Media  Global Economy  2014.01.30

Protection for farmers and protection for farming

English translated version of "Business Prospect" on NHK Radio Channel 1 on December 24, 2013

1. What impact the current review of the rice paddy set-aside program can have on farmers' income was discussed during a review process.

The Ministry of Agriculture, Forestry and Fisheries (MAFF) estimated that farming income in an average farming community would increase by 13% due to the currently-planned changes in agricultural policy which include (i) a significant increase in the amount of subsidy paid for the conversion of production from rice for direct human consumption to rice for flour or feedstuff; (ii) an introduction of new arrangements in which a subsidy is paid for carrying out farmland maintenance. It is of paramount importance for politicians to know how the income of farmers in their constituencies will be affected by the policy change.

The present policy change follows on from the campaign pledge made by the Liberal Democratic Party (LDP) to abolish the individual household income support introduced by the then-ruling Democratic Party of Japan, a policy which the LDP has criticised as a pork-barrel measure. Since this individual household income support is paid to farmers who comply with the maximum limit of production quantity set to reduce rice production, many media sources incorrectly report that the abolishment of this support means to abolish the rice paddy set-aside program.

Under the individual household income support system, an amount of 15,000 yen is paid for each 10 acre area of rice paddy. Additionally farmers are reimbursed for the difference between the actual price of rice and the fixed standard price if the former becomes lower than the latter. As its name indicates, the objective of this system is to support farmers' income. As a result, the LDP politicians are concerned about any possible decline in farmers' income caused by the abolishment of this practice. The subsidy to be paid under this system will not be entirely abolished immediately, but will be halved to 7,500 yen per decare in the fiscal year of 2014. MAFF's estimate, taking into account the reduction of this subsidy; an increase of subsidy for conversion to rice for flour and feedstuff; and an introduction of new subsidy for farmland maintenance, shows an increase in farmers' income. Needless to say, the MAFF assumes that the price of rice will stay at the same level.

2. What is your opinion on the situation of farmers' income?

One of the biggest internal policy issues in China is the income disparity between rural and urban areas: the par capita income level in rural areas is three times lower than that in urban areas.

Actually, Japan suffered the same problem before World War II: farmers in rural areas were poor compared to workers in urban areas. Most of them were peasants who had to pay a landlord nearly a half of their rice harvest as farm rent. They also had to spend the revenue from the remaining half of rice on fertilizers to be used for the next year's rice production. As a result there were many farmers who could not eat the rice they had produced. This situation reached its worst in 1930 when the effects of the Great Depression hit Japan. This coincided with the full harvest which had the result of causing a collapse in the price of rice. In the following year the Tohoku and Hokkaido regions suffered a serious harvest failure. There were many parents in rural areas who had to sell their daughters into prostitution.

Older people may remember the name of Mr Takekazu Ogura who is called the 'father' of the Agriculture Basic Act in 1961 and served as the chairman of the governmental tax commission for 16 years after his retirement from the then Ministry of Agriculture and Forestry (MAF). Officials who joined the MAF before World War II including Mr Ogura saw such misery among farmers and were determined to reduce poverty in rural areas. Such officials included Mr Senichi Tanigaki who is the father of Mr Sadakazu Tanigaki, the current Minister of Justice, and Mr Masayoshi Ito who refused to be appointed Prime Minister and President of LDP when the Takeshita cabinet resigned en masse because of the Recruit scandal in 1989. He said that "Nothing will change by changing the cover of the book unless you change what is written in the book."*1

In order to improve the situation of peasants before World War II MAF's officials persistently challenged the politicians who represented the interest of landlords in the Imperial Diet. Their untiring dedication and unceasing efforts resulted in the agrarian reform immediately after World War II. Many school history textbooks stated that the agrarian reform just after World War II was carried out by the occupation forces: the General Headquarters of the Allied Forces (GHQ). However, among the Japanese post-war economic reforms made by GHQ, including dissolution of the Zaibatsu (industrial conglomerates), the agrarian reform was the only one initiated by the Japanese government, specifically the MAF. Needless to say, GHQ helped the MAF to persuade the politicians of conservative parties who were against the agrarian reform. However, it was the MAF that designed and implemented the agrarian reform. Mr Ogura was the MAF's Director in charge of the second draft of the Agrarian Reform Act.

3. How do you see the current status of the farmers in rural areas?

Dr Shuzo Teruoka, one of the respectable scholars of agricultural economics, wrote a book titled "Nihon no Nogyo 150 nen (150 years of Japanese agriculture)" which I believe must be read by anyone who studies the history of Japanese agriculture. I was recently presented by Dr Teruoka with a copy of his autobiography. In that book he writes, "Generally speaking, in the early 1970s farmers and farming communities were not poor anymore. Essentially poor peasants disappeared. One cannot say that farmers and farming communities are poorer than those who live in urban areas." Indeed, farmers' income has constantly exceeded workers' household income since 1965 due to the expansion of part-time farming. Poverty has disappeared from rural areas. Currently farmers' income consist of 1.1 million yen from farming, 4.32 million yen from other businesses (which is four times higher than farming income) and 2.29 million yen from pensions and other sources.

It is no longer necessary to focus exclusively on the issue of farmers' income. Agriculture needs to be maintained and developed in order to ensure a stable food supply to citizens. However, these things are necessary not only for farmers but also for citizens and consumers. MAF officials before World War II never forgot this point even for a moment. Mr Tadaatsu Ishiguro, one of the symbolic MAF officials before World War II, said, "Agriculture is of particular value because it supports the foundations of the nation. If it does not support the nation's foundations it is less than nothing."

What he meant by the words "agriculture supporting the foundations of the nation" is that agriculture is valuable because it carries out the essential function of providing a reliable food supply to citizens. Currently under the rice paddy set-aside program, rice production is artificially reduced and consumers are forced to pay an inflated price for rice. This was strongly opposed by the MAF officials before World War II. In establishing and implementing agricultural policy one should not forget the focal point of economic policy which is "Keisei-saimin(経世済民)" which roughly translates as "governing the nation for the relief of the people."

*1 (Translator's note) In 1989 some ten members of the LDP were charged by the public prosecutor with bribe-taking. They received from the company Recruit Co., Ltd. (then-current name) the unlisted shares of its subsidiary which were later made an IPO. Because of this so-called Recruit scandal Takeshita's cabinet resigned en masse. At the time Mr Ito was the Chairman of the General-Council of the LDP which was one of the most important positions immediately below the President. He refused to be nominated the candidate of the Prime Minister (and the President of the LDP) by saying the above words. Presumably he meant that the LDP needed to change substantially but not by merely changing its President.

(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 December 24, 2013.)