Current State of Agricultural Reform

(HARA Eiji, PPPC President)

In the new Japan Revitalization Strategy revised in June, we were able to observe firm advancements in the agricultural reform.

It may be applauded that the Cabinet mentioned reforms of Japan Agriculture which has long been considered as a difficult challenge.

Yet, it does not mean a happy-end by itself. Let us summarize the past achievements and remaining challenges here.

First, in the field of agriculture, many have shared an understanding on what should be done for many years.

The bottom line is to heighten productivity in the management of agriculture and to rear up farmers with ambitions and abilities. To that end farmlands need to be consolidated and agricultural policy must break with measures that distribute subsidies to al farmers uniformly.

Such a viewpoint has been shared from the 1960s when Basic Act on Agriculture was enacted and Ogata village kicked off. However, there have hardly been major advancements for generations and it resulted to the present agricultural situation.

In the 2000s, under the Basic Guideline on Economic and Fiscal Policy in 2002, such measures as the following have been taken.

i.              Expansion of corporate entry into agriculture

ii.              New grant system limiting subject to ambitious farmers with certain size of farmlands

Although there were certain accomplishments due to these efforts, it hasn’t fully come to light as there was a certain kind of backward movements.

Under the current circumstance, the remaining challenges in the agriculture can be listed as follows.

1.         Businesslike management of agriculture

<Relaxation of conditions to be qualified as agricultural production corporation>

Currently, only the agricultural production corporations are allowed to own farmlands and there are strict conditions on an establishment of the corporations regarding financial composition, membership of directors, etc. Such restrictions have prevented Japanese agriculture from switching into businesslike management styles.

2.         Measures to consolidate and make effective use of farmlands

<Reform on Agriculture Committee>

Currently the agriculture committees in the municipal government, composed of elected (often nonelected) local bosses, dominate authorities over the right to use and shift ownership of farmlands. It often results to exclusion of entry of newcomers.

<Others>

For more, there have been debates to promote effective utilization of farmlands from the viewpoint of tax.

3.         JA reform

Traditionally, many farmers who are not likely to grow have barely survived by thoroughly depending on the JA (procure materials from JA, borrow loans from JA, receive government grants via JA, produce goods in accordance with JA instructions, deliver goods to JA, etc.). Meanwhile, independent, autonomous management style of agriculture has been disliked.

4.         Reform on rice adjustment system and price control

It refers to the rice adjustment system and exclusion of price competition by trade barriers.

With regard to these challenges, efforts of the Abe Cabinet can be summarized as the table1.

l  Farmland Consolidation Banks Act was enacted in 2013,

l  Regional experiments of reforms have been arranged in the National Strategic Special Zones in 2014

In addition, there were further advancements in the revised Japan Revitalization Strategy in June.

As is clear from the table1, there have been advancements on the themes which have long been considered as difficult, and surely it makes a big step forward.

Efforts of the Abe Cabinet
	2013	NSSZ Act è  implemented in spring 2014	Measures arranged in the Revised Japan Revitalization Strategy in June
Condition of Agricultural Production Corporation		Exceptional measure on directors (accepting single director)	l  Relaxation of conditions of directors l  Relaxation of conditions on membership (no limits up to 1/2 members) è Next Diet session
Consolidation, utilization of farmlands	Farmland Consolidation Banks	l  Shift of authority from agriculture committee l  Expansion of effective use (farmer’s restaurant)	Reconsidering composition of agriculture committee è Next Diet session
JA reform		l  Credit loans to agriculture	l  Relooking JA-Zenchu l  Corporatization of JA-Zennoh è Next Diet session
Reform on rice adjustment system and price control	l  Abolishment of rice adjustment system? l  Participation in the TPP negotiations

In the meantime, there are remaining challenges to be noted.

①       The Japan Revitalization Strategy is only at the stage of drafting and specific measures are to be arranged hereafter.

②       There are further points to be reconsidered in each challenge (table2).

I.          With regard to conditions to establish agricultural production corporation, it is still problematic that the law provides “more than 1/2 of investors must be those engaging in agriculture.” This provision makes it difficult for ordinary companies to enter into agriculture by owing farmlands, and for ventures to seek being listed, as well.

II.       While it was arranged to transfer from the election of committee members to nomination by mayors with assembly’s consent, it might result to a mere fact that the same members will be selected as ever. It requires further specific organizational devices to really change the actual state of the agriculture committee.

III.     With regard to the JA reform, it is yet clear what kind of organizations both Zenchu and Zennoh will be rebuilt into (although Zenoh will be “corporatized,” it is yet known who will be the shareholders and by what percent). It all depends on the future discussions on their organizational designs.

Items arranged in the Revised Japan Revitalization Strategy and remaining challenges

l  Condition of Agricultural Production Corporation ²  “more than 1/2 of investors must be those engaging in agriculture” è Neither ordinary companies can entry, nor can agricultural production corporations be listed. ²  “further relaxation of condition will be reconsidered after five years…” l  Agriculture Committee ²  “abolishing the election system,” “nomination by mayors with a requirement of the assembly’s consent” l  JA reform ²  “central union will shift to a new autonomous institution” ²  “Zennoh will be able to turn into a stock company invested by JA”

We need to keep paying attentions to these points in eye if the next ordinary session of the Diet.