Media  Global Economy  2018.01.26

"Japan, Mizuho no Kuni" will be destroyed by Abenomics: Although the front of the signboard saying "reform" is decorated with catchphrases and the like, its back is....

The article was originally posted on Webronza on January 9, 2017

Prime Minister Abe likes the catchphrase "Mizuho no Kuni" (land of golden ears of rice). When he talks about agricultural policies, he often uses this phrase. I infer that "Japan, a beautiful country," which was used during his previous term as prime minister, is represented by golden-colored paddy fields in the autumn.

He seems to like using catchphrases and slogans. Regarding agricultural policy reform, he said that it was the first one in 40 years and that no one dared to carry out it for 60 years. For example, in 2014 he stated, "We are promoting aggressive agricultural policy reform. We will abolish the Policy of Reducing Paddy Acreage, which had continued for 40 years. Although any change in the system of agricultural cooperatives has been regarded as a taboo, we will drastically reform it for the first time in 60 years."

Is Mr. Abe an unprecedented prime minister?

Given what has been described above, Prime Minister Abe seems to be an unprecedented prime minister who accomplished reform that could not be accomplished by reformist prime ministers like Yasuhiro Nakasone and Junichiro Koizumi. In reality, however, the Abe government's agricultural policy reform is deceptive in that there is a great gap between the title and content of the policy.

The front of the signboard saying reform is brightly decorated by catchwords and slogans. On the back side, however, the actual content of the policy protects and expands the vested rights of what is called Agricultural Village consisting of the Ministry of Agriculture, Forestry and Fisheries, agricultural cooperatives and the Liberal Democratic Party politicians backed by farmers' votes and acting in the interest of farmers . Although there are some changes in the policy, they do not constitute reform; they are results of change of the policy in the opposite direction.

This is because Prime Minister Abe has left everything about the policy to the Agricultural Village. In the past, Prime Minister Shigeru Yoshida left everything about the agrarian reform policy to Hiroo Wada, the then Minister of Agriculture and Forestry. However, this was because Wada was a genuine reformer who had both the eagerness and ability to accomplish farmland reform thoroughly. The agricultural reform was not left to the Agricultural Village (the then landlord class) that did not wish for reform.

Leaving everything and the Agricultural Village's loud laugh

Although the agricultural cooperatives were reformed for the first time in sixty years, the reform was partial and slight as a result of leaving policy coordination to the Agricultural Village. Regarding enterprises' possession of farmland under a special zone system, the Agricultural Village applied this policy only to Yabu City, Hyogo Prefecture, taking advantage of Prime Minister Abe's statement.

Because the Japan-EU Free Trade Agreement impacts the production of cheese, Japan has planned to take domestic measures. If the Agreement brings about an increase in imports and it becomes necessary to lower the price of domestic cheese, the price of raw milk for manufacturing cheese should be lowered. Far from it, ,in December last year the Hokuren Federation of Agricultural Cooperatives, the greatest milk supplier, raised the price of milk for cheese by four to five yen (about 10%). As I pointed out before, this shows that both Hokuren and dairy manufacturers have recognized that the liberalization has no impact at all.

In other words, the Agricultural Village took advantage of the Prime Minister's leaving everything to it and increased the budget in spite of the fact that the liberalization has no impact.

I guess the Agricultural Village is laughing loudly. However, we, the general public, should also pay attention to the fact that it is laughing at not only the Prime Minister but also at other persons.

Fake news by Prime Minister Abe

The Agricultural Village's policy change, which was completely opposed to reform, was entirely accepted or endorsed by Prime Minister Abe, who presented the changes as drastic reform without understanding the contents. This is fake news called Discontinuation of the Acreage Reduction Policy made by the Prime Minister's office.

Rather than being abolished, the Gentan System was strengthened.-We need to abolish the gentan policy even if we are not pushed by the United States to do so.-

Although the executive members of the Liberal Democratic Party and the Ministry of Agriculture, Forestry and Fisheries have long emphasized since the policy change that acreage reduction (production adjustment) is necessary, a major newspaper reported it just as stated by the Prime Minister's office without consulting the people concerned (basic and standard protocol for reporters), and other mass media followed this. Although the central government merely decided to cancel the target volume of production (acreage reduction from the opposite point of view), the mass media reported that the acreage reduction policy would be abolished. At that time, however, Mr. Hayashi, the then Minister of Agriculture, Forestry and Fisheries, stated that the target volume had already become totally meaningless. Backstage, there was a great increase in the subsidies for acreage reduction (change of crops), the core of the acreage reduction policy. Concretely, there was an increase in the unit amount of subsidy for the production of rice not as staple food but as feed.

Prime Minister Abe told two lies. Although he bragged that no one has carried out such a drastic reform for 40 years, in 2007, when the first Abe Cabinet was in office, he by himself canceled the target volume of production and immediately withdrew this policy change after a subsequent decrease in the price of rice. At that time, the mass media did not report that the acreage reduction policy had been discontinued. The issuance of subsidies for reduction of acreage for feed rice started as a measure against the drop in the price of rice at that time.

The other lie is the abolition of the acreage reduction policy itself. The Staple Food Act (Act on Stabilization of Supply, Demand and Prices of Staple Food), which was enacted in place of the Food Control Act, has a provision concerning production adjustment (acreage reduction). If the abolition of the acreage reduction policy is true, this provision should be eliminated. However, such a revision of the Act has still not been either proposed or carried out. If Prime Minister Abe continues to advocate the abolition of the acreage reduction policy persistently, he should submit a draft revision of the Staple Food Act to the Japanese Diet.

Nature of the acreage reduction policy

Right from the start for what has rice acreage been reduced?

The purpose of the acreage reduction policy is to keep the price of rice higher than the market price by giving subsidies to farmers for reducing the production of rice. If the policy is abolished, the price of rice will decrease due to an increase in the supply of rice.

If the policy is abolished, this will be a radical reform that will deny the postwar agricultural policy. In 2008, Mr. Ishiba, the then Minister of Agriculture, Forestry and Fisheries, publicly announced that if the policy were abolished, the price of rice per 60 kg would be estimated to decrease from 15,000 yen to 7,500 yen. At that time, the Diet members acting in the interest of farmers fiercely rebelled against Minister Ishiba, who insisted on the reconsideration of the acreage reduction policy, resulting in failure of reform. The agricultural cooperatives strongly opposed TPP because if there are no customs duties, inexpensive rice will be imported and it will become impossible to keep the price of rice high through acreage reduction.

The Ministry of Agriculture, Forestry and Fisheries has long insisted that acreage should mainly be reduced not by the central government but by the agricultural cooperatives, because acreage should be reduced on behalf of producers. Because of this, both in 2007 and this time, the central government decided not to set the target volume of production. The decision not to set the target volume was not made by the Prime Minister's office but by the Ministry of Agriculture, Forestry and Fisheries. This time, subsidies for the reduction of acreage for feed rice are in place and planned to be issued as an adequate preparation for a decrease in the price of rice.

There is no change in the basic system of encouraging acreage reduction through the issuance of subsidies. If the mass media had understood this, they should not have called it the abolition of the acreage reduction policy. In addition, surprisingly, university professors and think tank staff members who called themselves agricultural experts explained that the policy would be abolished in reality. They may be fake experts.

Only the Japan Agricultural News, a bulletin of the agricultural cooperatives, has not reported the abolition of the acreage reduction policy. The true agricultural experts in the Agricultural Village also are well aware that the abolition is fake news by Prime Minister Abe. This is because they have properly understood the nature of the acreage reduction policy.

Rise in the price of rice due to the abolition of the acreage reduction policy?

As estimated by Minister Ishiba, if the acreage reduction policy is abolished, the price of rice should decrease. However, the price has been rising because the supply of feed rice increased and the supply of rice as staple food decreased due to an increase in the amount of subsidies.

Why Do Rice Prices Rise?: Farmers aren't poor. The acreage-reduction policy only hurts the taxpayers / consumers.

Even if the central government stops setting the target volume of production, as far as powerful acreage reduction subsidies exist, farmers will continue to participate in the acreage reduction policy, which is a production adjustment cartel under the auspices of the agricultural cooperatives. Although it is reported that "the abolition of the acreage reduction policy" increases production in Hokkaido, production targets are shown by producers' associations in Hokkaido, which will continue acreage reduction cartels. This is not the abolition of the acreage reduction policy that will enable farmers to produce rice freely. In addition, production in Hokkaido will increase by only 0.9%. On the other hand, because some prefectures will reduce production, production in Japan as a whole will not increase. The price of rice will be kept high in this year of the abolition of the acreage reduction policy. Because 40% of the paddy fields have been reduced (or diverted to grow other crops), the abolition of the acreage reduction policy should have greatly increased the production of rice and depressed the price of rice.

Mizuho no Kuni is being destroyed

What is problematic is the Agricultural Village's desperate attempt to reduce the production of rice as staple food to keep the price of rice high. In these 25 years, the production of rice decreased from 11.98 million tons (in 1994) to 7.35 million tons (target volume for 2018). Because there is a shortage in rice for eating out and home-meal replacement, which now occupies a little more than 30% of the total consumption of rice, due to the increasing supply of rice for feed use, the restaurant and catering industries have begun to cry for help. Because rice for feed is more profitable, farmers have begun to shift supply from rice for food service to rice for feed.

While the price of rice supplied in Japan in the name of protection of farmers has been raised substantially, the price of wheat, 90% of which is imported, has been left as it is. Because of this price policy in favor of foreign products, the consumption of rice, which used to be more than three times higher than that of wheat 60 years ago, has decreased to near the level of wheat consumption. It is the Agricultural Village that has reduced the food self-sufficiency rate.

The Agricultural Village even seems to welcome the fake news of the abolition of the acreage reduction policy. Its members might chuckle to themselves when thinking that if the general public and the mass media accept and believe the abolition without question, the problem of acreage reduction, which has already been settled politically, will not be taken up for discussion for further reform. Due to the false report, the Agricultural Village can continue to reduce acreage with ease and without challenge.

Prime Minister Abe has no intention to probe this most important problem about agricultural policy thoroughly. Soon, Japan will change from the land of golden ears of rice to the land of bread.

This beautiful country has been disappearing. The Agricultural Village is laughing at the general public, who are forced to pay a heavy tax for the provision of acreage reduction subsidies as taxpayers and to pay a high price for rice as consumers. Will future historians ridicule Prime Minister Abe as the prime minister of bread?

(This article was translated from the Japanese transcript of Dr. Yamashita's column in "Webronza" on January 9, 2017.)