PROBLEMS WITH JAPANESE AGRICULTURAL POLICY
Hiroko Tabuchi wrote in the New York Times, “Farmers say that their sector has been weakened by a reliance on tariffs and ineffective government subsidies, which do not reward farms for innovation or productivity. High transaction costs hamper efforts to consolidate farmland and raise efficiencies, they say, leaving farms fragmented. Moreover, a sprawling and bureaucratic distribution system dissipates farmers’ earnings. That leaves farm incomes depressed despite the heavy protection they receive and drives younger generations from farming, experts say.” [Source: Hiroko Tabuchi, New York Times, November 11, 2010]
According to a Yomiuri Shimbun editorial, “Every time the farming industry has emerged as an issue of contention, agricultural organizations and Diet members with vested interests in the industry, who have an eye on future elections, have perverted policies and hampered reforms.” In addition to that large amounts of government money ended up wastefully spent on useless projects, such as the construction of various facilities in farming villages and hot spring resorts. Even airports were built, along with expanding agricultural roads, as a way to promote the industry by transporting farm products by air.
Farmers are a powerful political group in Japan (See the JA). Although farming and other primary industries, like mining, make up just 1.5 percent of gross domestic output, outdated election maps and effective organization by farmers give Japan’s rural communities disproportionate political power.
Decline of Japan Agriculture
“Japan's agriculture has been on the decline over the past 20 years, the Yomiuri Shimbun reported in 2010. “The Kamishina district in Ueda, Nagano Prefecture, once consisted of wide-open paddy lands where one could easily see a cluster of poplar trees from as far as two kilometers away. But the atmosphere has completely changed there now, with houses and other structures having been built as a result of the conversion of farmland to nonfarm uses.” [Source: Yomiuri Shimbun]
“The average age of farmers has climbed to 65.8. The number of people engaged in farming has fallen by half, to as low as 2.6 million. There is even a prediction that more than 1 million farmers will quit farming in the next 10 years. The decay of rural communities has been expanding. Japan's farm sector has been protected from imports by high tariffs, which in the case of rice are as high as 787 percent. But even without joining the TPP, the nation's farming industry is on a clear path of decline.” [Ibid]
High Tarriffs on Agricultural Products in Japan
Of 1,323 imported agricultural and livestock products 101 have tariffs of more than 200 percent. They include: 1) pears (1,085 percent), 2) peanuts (593 percent), 3) tapioca flour (583 percent), 4) adzuni beans (403 percent), 5) barley (256 percent), 6) wheat (252 percent), 7) raw silk (245 percent), 8) potato starch (234 percent), 9) nonfat dry milk (218 percent ). [Source: Japan’s Ministry of Agriculture , Forestry and Fisheries]
Other products with very high agriculture tariffs (tariff rate in 2010, domestic production 2010): 1) polished rice (778 percent, ¥ 1.9 trillion); 2) beef (38.5 percent, ¥532 billion ); 3) raw sugar (328 percent, ¥83.3 billion); 4) butter (360 percent, ¥77.9 billion); 5) wheat (252 percent, ¥58.5 billion); 6) konnyaku tubers (1,706 percent, ¥14.2 billion). [Ibid]
the United States has only handful of products with duties over 200 percent, including tobacco. The European Union has a few more, including sugar and dairy products. According to the WTO Japan’s custom duties average 22.2 percent, compared to 5.2 percent in the U.S. and 13.5 percent in the E.U.
Japan banned the import of rice until 1995. Now its imported rice is called “minimum access rice,” meaning Japan had opened the rice market by what is regarded as the minimum possible level. At one time bananas were considered a luxury item and a limited volume was imported and they were earmarked for people that were ill. When banana imports were liberalized bananas became very popular. Beef imports were also banned. When the ban was lifted iin 1991, beef imports jumped from 460,000 tons in 1991 to 1.05 million tons in 2000.
The production cost gap between domestically-produced rice and rice produced overseas has shrunk. In 1999 the average cost of domestically grown and milled rice was ¥314 per kilogram while imports from the United States and China stood at ¥81 and ¥62 per kilogram respectively. In 2008 the average cost of domestically grown and milled rice was ¥282 per kilogram while imports from the United States and China stood at ¥167 and ¥163 per kilogram respectively.
Poor Use of Agricultural Land in Japan
As of February 2010, 979,000 acres, or 10 percent of Japan's farmland, sat empty, according to Agriculture Ministry data. Dormant fields are a lost opportunity in a country where only about a third of the land is arable.
The Yomiuri Shimbun reported that in 2010 more than 79.83 million square meters of farmland has been taken over by houses, factories, roads and other facilities, more than the entire area inside Tokyo's Yamanote Line. Osaki, Miyagi Prefecture, for example, has the broad fields well suited for growing rice typical of the Tohoku region. Looking at the area after this year's rice harvest finished, the rice fields were interspersed randomly with residential development.
“Agricultural land sold for residential use can fetch more than 10 times its value as farmland,” according to the Yomiuri Shimbun. Some land-owners leave their plots uncultivated in the hope it will be converted to residential land, and some actively apply for their plots to be zoned as residential land. The rush for lucrative land zoning changes has resulted in about 8,000 cases of illegal conversion annually. Lax regulation of land conversion has gradually eaten into the nation's farmland.
Farmers who work agricultural areas that require high maintenance such as places that have been reclaimed from swampland or the sea are increasingly asking of it is worth their trouble as the price of rice has fallen and their loans for new machinery and fertilizer eat away at their earnings. One farmer who works such an area in the Tsugaru Peninsula in Aomori Peninsula told the Yomiuri Shimbun, “I can hardly make any profit at all.”
Agricultural Reforms in Other Countries
“Since the 1990s, when the trade liberalization trend began picking up steam, foreign countries have implemented various measures to reform their agricultural sectors,” the Yomiuri Shimbun reported. “In EU countries, where farmers' zest to produce was strong thanks to high prices, overproduction led to surpluses dubbed “mountains of butter and lakes of wine.”" [Source: Yomiuri Shimbun, December 2, 2010]
“By shifting from a "price-support system" whereby farm households were protected from imports by high tariffs to a "direct payment system" whereby the government pays farm households to make up for the price declines brought on by trade liberalization, excessive supply and inventory was reduced, while productivity was enhanced.” [Ibid]
“South Korea has also shifted away from high tariffs, and is set to reduce tariffs on farm products other than rice to near zero over about 20 years. Meanwhile, the government has begun to spend a projected 130 trillion won (about 9 trillion yen) over 14 years starting in 2004 to hasten agricultural reform. One South Korean measure to support farming communities affected by free trade is the “one business firm buying farm products from one village’ campaign, with the active participation of business firms that stand to benefit from trade liberalization, such as Samsung Electronics Co.” [Ibid]
“In the past, Japan maintained rice prices by cutting down farmers' productive capacity through acreage reduction. But in the era of trade liberalization, the nation needs to shift its agricultural administration policy to one that reinforces the farming infrastructure, that concentrates support on those farm households who would be the driving force for agriculture in the future, and that promotes exports.” [Ibid]
Politics and Farm Policy in Japan
University of Tokyo Prof. Shinichi Shogenji, dean of the faculty of agriculture, wrote in the Yomiuri Shimbun: “The agricultural policy of recent years grew out of the Basic Law on Food, Agriculture and Rural Areas, which the Diet enacted in 1999. The policy lays out a basic course of action that seeks, among other things, to increase the number of households that work exclusively in farming, which will form the pillars of the agricultural sector.” [Source: Shinichi Shogenji, Yomiuri Shimbun, January 14, 2011]
“In 2006, the government came out with a plan that would grant the lion's share of government farm aid to households cultivating more than four hectares of rice in principle. But the situation changed in 2007, when management of the agricultural sector became confused and the government retreated from the reform drive. Both the ruling and opposition parties increasingly focused on agricultural policies that only helped them collect votes.” [Ibid]
The Democratic Party of Japan (DPJ) was among those parties. “In the beginning of the campaign for the 2009 House of Representatives election, the then main opposition DPJ proposed a system under which individual farming households would get income compensation. At the same time, they emphasized the need to sign EPAs with other countries. However, the DPJ backpedaled on this point when agricultural cooperatives and other organizations raised objections to free trade policies. A sizable group of lawmakers in Mr. Kan’s ruling Democratic Party have urged him to abandon his free-trade drive to placate the nation’s farmers.” [Ibid]
“Direct payments to farmers---using taxpayer money---would help tariffs to be lowered on agricultural imports. Admittedly, the current income compensation system has served its purpose of making up for income losses due to rice-acreage reductions. It should be noted, however, that the system does little to increase the scale of farming operations or nurture new farmers. It is also unclear what the rice-paddy reduction program will lead to. [Ibid]
Text Sources: New York Times, Washington Post, Los Angeles Times, Times of London, Yomiuri Shimbun, Daily Yomiuri, Japan Times, Mainichi Shimbun, The Guardian, National Geographic, The New Yorker, Time, Newsweek, Reuters, AP, Lonely Planet Guides, Compton’s Encyclopedia and various books and other publications.
© 2008 Jeffrey Hays
Last updated August 2011