Media  Global Economy  2013.06.04

LDP campaign pledge: Doubling farming income

English translated version of "Business Prospect" on NHK Radio Channel 1 on April 16, 2013

1. Newspapers have reported that the Liberal Democratic Party of Japan (LDP) has announced "doubling farming income" as a part of its campaign pledge for the Upper House election this summer. What are your thoughts on this?

The LDP's campaign pledge implies a concern that farmers, who usually constitute a large portion of the LDP's support base, may be disaffected by its recent decision to participate in the TPP negotiations. However, the LDP must be accountable for the reasons why farmers' income has to be doubled. The issue here is why they are looking after farmers' income but not, for example, the income of medium- or small-sized retailers who have closed their shops, resulting in the advent of 'a shuttered street' (a formerly high-traffic street where many shops and offices are now closed). In other words, the LDP must answer the question as to why nothing but agriculture needs to be protected.

Food security and the multifunctional roles of agriculture have often been cited as the main reasons for protecting agriculture. It is certainly necessary to preserve agricultural resources, such as farmland, to secure adequate domestic production of foodstuffs in the event of a global food crisis. This is one of the reasons for protecting agriculture from the viewpoint of food security. It is also necessary to properly preserve farmland in order to prevent flooding, secure water resources, and conserve a beautiful landscape. From this perspective, even the terraced rice paddies in hilly and mountainous regions which have poorer productivity have to be preserved. This is the other reason for protecting agriculture in terms of conserving its multifunctional roles.

I agree with securing farming income in order to fulfill these agricultural roles and functions. However, the policy to protect agriculture and farmers must be based on the intention of ensuring food security and preserve multifunctional roles, and not directed at maintaining or increasing farming income itself. For example, converting farmland into housing sites gives farmers a large amount of money. But this serves the purpose of neither food security nor agriculture's multifunctional roles but it damages those roles because farmland is lost. So when we pursue securing farming income as a part of agricultural policy, it must ensure and improve food security and the multifunctional roles of agriculture.

2. From this point of view, how do you see the history of Japan's agriculture policy?

The Agricultural Basic Act enacted in 1961 provided that the purpose of the act was "to correct the income gap between agriculture and industry." This means that the act intended to increase farmers' income because it had become less than that of industrial workers. In order to accomplish this, the act advocated the expansion of farm size, which would reduce farming costs and increase profits. Until that time, the idea behind agricultural bureaucracy since the prewar period was reflected in the act's "improving Japan's small agricultural structure."

However, the actual agricultural policy adopted by the government was different: it aimed to and actually did increase the price of rice to raise farmers' income. Farmers and their supporters, including politicians, advocated doubling the rice price for a free ride on the Ikeda administration's Income Doubling Plan. Along with an increase in the number of part-time farmers, their gross income exceeded that of industrial workers after 1965. The purpose of the Agricultural Basic Act "to correct the income gap between agriculture and industry" was accomplished by other means than that intended by the act. However, since the price of rice increased unrelated to the supply and demand of rice, excess rice inventory piled up in the market after around 1970. This inevitably forced the government to introduce the rice paddy set-aside program. Nowadays, the price of rice is maintained by the rice paddy set-aside program, which secures the income of rice farmers.

Most of the multifunctional roles of agriculture, including replenishing water resources and preventing floods, are derived from functions of wet rice paddy fields. Under the rice paddy set-aside program, rice paddy fields, which are one of the most important resources of rice production, would decrease. Before the program was introduced, rice paddies had expanded to 3.44 million hectares. After it was introduced, rice paddies have been on the wane, eventually reaching their current of 2.5 million hectares. Among 2.5 million hectares, rice is currently cultivated in only 1.5 million hectares, while 1 million hectares are left fallow under the rice paddy set-aside program. Thus, the program intended to secure farming income undermines food security and the multifunctional roles of agriculture.

3. What kind of policies do you think the LDP intends to promote under its recently- announced campaign pledge?

I understand that the details of the policy have not been determined yet, but the LDP is reportedly exploring how to improve productivity by aggregating farmlands and expanding farm size, and how to increase exports of agricultural products. In these two decades, the annual production of rice has decreased by one-third from 12 million to 8 million tons. Japan's domestic market for agricultural products will continue to shrink due to a demographic shift. In such case, doubling farming income is very far from realistic, and Japan's agriculture would easily die away. In this context, increasing exports of agricultural products is imperative to preserve agricultural resources.

However, since the first Abe administration in 2006, exports of agricultural products have never increased despite the government's support for providing an adequate budget and human resources under its slogan to significantly expand exports. This failure was brought about by the government's single-minded focus on sales promotions. If you want to successfully export goods, price competitiveness is essential. In other words, it requires building the competitive advantage of Japan's agricultural products by reducing costs and prices through agricultural structural reform. High-quality rice is one of Japan's representative agricultural products. Measures must be taken to abolish the rice paddy set-aside program, resulting in a lower price of rice, and expanded farm size and increased yields, thus improving Japan's competitive position by reducing costs.

Improving productivity by aggregating farmlands has been voiced repeatedly but has never materialized. It is easy to speak about "aggressive promotion of agriculture," but words alone will not expand exports. I wonder if the current administration is really determined to take drastic measures to abolish the rice paddy set-aside program that has stood in the way of Japan's agricultural competitiveness. If the LDP-led administration will not carry out such fundamental reform, it will be difficult to realize its campaign pledge to improve farming income, ensure food security, and preserve the multifunctional roles of agriculture.

(This article was translated from the Japanese transcript of Mr. Yamashita's speech in the "Business Prospect" session of the radio program "First in the Morning News" broadcast by NHK Radio Channel1 on April 16, 2013.)