Will Japanese agriculture revive? 日本の農業はよみがえるのか―注目される安倍政権の「攻めの農林水産業」―


The Japanese economy is now entering a crucial phase. Abenomics, a package of bold fiscal stimulus, monetary easing and growth strategies which Prime Minister Shinzo Abe’s government has pushed ahead in the past two years, seems to be helping the economy crawl out of a sense of frustration that has been hanging over the country since the Lehman Shock. Yet it is a mix of policy measures shorter and limited in effectiveness. Whether a long-term economic stability can be achieved to bring benefits to the nation totally depends on the growth strategies to spur private investment, the last of the “three arrows” that form Abenomics. The Japanese agriculture that stands at a crossroads may deserve particular attention in the growth strategies targeted at a broad spectrum of industries.


Japanese agriculture losing power



Japan’s agriculture has been on the decline for years due to a falling number of farming population, coupled with the aging of people engaged in the industry. The annual gross agricultural output has been gradually diminishing since hitting its peak at \11 trillion in 1985. The latest statistical data made available by the Ministry of Agriculture, Forestry & Fisheries (MAFF) put the 2012 output at \8 trillion, a contraction of some 30% in the past 27 years. Adding to the industry’s plight have been the falling domestic demand and increasing imports of cheaper crops. The agricultural income dropped as much as 50% compared with 20 years ago.



Alerted by this critical situation, the Abe administration came out with an ambitious growth strategy, dubbed “aggressive agriculture, forestry and fisheries,” aimed to double the farming income in the next decade through improvement of productivity.  The strategy specifically aims to: (1) improve productivity through integration and consolidation of farmlands, (2) double exports of agriculture, forestry and fisheries products, and (3) expand the market of the so-called “sixth industry” from \1 trillion now to \10 trillion in the next ten years. For reference, the “sixth industry” is a term coined by agricultural economist Naraomi Imamura, a professor emeritus at the University of Tokyo, by multiplying the primary, secondary and tertiary industries. It is an initiative to have producers of farm and dairy products directly involved in the secondary (food processing) and tertiary (distribution and marketing) industries so that they can get part of the added values earned by those who are engaged in the two industries.


“Farmland Consolidation Banks”



Playing the core role in the growth strategy for agriculture will be what it calls “Farmland Consolidation Banks.” These are the “Public Intermediate Organizations for Farmland Consolidation” set up so far in 43 of the country’s 47 prefectures. The banks will acquire idled and abandoned farmlands and lease them to big regional farmers. They may hold the key to the success of the strategy as they are aimed to help the agriculture industry revive by eliminating its long-standing inefficiency.



Improved productivity can cut the production cost for both crops and processed goods based on them. The reduced cost can make Japanese farm products more competitive in the global markets. That will help expand their exports and boost competition among farmers at home. However, the government, farmers and people in general will need to cooperate with each other in achieving those aims.



For example, greater mutual efforts will be needed in improving the rice productivity. Rice is one of the staple crops in Japan. Any productivity improvement will be hardly possible without lifting the production adjustment policy which has been in place since 1970. Farmland consolidation banks, mentioned above, will temporally borrow fallow and deserted farmlands from their owners to lease them to applicants. The cost needed to take care of those farmlands and make them ready for leasing is estimated at as much as \10 million per hectare. It will indirectly add to the burden shouldered by taxpayers. Moreover, this project can involve risks because no applicants may come forward if lands are prepared.



Long rugged road ahead



As part of its “sixth industry” initiative, the Abe government is planning to ease the existing regulations to make it easier for private businesses such food and distribution firms to branch out into the agriculture industry. However, the move is strongly opposed by the National Federation of Agricultural Cooperative Associations (Zen-Noh). The Japanese agriculture has long been run in a conservative way, protected by complicated regulations. A number of hurdles need to be cleared before revolutionary changes can be brought into it. Will the incoming administration be able to carry out agricultural reforms to stem the industry’s long-continued decline? A long bumpy road is in store for it.



(Written by: Hideki Kato)