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Japan agribusiness

The victory of the Democratic Party of Japan (DPJ) in August 2009's general election is bound to have repercussions on the country's agricultural sector. The defeated Liberal Democratic Party (LDP) had been in uninterrupted power since 1955 except for a brief period of less than a year in the early 1990s. The LDP enjoyed a very strong relationship with the country's farmers and particularly the powerful agricultural co-operatives. Japan's agricultural system of large subsidies propping up many fairly inefficient and loss-making farms was constructed by the LDP. The DPJ's strong support in rural areas suggests that many farmers were attracted by the proposals for reform of the agricultural sector laid out in the party's pre-election manifesto. Despite assurances from the party that they will continue to offer strong support to the country's farmers, the change in government undoubtedly poses some risk to the country's agricultural culture. The main policy in the DPJ's manifesto is the replacement of the system of price supports and subsidies for major crops, predominantly rice, with a direct income support payment to farmers. The payments will make up for the shortfall between the market price and the cost of production for a targeted amount of rice. Farmers will be able to sell any excess production at the market price. The DPJ will also scrap subsidies offered to farmers to reduce rice production. Details on exactly how the system will be run are for the moment somewhat scarce. The DPJ is hoping to introduce the new payment system in 2010. Judging by the election results, many farmers like the sound of the policy despite the lack of details. We also believe the proposed support system would be positive for the country's agricultural sector, though warn that there will be many difficulties in its implementation. The DPJ is sticking to the former government's aim of raising food self-sufficiency on a calorie basis to 50% within 10 years from its current level of around 40%. The party has previously also promised to free up trade in agricultural commodities saying that free trade and food security are not incompatible. While the intent is to be applauded, the realities of governing may well see the new administration's enthusiasm for opening up the country's agricultural sector diminish when faced with the many vested interests in the current system. There are as yet few details available on how the DPJ intends to maintain production when Japan's hundreds of thousands of ageing, part-time rice farmers leave the sector. Promisingly, in its election manifesto the party promised to reform land rules governing the transfer of agricultural land to ease entry into the sector and bring idle land into production. For the long-term health of food production in Japan, the development of profitable full-time farms needs to be further encouraged.

by S. C.
16 march 2010, World News > Asia