The stage is set for the reform of the Japan’s Agricultural Cooperatives (JA). The main battlefield will be the National Federation of Agricultural Co-operative Associations (JA Zen-Noh), which effectively monopolizes the fertilizer and agrichemical markets. Shinjiro Koizumi, the head of the Liberal Democratic Party’s Agriculture and Forestry Division, intends to make price reductions in the agricultural materials market, which Zen-Noh is in charge of, the centerpiece of his agricultural reform plan to be finalized in the fall. With some in the administration starting to comment on disbanding Zen-Noh, a fierce clash is becoming increasingly likely.
On July 22, the leaders of four agricultural organizations – the Central Union of Agricultural Cooperatives (JA Zen-Chu), Zen-Noh, the National Mutual Insurance Federation of Agricultural Cooperatives (Kyosairen), and the Norinchukin Bank Agricultural and Forestry Central Bank (Norinchukin Bank) – held a joint press conference. This was the first such meeting since November 2014, when the council for regulatory reform discussed “disbanding of Zen-Noh”. The press briefing was held out of a sense of urgency to put forward the organizations’ own initiatives for reform in response to Koizumi’s JA reform plans.
The government views the agricultural industry as one of the pillars of its growth strategy. The government’s demand for reforms of the agricultural materials market is triggered by the Trans-Pacific Partnership agreement, which will require better cost performance from the Japanese agricultural industry in the face of severe competition from abroad.
Instead of presenting a united front, the press conference revealed the organizations’ different levels of enthusiasm toward the reform. While the pro-reform Chairman of Zen-Chu, Choe Okuno, said that they want to present a concrete reform plan by September, Zen-Noh Chairman Yoshimi Nakano claimed that what they have been doing is not wrong, and announced his support for the status quo.
Previously, Koizumi told the press that Okuno’s calls for reform have been largely unanswered in the agricultural group. Koizumi took a strategy of strengthening cooperation with the pro-reform camp prior to altering Zen-Noh’s position. He has had discussions with Okuno, as well as with Vice-Minister of Agriculture, Forestry and Fishery Masaaki Okuhara, and Council for Regulatory Reform member Yasufumi Kanamaru, who is in charge of agricultural issues in the council.
In the past, Koizumi caused a stir by saying, “Farmers are forced to buy agricultural machinery that costs as much as a Lexus.” He pointed out that the high prices of agrichemicals and machinery due to Zen-Noh’s monopoly are depriving Japanese agriculture of a competitive edge.
Under the reform policy of the administration, which regards Zen-Noh reform as the main pillar of the policy, Zen-Noh is expected to negotiate with material manufacturers and make various other efforts to reduce the prices of production materials.
The agricultural organizations’ opinions diverged there as well. Norinchukin Chairman Yoshio Kono called for structural reform of manufacturers’ groups. But Nakano insisted that there is no need for such reform if Japanese agriculture continues in its present form. (Abridged)