmers’ children are in their mid-40s.

“In Japan, there is a concern about attracting young people into agriculture. Many who grew up on a farm and left felt they couldn’t make a decent living by remaining,” he said. “Enabling them to make a living with decent working conditions is crucial. This is why we put a lot of emphasis in our report on R&D, innovation, technology transfer, and education to allow farms to become more profitable.”

New policies that make it easier for farmers to get the latest technology, and not just agricultural technology, is needed for Japan. Ash said that, as in other countries, what young farmers in Japan want is access to the latest technology, to talk to IT people and to get the latest software.

“They want their personal farm performance data to be grouped with similar data from other farmers so they can learn the best practices and which mistakes to avoid,” Ash said. “We don’t hear these things from the 55-, 65- or 75-year-old farmers, but we sure hear them from farmers in their 20s and 30s.

Ash said they can feel they are being held back by limited access to new technologies, and the fact they live in the countryside, where there may, or may not be, high-speed internet access, is also a problem.

A more open agricultural policy, the OECD says, will help spur new technological changes that can help Japanese farmers on the international stage.

“In Japan, agriculture policy has long isolated farmers from international competition. Unintentionally, it also isolated the sector from technological developments and innovation,” Ash said. “Opening up is not just about markets. It’s opening up to new technologies, whether they come from the IT sector in Japan or the agricultural sector in the U.S.,” he noted.

Allowing individual farmers more freedom in deciding what crops to grow and policies that expand their choices, especially in terms of more access to financing, are also important. Traditionally strong government control over farming policies and agricultural cooperatives like Japan Agriculture, which have long provided banking services, insurance and farming supplies, creates a situation that limits individual choices, the OECD says.

“Governments shouldn’t presume to know what’s best for any particular farmer. Farmers should have the freedom to decide what to produce in response to market demands, as opposed to some government regulation that says ‘Thou shalt produce X, Y, or Z.’ The same applies to farmers looking to access commercial credit or short-term funding, Ash says.

“What we argue is that, in Japan, there isn’t always as much choice as there might be, and that more choice will allow Japan to be more competitive internationally.”