PROBLEMS WITH JAPANESE AGRICULTURE AND REFORMS

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 Although farming and other primary industries, like mining, make up just 1.5 percent of gross domestic output, outdated election maps and effective organization by farmers give Japan’s rural communities disproportionate political power.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.”

Subsidies for Japanese Farmers

The Liberal Democratic Party (LDP) enacted the a “gentan” policy of reducing rice acreage to no more than 60 percent of Japan’s paddies to prevent sharp declines in the price of rice caused by a supply glut. The LDP feared that falling prices would affect the farmer’s bottom line and cost the party votes in rural areas. This also why the LDP put huge tariffs in imported rice to protect domestic farmers. But the rice acreage curtailed scheme backfired, A large number of rice farmers lost interest in farming after not being able to grow rice freely. Their children abandoned farming altogether and moved to the cities, leaving farming communities in disarray and farmland unattended. [Source: Junichi Maruyama, Yomiuri Shimbun, May 2010]

Junichi Maruyama wrote in the Yomiuri Shimbun, “The Democratic Party of Japan (DPJ) government elected in August 2010 proposed rectifying this situation by compensating farmers for losses they might suffer with, at least in theory anyway, the increased burden on tax payers being compensated by lower rice prices. Under the DPJ system cash handouts are given to individual farming households to help compensate for the drop in income after discontinuing rice production.” [Ibid]

The DPJ introduced a subsidy system for farmers aimed at supporting farmers and raising the self sufficiency of Japanese agriculture. Under the scheme, launched in 2010, all farmers that put their rice on the market are eligible for a uniform ¥15,000 in direct income subsidy per 0.1 hectares (1,000 square meters) of land. If a rice farmer suffers larger than expected loss he will receive additional compensation. Compensation payments are calculated to reflect the difference between the national average production cost of rice and the sales price received for the rice. The ¥15,000 payment is made even to farmers who are earn a large profit.

A total of 1.33 million households are eligible for the subsidies. The program began when ¥7.4 billion was paid to 2,116 households in Hokkaido in November 2010. Under the plan the government will spend over ¥ 1 trillion a year on the income compensation program, which covers rice and other farming products. There are plans to provide subsidies for wheat and soybean growers too.

Many have criticized the scheme for not achieving its aims---chiefly to provide more income for farmers and better food security for Japan---and for taking money out the hands of people and organizations that really need it. The program is expensive and depletes the government treasury and raises government debt. If trade liberalization lowers the prices of farming products, the amount of compensation paid will balloon, putting a greater burden on government coffers.

Problems with the Subsidies for Farmers

As it stands, the income compensation program resembles a handout policy, providing the same funding to people who engage in agriculture only on weekends as to motivated farmers who want to expand their farms. According to statistics from the Agriculture, Forestry and Fisheries Ministry, the average income of households that primarily engage in agriculture is 5.48 million yen. The average among part-time farmers with other sources of income, such as salaried work, is 5.92 million yen. Sixty percent of farming households have side jobs that provide them with a stable income. Some say the government's assistance should be focused on full-time farming households, which play a central role in the industry. [Source: Yomiuri Shimbun, December 1 and 4, 2010]

The system often has been abused by some farmers who try to have their leased land returned for the purpose of receiving compensation money. A farmer who returned his rented land to its owner told the Yomiuri Shimbun: "I've heard of similar cases happening in other areas, too. Such cases are occurring more frequently in areas where rice acreage consolidation is progressing."

According to the Yomiuri Shimbun. “The income compensation scheme is adversely affecting farmers in yet another way. Farmer Shoichiro Omura, 32, who cultivates about 10 hectares of rice paddies, has been frustrated by a rice dealer's request for a discount on the rice Omura sends him. Omura believes the dealer is trying to take advantage of the government's program, which also covers the gap if the market price of rice falls below participating farmers' production costs. A farm ministry survey has shown that one in 10 rice farmers have been asked to lower their prices.

Subsidies for Farmers Discourage Consolidation

The subsidy program is a major obstacle to farm consolidation, one of the major agricultural reforms needed if Japan is going to make its agricultural sector more efficient and productive. Many farmers want to consolidate their land to operate on a larger scale, but the income compensation, which is provided irrespective of farm size, is instead helping to split up farmland. [Source: Yomiuri Shimbun, December 4, 2010]

The problem with the subsidy scheme is that income compensations are not provided to farmers who refuses to comply with the LDP acreage reduction policy and compensation payments are made to farmers tending small inefficient farmers, This encourages small farmers to hold on their inefficient farm rather than selling or leasing selling them so they can get the subsidies---discouraging the creation of a larger more efficient farm system. [Ibid]

The Yomiuri Shimbun described a 64-year-old former carpenter recently "returned" to his family's farming business in Gonohemachi, a town in southern Aomori Prefecture to get the money provided by the subsidy program. For the last 40 years, an agricultural corporation and others have taken care of the rice paddies belonging to the man's family. "I'd never even planted rice seedlings before," he said. Now, however, he can receive 180,000 yen from the government for the 12 hectares of rice paddies he has taken back. [Ibid]

In contrast, since autumn last year a tenant farmer cultivating about 100 hectares of rice paddies in northern Kumamoto Prefecture has received a number of applications from landowners wanting to cancel his lease contracts. The Kumamoto man is frustrated by the requests, which the owners apparently have made so they can receive income compensation from the government. Not wanting to create friction, however, he has kept his feelings to himself. An increasing number of owners across the country are trying to get their farmland back from tenants for similar reasons. [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]

AGRICULTURAL REFORMS IN JAPAN

Agricultural policy makers are frustrated by conflicting goals that are difficult to resolves especially when their high costs are factored in. While making reforms to preserve the domestic farming sector and making adaptions so that Japan can enter free trade agreements, the government also has to enhance this nation's food self-sufficiency rate and the international competitiveness of its farms.

Many think: 1) farmland should be consolidated to promote large-scale farming to reduce production costs; 2) the distribution system of agriculture products should reformed to enable farmers to more easily purchase equipment and supplies and expand their sales routes and sell products at lower prices to consumers while taking a large percentage of the salves revenues for themselves; and 3) foreign markets could be targeted, taking advantage of the high quality of Japan's farm products.

Reforms proposed by the Economy, Trade and Industry Ministry (METI) include: 1) Making the best use of the expertise the ministry has acquired in promoting small and midsize companies; 2) Applying techniques and managerial systems of manufacturing companies to the envisioned agricultural limited liability companies (LLCs) See Below for information on LLCs; and 3) Stepping up efforts to expand farm exports to other Asian markets.

The ministry also believes lowering the cost of fertilizers and farm machinery will help reinvigorate the farming sector. The report said that to improve the agricultural sector it was important to ensure stable fertilizer supplies at lower prices. It also said new models of tractors, combines and other farm machines should be developed that had fewer functions and lower price tags.

What a University of Tokyo Professors Thinks Should be Done

University of Tokyo’s Shinichi Shogenji wrote in the Yomiuri Shimbun: “I think the government should phase out the rice-acreage reduction program. It should also work to offset the impact of drops in rice prices by extending greater assistance to households that exclusively engage in farming. Doing so would address problems farmers could face if tariffs are cut. There is also room for improvement in the Agricultural Land Law---for instance, relaxing regulations on farming corporations. I believe, however, that legislative changes made to the law in 2009 have removed obstacles to the integration of small tracts of farmland.”[Source: Shinichi Shogenji, Yomiuri Shimbun, January 14, 2011]

“Still, problems remain in the promotion of farmland integration. For example, land integration is carried out by several separate organizations in each region. Different bodies---local agriculture committees; city, town and village governments; farmers' cooperatives---each run their own land integration programs. An investigation is needed into whether these organizations are truly abiding by the spirit of the revised Agricultural Land Law, which emphasizes the need to serve the interests of farmers seeking to integrate their land.” [Ibid]

“Agricultural cooperatives also have a host of problems, including the influence they exert on politicians and political parties. But I believe the shift in power from a Liberal Democratic Party-led government to a DPJ-led administration in 2009 fundamentally changed the relationship between agricultural cooperatives and politicians. In the years ahead, the raison d'etre of agricultural cooperatives will be tested, first and foremost in terms of what they do for farmers. Given that the government is effectively not involved in setting agricultural prices any more, cooperatives must explore what role they should play as produce sellers. In recent years, some agricultural cooperatives have assisted rural residents who have difficulty shopping for daily necessities. Helping their communities in different ways might be an additional role for cooperatives.” [Ibid]

“Progress in trade liberalization is bound to affect the food industry, but this issue can often be overlooked. Increased imports of low-priced processed and prepared food can have a grave impact on the employment situation in rural areas. With this in mind, it is important for consumers, as well as the manufacturing and agricultural industries, to become aware of the advantages---and disadvantages---trade liberalization would bring. For years, the agricultural community has been criticized for being preoccupied with self-centered interests. The farming industry should think about the benefits and harm its activities bring to people from all walks of life, including city dwellers.” [Ibid]

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]

Implementing European-Style Reforms

In February 2011, according to Kyodo News “Japanese Foreign Minister Seiji Maehara vowed that Japan will carry out fundamental agricultural reforms modeled after the European system of direct payments to farmers to help strengthen the local farm sector’s competitiveness and promote trade liberalization. Speaking at a forum for institutional investors, the minister said Japan will pursue high-level free trade agreements with its economic partners and at the same time encourage “a flourishing agricultural sector and prosperous rural districts at home.” [Source: Kyodo, February 28, 2011]

“Maehara said both the European Union and South Korea have implemented drastic reforms to brace for the impact that regional market integration and liberalization will have on the farm sector. He pointed out that the direct payment system in the E.U.’s 27-nation regional bloc has “Succeeded in achieving two goals at once: bringing benefits to the consumer by reducing high tariffs and making producers more competitive.” [Ibid]

“Through the system, farmers can better prepare for cheaper agricultural imports flowing into the domestic market due to trade liberalization and causing the prices of domestic farm products to fall. Maehara also said Japan “can look to increase both public and private-sector investment in agriculture overseas”to help secure a reliable and stable supply of food for the country. “The introduction of safe, dependable and high-quality food production technology would help to increase production” abroad, he said. “At the same time, a part of the resulting harvest could be exported to Japan, leading to a win-win situation.”? [Ibid]

As an example, Maehara said Japan can export its solar-powered “vegetable factory” technology to regions with scarce water resources such as the Middle East and Africa. The plant, which allows for the cultivation of produce such as leaf greens using only artificial lighting, would solve water and food shortages as well as environmental problems, he said. [Ibid]

Consolidating Farms in Japan

The amount of acreage under cultivation has a large impact on the profitability of rice farming. Statistics for 2009 from the Agriculture, Forestry and Fisheries Ministry have shown that the average household income for rice farmers with 20 hectares or more under cultivation was nearly ¥ 12 million a year, while those with less than 1 hectare operated at a loss of ¥138,000, showing that farm income increases with land consolidation.

“At present, however, less than 6 percent of agriculture corporations and farming households plant more than 50,000 square meters of rice,” the Yomiuri Shimbun reported. “About 80 percent have less than 20,000 square meters in rice. Like other areas, a host of regulations hamper rice paddy consolidation. Some land-owners worry that if they lease their land---which has often been passed down for generations---they will have trouble getting it back. Such attitudes hinder a wider participation in farming. [Source: Yomiuri Shimbun, December 3, 2010]

“Increasingly large corporations are running large farms. A farm owned and operated by Watami Co., an operator of izakaya pub chains and other ventures, emphasizes straight-from-the-farm and organic produce, The firm grows vegetables such as lettuce and mizuna for its izakaya at eight farms with a total area of 2 million square meters. Watami also runs a cattle ranch, is engaged in rice production and is looking into creating a brand of rice for export.” [Ibid]

“Sweeping institutional reform, including further revision of the farmland law, is necessary to encourage new participants in the agricultural sector and to speed up land consolidation. Only this will revitalize the domestic agriculture industry. The 2009 year's revision of the Agricultural Land Law stopped short of achieving its goal of encouraging a switch from owning to using farmland.” [Ibid]

Encouraging the Consolidation of Farms with LLCs

In February 2011, the Economy, Trade and Industry Ministry (METI) put together a package of measures to boost farm production and keep costs down by consolidating farmland through the introduction of limited liability companies (LLCs), a business concept more flexible than joint stock companies. METI and the Agriculture, Forestry and Fisheries Ministry will establish a joint study panel to discuss specific ways to bring production costs down, officials said. [Source: Yomiuri Shimbun, February 24, 2011]

An LLC is designed to allow more flexibility for the owners, who are called "members" rather than "shareholders." According to the Yomiuri Shimbun, “In the United States, LLCs operate under the statutes of state governments. While LLCs are similar to joint stock companies as their owners have limited personal liability for debts and corporate actions, they are allowed to decide freely on how to allocate profits among the members through articles of incorporation. Dividend payments in joint stock companies, by contrast, are by law made in proportion to their investment ratios.” [Ibid]

Unlike joint stock companies that can sell farms they operate at any time if they prove unprofitable, LLC-owned farmland is very difficult to unload under the new Companies Law, as the land can only be sold if all LLC members agree. This reassures farmers, particularly elderly ones, that they will not lose their land, the officials said. "Since no key decisions can be made without unanimous approval, farmers can rest assured their farms won't be sold to third parties," an official said. "In addition," he said, "LLC flexibility allows people entering the farming sector to gain dividends in a way suited to the LLCs, not necessarily in proportion to investment ratios among their owners." [Ibid]

Revised Farming Land Law, Regulations and Offering Incentives to Farmers

The revised farming land law, which was enforced in December 2009, raises the corporate investment ceiling permitted in an agricultural incorporated body from 25 percent to just under 50 percent. The law deregulates corporate leasing of agricultural land in principle. [Source: December 1, 2010]

In 2009 Pasona Inc., a major temporary manpower agency, announced it would establish an agricultural incorporated body by taking advantage of the revised law. The firm planned to operate an onion farm over an expanse of land in Awaji, Hyogo Prefecture, a place famous for onion production due to its mild weather, and to hire young people interested in farming. But the firm was urged to review its plan given the prospects of low profitability and the legal need to secure an investment partner from among farming families under the revised agricultural land law, which limits corporate investment to less than 50 percent in a given project. [Ibid]

Despite revised Agricultural Land Law tight controls remain on farmland ownership, and there are requirements that a majority of sales come from agriculture and a majority of board members be farmers. Corporate bitterness abounds toward the constraints of the law and their lack of relevance to reality. Yoshinoya Co., the gyudon beef bowl chain, and Nomura Holdings, Inc., a major securities and financial firm, have invested in the onion and tomato growing business, respectively. At first glance, this corporate participation in agriculture might seem spectacular, but many of the ventures operate in the red. Watami Chairman Miki Watanabe expressed his frustration over eight years of poor performance, saying, "There's no business as restricted [as farming]." [Source: Yomiuri Shimbun, December 3, 2010]

"If new capital is needed, you need to go through a complicated approval process at a board meeting. Running a flexible, responsive farm is impossible under these conditions," said one businessperson involved in farming. "A lot of land leases are short-term, which makes it tough to make medium- or long-term investment plans," another said.

Koichi Uetake wrote in the Yomiuri Shimbun, “In December 2010, the Japanese government decided to offer incentives encouraging farmers to expand their operations from fiscal 2011 to help improve efficiency and competitiveness in the agricultural sector. The incentives, which will be tacked on to uniform benefits under the income compensation program for individual farming households, will be extended to farmers that increase the area under cultivation of rice and several other specified products.” [Source: Koichi Uetake, Yomiuri Shimbun, December 4, 2010]

“Farmers that increase tillage will benefit from both the increase in productivity that usually comes with expanded acreage as well as the government handouts, officials said. Under the current plan, however, additional benefits for increasing cultivation will be limited to a single year. Additionally, revenue sources to finance the incentives have yet to be decided upon. Since the incentive program does not offer anything to those parting with their land, industry analysts have questioned the extent to which the program will help consolidate farmland.” [Ibid]

Reforming the Subsidies Scheme

The system has been criticized even by some DPJ lawmakers. Masashi Mito, a DPJ member of the House of Councillors, said consolidating farmland would not make headway if compensation payouts remained uniform nationwide. [Source: Yomiuri Shimbun, December 4, 2010]

The government needs to revise the system so it will encourage farmers to expand their farms' size and enhance productivity. To achieve such goals, the government should consider ways to provide better compensation in proportion to farm size and give an advantage to farmers experienced in large-scale farming operation. [Ibid]

In October 2010, the Yamagata Prefectural Assembly approved a written opinion calling for the revision of the income compensation system, in particular the fixed cash handout amount. The practice of forcing farmers to withdraw from rented land hinders efforts to enhance agricultural efficiency, the written opinion says. [Ibid]

If an improved income compensation program can help large farms become more competitive, the government will be able to end its rice paddy reduction program. This would likely enable farmers to reduce rice prices and export rice. "We must stop the rice paddy reduction program so rice prices will fall and become internationally competitive," said Kazuhito Yamashita, a former farm ministry bureaucrat. [Ibid]

Drive Underway to Export Value-Added Products

“Another important task is to enhance the international competitiveness of domestic agricultural products, the Yomiuri Shimbun reported. “The current Diet session has seen passage of a bill to encourage the consolidation of production, processing and sales of farm produce, thereby enhancing the added-value of agricultural products. “In a related move, Yamagata Prefecture and Shonai Bank opened a school to teach the production, processing and marketing of agricultural products in an integrated manner. Fukushima Prefecture, for its part, launched a similar school....Thus, local governments have shown keen interest in promoting consolidation in the agricultural sector.[Source: Yomiuri Shimbun, December 1, 2010]

“The image of Japanese food products as safe and secure has taken root in other Asian countries. High-grade wagyu beef, apples produced in Aomori Prefecture and yams harvested in Hokkaido already have a competitive edge in export markets. Efforts also must be made to enhance the competitiveness of rice as an export item, observers said.” [Ibid]

A drive is under way to increase the export value-added products such as high-quality rice and produce. The Yomiuri Shimbun described At Shin Kong Place, an upscale department store in Beijing's business district, packages of Koshihikari rice---a popular brand harvested in Japan---were displayed prominently on the basement food floor. At the store, which has many affluent customers, the rice costs 198 yuan (about 2,500 yen) for two kilograms---about 25 times the average price of rice sold in China. Despite the hefty price tag, one woman put a bag of Koshihikari in her shopping basket without flinching. [Source: Yomiuri Shimbun, December 5, 2010]

Exports of Tokachi Kawanishi Nagaimo, a brand of yam produced in Obihiro, Hokkaido, have doubled in value to 400 million yen over the past decade. Initially, when a bumper crop produced too many of the yams, surplus crops were shipped to Taiwan. However, large yams used for medicinal dishes brought higher prices in Taiwan than those sold in Japan, leading to the increase in their export. [Ibid]

Making Japanese Agriculture More Business-Like

“Promoting exports requires expertise in market research, product development and sales,” the Yomiuri Shimbun reported. “More people in the field are aiming to achieve so-called sixth industrialization, which combines the advantages of the three industrial-sector economic theory---primary (extraction of raw materials), secondary (manufacturing) and tertiary (services).” [Source: Yomiuri Shimbun, December 5, 2010]

“At the foot of Mt. Asama in Miyotamachi, Nagano Prefecture, Hideki Shimazaki, 51, who previously worked at a major confectioner, is aiming to establish a "profitable agricultural" model. Shimazaki's business, which includes growing lettuce and Chinese cabbage, generates more than 1 billion yen in sales annually. The apparent key to his success is that he creates his own sales network and does not use agricultural cooperatives. Taking advantage of his sales experience, Shimazaki has established a direct-selling system encompassing 50 companies."Agriculture lacks the matter-of-fact business approach of ensuring that product development and costs respond to customer needs," he said. "If we incorporate this idea, we can counter cheaper imports." [Ibid]

“In some cases, the agriculture, commerce and industry sectors have successfully combined their strengths and made coordinated efforts to boost business. Agricultural business entrepreneurs, who formerly were company employees, have brought a breath of fresh air---and boosted sales---of the aojiso beefsteak plant (green shiso) harvested in Toyohashi, Aichi Prefecture. By linking up with the municipal government and commerce association in Takkomachi, Aomori Prefecture, entrepreneurs have turned around the local garlic industry that had been battered by imported Chinese garlic.” [Ibid]

“However, exporting agricultural commodities still faces many challenges. For example, China has strict quarantine rules and only designated companies are allowed to operate in the country. Japanese farmers have complained about China's complicated procedures when rice exports are changed from raw to processed products. Some even grumble that Japanese agricultural cooperatives have been reluctant to export farm produce.” [Ibid]

Agriculture Policy and Free Trade

The Japanese government also wants to liberalize the farm market to make easier to set economic partnership agreements (EPAs), or free trade agreements. To this Japan would need to lower tariffs on agricultural good, which would could lead to a flood of cheap products from the United States and Australia and drive down prices, negatively affecting Japanese farmers, and derails Japan’s plan to be more self sufficient in food production. To offset hardships for farmers, the Japanese government has proposed giving them more subsidies.

If Japan participates in the Trans-Pacific Partnership free trade initiative, its tariffs on agricultural produce are certain to be lowered. Farmers also will need to enhance their competitiveness by growing quality produce and selling them at low prices.

“As it is, Japanese farming is in crisis,” said Masayoshi Honma, a professor in agricultural economics at the University of Tokyo. The trade partnership, he said, could perhaps “serve as a much-needed shock therapy.”

Encouraging Young Farmers in Japan

The number of people who newly took up farming totaled 66,000 in 2009, most of them from farming families. New farmers who came from nonfarming sectors amounted to a mere 1,850. In November 2010, Prime Minister Kan revealed his sense of crisis over the aging farm population, acknowledging, "The agricultural land law restricts young people's participation in farming." [Source: Yomiuri Shimbun, December 3, 2010]

In January 2011, the Agriculture, Forestry and Fisheries Ministry has decided to offer 1 million yen annual grants to people who start farming after migrating from metropolitan areas to rural ones. Under the "U-turn, I-turn subsidy" program, the government aims to utilize uncultivated farmland and revitalize farming, which has been strained by declining numbers and advancing age. "U-turn" is a name given to the phenomenon of people returning from metropolitan regions to their hometowns, and "I-turn" is the phenomenon of city-born people moving to rural areas in search of work. [Ibid]

Getting more individuals involved in farming have made only slow and modest progress. A farmer in Niigata Prefecture said: " If you really want to be a farmer, you need an initial investment of at least a 5 million yen for machinery and fertilizer. But the financing and other assistance available to individual farmers? It's not enough." [Ibid]

Renting Farmland to Japanese Urbanintes

An increasing number of people are taking up farming as a hobby and renting small plots to grow their own vegetables and experience farming. Some farmers are making a good living renting out land to such people with the help of government subsidies to farmers who make their fields and expertise available to couples, families and schoolchildren.

Describing such a farmer Kenji Hall wrote in the Los Angeles Times, “Yoshikatsu Mochida strolls between the long, green rows of his field, pausing occasionally to inspect the mustard spinach and garland chrysanthemums that have grown shin-high.For more than a year, Mochida has divided some of his farmland on the outskirts of Yokohama into 8 feet by 40 feet plots, renting 70 of them to urbanites who come once a week to tend their crops.” [Source:Kenji Hall, Los Angeles Times, December 06, 2010]

“For an annual fee of about $500 per parcel, Mochida shows the elderly couples and young families how to plant seeds twice a year and when to water and harvest. They take home their vegetables, and Mochida receives government subsidies to help pay for water, seeds and tools.” "I put more energy into this than my own crops," he jokes. [Ibid]

“The part-timers are engaged in what's known here as shumatsu nogyo , or weekend farming,” Hall wrote. “Their daily lives are firmly rooted in crowded cities. But with no yard of their own, they sign up instead at nearby farms that teach the basics of horticulture. The seasoned ones rent their own pint-sized plots in public-run gardens, known as shimin noen ("people's farms"), on the fringes of Tokyo, Yokohama, Osaka and other cities.” [Ibid]

For Yohsuke Itoh, his wife, Kumiko, and their 5-year-old daughter, Fumi, working in Mochida's fields one day a week is the closest they come to the real thing. "Until we started coming in April, we had never spent a day on a farm," says Itoh, a 43-year-old engineer at IBM Japan. "Our daughter loves coming out here." . A few miles away, in a private rented field, Hideo Nokashi grows potatoes, herbs and leafy vegetables as a way "to unwind" on weekends. An intellectual property-rights lawyer, Nokashi says people like him are not so much interested in saving money as in getting the peace of mind that farming brings them after two decades of near-zero economic growth and job insecurity. "It's more convenient and cheaper to buy food in a supermarket," Nokashi says. "But I know people who couldn't be happier out here...A lot of people are realizing that having a connection to their natural surroundings is more important than amassing material possessions.” [Ibid]

“There are no reliable estimates of how many such farmers there are, but anecdotal evidence suggests that plenty of young city dwellers are taking up horticulture. Recently, Tokyo city government officials have been swamped with requests to rent 15 feet by 10 feet plots on public land in residential areas. "Applicants exceed the number of plots by 3 to 1, and many are young families," says Nobuyoshi Kato, in the Nerima ward office. [Ibid]

Underlying the trend is the philosophy of jisan jisho. A Kyoto farm-rental company claims to have coined the phrase, often translated as "local food for local consumption," which means to eat food that you grow yourself and has its roots in the local food movement. One of the most influential books promoting part-time farming is Naoki Shiomi's "Han No, Han X To lu Ikikata" ("Half Farmer, Half-X [Something Else Lifestyle]"). It details his decision to quit his job at an online retailer in the 1990s and divide his time between farming and environmental activism. Shiomi traces weekend farming to widespread food-safety concerns, following mad-cow disease outbreaks in Japan, the United States and Britain and the discovery in Japan of banned pesticides in dumplings from China. "Most people are still interested in agriculture more from a food standpoint than as a life choice," he says. [Ibid]

Image Sources:

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.

Last updated August 2011

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