The reform proposals announced by the JA Group on Sept. 8 were indeed aimed at reviewing some of the operations of the National Federation of Agricultural Cooperative Associations (JA Zen-Noh), which the government and the ruling parties regard as the main target of agricultural reforms. Lowering the prices of fertilizers and pesticides will be one step forward for agriculture to break away from its high-cost structure. However, these proposals were evidently inadequate in terms of concrete plans. The government and the ruling parties are likely to demand more reforms from the JA Group.
Chairman Choe Okuno of the Central Union of Agricultural Cooperatives (JA Zenchu), the leadership body of the JA Group, stressed the significance of the reform proposals at his regular news conference on Sept. 8 by saying: “These proposals represent tremendous self-sacrifice on the part of Zen-Noh.” The JA Group has been forced to start implementing serious reforms under pressure from the government and the ruling parties. After the basic TPP agreement was reached last October, enhancing the international competitiveness of agriculture became an urgent issue.
Shinjiro Koizumi, head of the Liberal Democratic Party Agriculture and Forestry Division, has been voicing “serious doubts” about JA Zen-Noh’s business operations in public and criticizing it sternly. Chief Cabinet Secretary Yoshihide Suga also indicated at a news conference on Sept. 6 that “Zen-Noh’s operations need to be reformed thoroughly.”
However, the reforms announced on Sept. 8 were short on specifics, such as a timetable for the consolidation of types of fertilizers and pesticides sold by Zen-Noh – the main area of reform — and the extent of the consolidation. Okuno said at his news conference that “this is not the end of reforms,” implying that the proposals may be reviewed.
The consolidation of fertilizers and other items will have a tremendous impact on the JA Group and the related business sectors. The consolidation of products and price cutting will mean a decline in JA’s business volume. This will inevitably result in the restructuring of production plants and manufacturers under Zen-Noh, which will affect employment and business operations.
The JA Group has a share of around 40% in the distribution of rice and over 50% in the distribution of vegetables and fruits. Direct marketing by Zen-Noh to the food service industry and other businesses will deal a serious blow to wholesalers and the wholesale markets. How to contain the resistance of manufacturers and business operators will also be a problem.