Revitalization of Japan’s agriculture is a major pillar of the government’s economic growth strategy. Parties concerned with agricultural reform have to be aware of what they are doing as reform is a touchstone for revitalization.
The Liberal Democratic Party’s plan for agricultural reform has been formed. The LDP called for the National Federation of Agricultural Cooperative Associations, or Zen-Noh, to implement major reforms of its operations regarding the purchase and retail of agricultural supplies, as well as the sales of farm products. The plan is reasonable because it includes basic elements of a proposal made by the government’s Regulatory Reform Promotion Council.
The proposal urged for reforms to be implemented within one year but the LDP plan avoids setting a time limit. Instead, it calls for Zen-Noh to publish an annual plan containing numerical targets, before the government and ruling parties eventually examine the progress of the reforms.
It is believed that the council intentionally called for the difficult task of implementing reforms in a short period of time in an effort to encourage Zen-Noh to launch such reforms. The LDP aimed to settle the issue while also respecting Zen-Noh’s independence because the Japan agricultural cooperatives (JA) group has strongly opposed the council’s radical proposal.
Since Zen-Noh is a private organization, it is impossible for the government to force it to carry out the reforms as it does not have legally binding power. It was apparently a political decision that the LDP’s plan, which focused on materializing the reforms, did not include a time limit even while adopting the basics of the council’s proposal.
A major question is whether Zen-Noh itself will be able to step up to the challenge of making bold reforms.
Zen-Noh has to carry great responsibility since the implementation of reforms is entrusted to a voluntary effort. If it publishes numerical targets and an annual plan but they are not considered serious enough, it would receive harsh criticism. It will never be an easy task for Zen-Noh to implement reforms, even without a time limit.
Develop retail channels
Zen-Noh is like a huge agricultural trade company and its operations have become overgrown, causing harmful effects such as an inefficient system of trading agricultural supplies. There is a pressing need to improve Zen-Noh’s management practices, which depend on commission income from farmers.
The agricultural supplies operation is one of Zen-Noh’s revenue sources, but farmers have been critical of it because supplies have been provided at relatively expensive prices compared to overseas. As the council has already pointed out, it would be better for Zen-Noh to focus on an operation for advising farmers on matters such as helping them purchase supplies at lower costs.
It is expected that Zen-Noh will redevelop its current operation of farm produce sales, in which farmers sell them produce on consignment, as a system of no-return purchase. It is necessary for Zen-Noh to make efforts to increase the income levels of farmers by developing retail channels that sell farm produce at high prices.
The LDP’s plan also included drastic reform of the distribution of raw milk, the material for milk and butter. It will be the first such major reform in 50 years. Milk producers who distribute their products without going through cooperative groups designated by the government will also be able to receive subsidies. It is expected that the reform would boost production because producers could freely choose where to distribute their product.
It is uncertain whether the Trans-Pacific Partnership trade deal will come into effect after U.S. President-elect Donald Trump announced his intention of withdrawing from the deal.
Nevertheless, Japan can afford no further delay in reforming agriculture by strengthening international competitiveness and making agriculture a growth industry. Both the government and the ruling parties must not relax their efforts in reforming agriculture.