* Written by PPPC Visiting Fellow
1.Circumstance of Rice Production Adjustment
Japan’s urgent task since the 1960s has been to restrain rice
production as countermeasure to its overproduction.
For this, the rice production adjustment started as an emergency
measure in 1971 centering on fallowing rice paddy field, and its
implementation has existed in this country for more than 40 years.
Although this policy has been implemented without legal or
legislative ground, there have been promotional measures (carrot:
production adjustment subsidy*) as well as penalty measures (stick:
exclusion from supportive projects in case not pertaining to the
adjustment goal) in order to secure enforcement of this policy
The penalty measure was abolished in 2010, coinciding with an
introduction of individual compensation to farmers (direct grant on
rice) under the former Democratic Party of Japan’s government.
Therefore, the implementation of the rice production adjustment
thereafter has been conducted on the combination of two kinds of
carrots since then.
*With regard to production adjustment subsidy, the amount of payment
was initially calculated on the basis of area of irrigated field to
be hallowed to reduce production, but the payments were later made
for a nominal reason of promotion of transplanting other crops like
wheat and soy beans on the redundant irrigated fallow fields aiming
for increasing the country’s food self-sufficiency rate. Therefore,
the subsidy has been granted under the name of promotion of rotation
of crops, instead of production adjustment. (Kazuhito YAMASHITA,
Research Director, The Canon Institute for Global Studies, former
2.Why abolishment of rice production adjustment?
The government’s Industrial Competitiveness Council took up the
revision of individual compensation to farmers and other items, listed
in the Liberal Democratic Party’s election pledge, as items for
discussion. On October 24, private sector members of the Council
proposed an opinion to abolish the allocation of production numerical
target and not to implement rice production adjustment by 2016
(abolishment of overall production adjustment in three years), which
brought about a wide range of attentions in public on the review of
rice production adjustment.
The Ministry of Agriculture, Forestry and Fisheries and LDP have
suggested the direction of agricultural policy reform as the following.
(1)Creating an environment in which farmers can produce accordingly
with demand upon their management mindset, not restricted by the
production target set by the public administration.
(2)With regard to individual compensation to farmers on rice (direct
grant), the payment will be reduced to \750 apiece (by half) for
rice produced in 2014 to rice produced in 2017 for three years
(scheduled to be abolished in 2018).
(3)Through direct payment of subsidy to utilize irrigated fields, the
government will promote full-scale transition from food rice to
strategic crops such as feed rice, wheat and soy beans, and take
additional measure on the subsidy on feed rice apiece to be
increased from the current \80,000 per 10 are to \105,000 per 10.
Many media focused on (1) alone and reported it loudly as
“abolishment of rice production adjustment.” However, as Mr.
Yamashita (abovementioned) says, a suspension of allocation of
production numerical target is not equivalent with an abolishment of
the production adjustment. The current production adjustment measure
could have already been meaningless, as MAFF admits, as it lacks the
old penalty measures (stick) to secure enforcement of the production
On the other hand, among the carrots, while the individual
compensation to farmers on rice (direct grant) will be abolished,
“the direct payment of subsidy to divert irrigated fields for food
rice into feed rice (production adjustment subsidy) will be continuing,
in an even strengthened manner by raising the amount of grant apiece
from \80,000 per 10 are to \105,000 per 10 are.
After all, no change has been made to the basic constitution of the
production adjustment which aimed at preventing the rice price from
decreasing. Moreover, the framework is to be sustained for another
five years while feed rice production will increase through
promotional measure. It might cause further fiscal burden if it
exceeds surplus owing to abolishment of the individual compensation to
farmers scheduled five years later. This would be rather an
enhancement of the production adjustment.
3.Integration into some form of income compensation measure
If it really intends an abolishment of the production adjustment,
the government’s fundamental role is to create an environment in
which ambitious farmers can produce as much food rice as they want to
while at the same time having as much cost-consciousness as possible,
instead of expanding the production adjustment (promotion of rotation
of crops) subsidy to such farmers.
In this context, it should be more desirable to reimburse the farmers
through some form of income compensation the gap caused by decrease in
rice price, rather than granting production adjustment subsidy to
prevent decrease in rice price. The expansion of production adjustment
subsidy this time must remain to be a transient measure.
At the current point, an overall picture of the new management and
income stabilization measures or the Japanese style direct payment
system said to be launched after five years is yet to be unveiled.
Aside with these important issues, however, in order to truly abolish
the production adjustment, a key will be how to integrate the
production adjustment subsidy into a new institutional design which is
more oriented toward income compensation.