The Abe administration's move to strip the Central Union of Agricultural Cooperatives, better known as JA-Zenchu, of its legal mandate to audit and guide regional cooperatives across the country is billed as the first major overhaul of the nation's agricultural cooperative system in 60 years. But it remains unclear if weakening the power of the organization, which has for long wielded strong political influence backed by farm votes, will in fact achieve the administration's goal of making Japanese farmers more competitive and boosting their income.

Prime Minister Shinzo Abe's bid to turn the nation's heavily protected agriculture sector into a growth industry has focused on reforming the farm cooperative structure. The government has said regional cooperatives and individual farmers will get more room to improve their management and flexibly adapt their operations to changing and diverse local needs once they're freed up from the uniform control of JA-Zenchu. At best, the JA-Zenchu reform will only be the first step toward reform of the nation's farm sector, which faces mounting challenges ranging from the aging of farmers and difficulty in finding successors for them to the large numbers of inefficient small-scale farms and the anticipated influx of more agricultural imports through free trade arrangements.

With the government's draft plan endorsed by the ruling coalition and accepted by JA-Zenchu, the administration plans to submit relevant bills to the Diet by the end of March. JA-Zenchu, established in 1954, will lose its legal mandate to lead the JA group's management, and become a general incorporated association, not a special entity specified by the Agricultural Cooperatives Law, by the end of fiscal 2018. Its function to audit the roughly 700 regional agricultural cooperatives will be spun off into a new auditing body, and it will be up to the regional cooperatives whether to be audited by the new body or certified public accountants.

Doubts persist as to whether stripping JA-Zenchu of such powers alone will make the regional cooperatives and individual farmers more independent and productive. Some experts point out that ambitious farmers and regional cooperatives have already taken their own initiatives free of JA-Zenchu's control while it remains to be seen if most others that have so far followed the national organization's lead will find their ways to improve their operations.

JA-Zenchu has predictably been a major opponent of farm trade liberalization under the ongoing Trans-Pacific Partnership free trade talks. There is speculation that Abe wanted to conclude the discussions on the farm cooperative reform and shed JA-Zenchu's influence before the TPP negotiations reach a crucial stage, possibly before this summer. The proposed reform will no doubt weaken JA-Zenchu's clout within the farm industry, but whether the domestic agriculture sector will become strong enough to compete with cheaper imports as a result of the trade liberalization will depend on the efforts of individual farmers and the regional cooperatives.

One of the problems with Japan's farm cooperative organizations has been their increasing dependence on non-farm businesses. The "associate" non-farm members of agricultural cooperatives today outnumber their regular members who engage in farming. Many of the agricultural cooperatives throughout the country rely on banking and insurance businesses for non-farmers and part-time farmers as the main sources of their earnings.

To get the farm cooperatives to refocus on their support of farmers, the Abe administration is said to have contemplated curbing the use of the JA group's services by its non-farm members to levels that do not exceed those of the farmers. The government and the Liberal Democratic Party eventually decided to forgo such restrictions in the proposed reform, which says that the use of the JA services by non-farm members will be monitored for five years before making a decision on the matter.

But the prospect of such curbs on the non-farm businesses — which would have jeopardized the operations of many regional cooperatives — reportedly led many prefectural and local representatives within the JA group to lobby the JA-Zenchu leadership and eventually prompted it to drop its opposition to the administration's plan for its reform.

The issue was thus shelved for now — which could mean that the agriculture cooperatives' focus on their secondary, non-farm business for non-farm customers as their main concern will remain unchanged.

By wrapping up the talks for JA-Zenchu reform, the Abe administration may have succeeded in taking down what it views as a symbolic obstacle to its agenda. But that in itself will not accomplish the task of making Japan's farm sector more competitive and helping the industry survive its mounting woes.