Japanese agriculture is beleaguered. Farmland keeps shrinking as aging farmers retire. Collective farming is all but stalled as prospective partners stay on the sidelines. The domestic market faces strong pressure for liberalization. For all this, structural reform is making little headway. No wonder a sense of crisis underscores the new policy guidelines presented recently by an advisory panel to the agriculture and fisheries minister.

The “Basic Program for Food, Agriculture and Rural Areas,” as the guidelines are formally called, sets the direction of the nation’s farm policy for the next 10 years. Its primary objective is to support farmers who are both willing and able to cultivate fairly large amounts of acreage on a long-term basis. They are expected to play the leading role in developing a more productive and competitive farm sector.

Generally, the guidelines set the right course. The drawback is that they lack specific plans to nurture pace-setting farmers. This is partly due to the fact that, as panel discussions demonstrate, farm groups and the Liberal Democratic Party remain at odds over key aspects of agricultural policy — despite their seemingly common perception of the crisis in agriculture.

Now is the time to accelerate reform. The World Trade Organization (WTO) is expected to resume farm talks as early as the middle of this year. Meanwhile, Japan, now in talks with Asian countries to conclude free trade agreements, needs to open its domestic market wider to their agricultural produce.

The silver lining is that the new guidelines call for an end to farm subsidies, which have been roundly criticized as a typical example of “free spending.” These product-by-product payments will be replaced by a system of direct income compensation to relatively large farmers. The problem is that specific criteria for eligibility have not been established, largely because of resistance from farm lobbies.

Details are to be worked out after next autumn. Items scheduled for discussion include methods for implementing the new system, the farm sizes needed to qualify for income support, and rules for improving productivity. Direct payments will also be made to small and “double-income” farmers (those who hold nonfarm jobs) provided that they belong to collective farming units that meet eligibility requirements.

It is likely, though, that some farmers will be left out in the cold, depending on eligibility standards. That may be unavoidable since the primary policy objective of the new system is to develop competitive “core” farmers. Including marginal farmers could reopen the way for free spending. The huge budget deficit makes it essential that the system be operated efficiently.

Another feature of the program is that it calls for wider leasing of farms to private companies. The idea is to have them play a larger role in training prospective farmers and using farmland more efficiently. The hope is that private management knowhow and capital investment will help expand the scale of farming. The rub is that companies could easily pull out of money-losing projects.

With the Kyoto Protocol on climate change now in force, the program calls for stepped-up conservation activities in rural areas. Aside from securing stable food supplies, agriculture has a role in protecting and preserving the natural environment. Greenery, for instance, helps to reduce air pollution by absorbing carbon dioxide.

Japan’s margin of self-sufficiency in food (calculated in calories) has dropped to 40 percent, due partly to changes in dietary habits. The program aims for a 45-percent level by fiscal 2015. In terms of monetary value, though, self-sufficiency will rise from 70 percent to 76 percent, thanks to the popularity of low-calorie but high-priced vegetables and fruits.

According to the panel, 10 years from now, the number of core farmers will reach 330,000 to 370,000, with 20,000 to 40,000 collective farming units. There are expected to be 10,000 long-term agricultural companies. The total number of farmers will drop from 2.93 million now to between 2.1 million and 2.5 million.

Ten years may seem like a long way off, but that’s no excuse for delaying needed reforms. The exclusion of details from last year’s WTO “framework agreement” on agriculture — details that could adversely affect Japanese farmers — is no cause for complacency. Nor is the two-year grace period for the direct payment system, which is expected to start in fiscal 2007.

Japan should act before the WTO sets rules for it. Sooner than later, the nation will have to end its traditional policy of restricting imports with high tariffs. The best approach is to speed up domestic reform before it is too late.

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