Abe's farm cooperative reforms

The Abe administration is keen on reforming agricultural cooperatives, which it regards as one of Japan’s “bedrock” interest groups guarded by regulations. But the administration has yet to provide a convincing explanation on how its reform plan will help make Japan’s farming sector stronger and enhance consumer interests while also preserving agriculture’s crucial role in land conservation and environmental protection. If the administration’s reform effort falls short in these areas, it could end up being reform just for the sake of reform, with most citizens reaping little or no benefits.

One of the focuses of the reform plan is to strip the Central Union of Agricultural Cooperatives, widely known as JA-Zenchu — an apex body of agricultural cooperative organizations (JA group) nationwide — of its power to audit local cooperatives and check their activities. Currently inspectors certified by the state and belonging to JA-Zenchu — which formulates common guidelines and programs for local cooperatives — audit their financial statements and their compliance with laws and regulations.

Believing that this power structure prevents local cooperatives from flexibly changing their management to adapt to local needs, the administration is pushing to separate JA-Zenchu’s audit section, turning it into a new organization and having this entity and certified public accounts take over the job of auditing local cooperatives.

While it is true that the bloated JA-Zenchu organization has become an obstacle for some farmers who want to modernize their operations through innovative means, the administration has yet to show to what extent the present system hampers local cooperatives’ initiatives and how the proposed system would contribute to expanding their autonomy and increasing the income of cooperative members.

The administration has presented a blueprint for turning Japan’s agriculture into a growth industry. It calls for increasing the competitiveness of farmers through the consolidation of their fields, expanding the entry of business corporations into the sector, and the development of products with higher added-value. This would be accomplished by strengthening the management base of farmers and through closer cooperation with food-related industries, including the food processing and distribution sectors. But how to achieve these goals remains unclear.

Japan’s agriculture is characterized by large numbers of small-scale farming units and aging farmers. Many farming communities are located in mountainous areas. One wonders whether the government’s blueprint is applicable in such conditions and whether it will in fact help revitalize these farming communities. While the nation’s farmers are aging and many of them have no one to take over their operations when they retire, some young people are interested in taking up agriculture. The administration should seriously consider how to help these young people start careers in farming since they could play a leading role in revitalizing the farming sector and the nation’s rural economies.

One of the important functions of agriculture in Japan is land conservation and protection of the environment. The administration needs to show how its reform plan will reinforce these functions.

The JA group has contributed to enhancing Japan’s agriculture by providing farmers distribution and financial services, and management advice. But JA-Zenchu — which controls Norinchukin Bank, local cooperatives and Zen-Noh (Central Federation of Agricultural Cooperative Associations), which collectively purchases materials needed for farm production and markets the products — wields strong power. The JA group must make serious efforts to shed the negative effects of its operations and turn itself into an organization that is dedicated to supporting farmers in their efforts to make the agriculture sector sustainable and profitable.