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Gov’t to consider further raising corporate capital ratio in agricultural companies

  • 2016-02-08 15:00:00
  • , Nikkei
  • Translation

(Nikkei: February 6, 2016 – p. 5)


 A meeting of the government’s Council on National Strategic Special Zones (NSSZ) agreed on Feb. 5 to consider raising the ratio of corporate capital in agricultural production companies further to more than 50% to allow companies to practically own farmland. This is meant to make it easier for companies to go into farming and improve the competitiveness of agriculture, in anticipation of the effectuation of the TPP agreement. However, the Ministry of Agriculture, Forestry, and Fisheries (MAFF) and Liberal Democratic Party (LDP) Diet members lobbying for agricultural and forestry interests are negative about this proposal. There is a possibility that the coordination process will run into difficulties.


 Regional Revitalization Minister Shigeru Ishiba, who is in charge of the NSSZs, has presented 14 deregulation proposals on agriculture and tourism, including the proposal to increase capital ratio. Prime Minister Shinzo Abe has ordered the concerned ministers to study these proposals and stated that he will make the final decision on incorporating the discussion results into legislative measures, thus exhibiting great enthusiasm to realize these proposals. Coordination will take place in the government and the ruling parties, with the aim of submitting amendments to the NSSZ Law to the current Diet session.


 Companies are currently allowed to contribute up to 25% of the capital of agricultural production companies. The revised Farmland Law taking effect in April will raise the ratio to an upper limit of 50%, but a higher ratio is not allowed since this would make companies de facto landowners.


 The government is considering raising the ratio beyond 50% first in the NSSZs, which are pilot areas for deregulation.


 However, easing the regulation on capital ratio is being opposed by the MAFF and LDP Diet members with a special interest in agriculture and forestry. When a similar proposal was made at the Industrial Competitiveness Council in 2013, concerns were voiced about companies abandoning farmland and farming once they become unprofitable. The Kantei (Prime Minister’s Official Residence) had to give up on this proposal at that time.


 Therefore, coordination in the government and the ruling parties from now on is also expected to involve discussions on ways to dispel such concerns, such as by imposing certain conditions on land ownership. (Slightly abridged)

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