Media  Global Economy  2018.06.01

No More of the False Report of Abolition of the Gentan Policy!

The article was originally posted on Webronza on May 18, 2018

Watching a TV special titled "Gentan haishidemo komeno seisanga fuenai (Rice production will not increase despite the abolition of the gentan policy acreage reduction policy)" which was broadcast by NHK on May 9, I felt a terrible letdown, thinking to myself, "Oh, not again!"

According to the TV program, although the government abolished the gentan (rice acreage reduction) program this year, this year's rice planting is almost on par with last year's in more than 70% of prefectures, with farmers not inclined to increase rice production. Referring to a farming household in Hokkaido, the program then pointed out aging and labor shortage as the reasons for that. Meanwhile, it also reported that since a significant amount of government subsidies went to the production of rice for animal feed, the supply of rice for direct human consumption for business use such as that for packed lunches had fallen, boosting the price of such rice.

As has repeatedly been noted in my WEBRONZA articles, ""Japan, Mizuho no Kuni" will be destroyed by Abenomics" (January 9, 2018) and "Rather than being abolished, the Gentan System was strengthened" (December 19, 2016), discontinuation of the gentan policy is fake news spread by Prime Minister Shinzo Abe.

Despite the fact that no changes have been made to the basic framework of the gentan program, i.e. providing subsidies to farmers to reduce rice acreage, Japanese media continue reporting the abolition of the program as if it were an established policy.

"National unity" fake news

Gentan is production adjustment aimed at keeping rice prices high.

When Prime Minister Abe, who had barely been involved in review of the gentan policy, declared proudly in 2014 that he would abolish the policy even though no one had been able to do so for 40 years, both key Liberal Democratic Party lawmakers affiliated with farm organizations who had reviewed the policy and officials concerned of the Ministry of Agriculture, Forestry and Fisheries including the Minister categorically denied that the government would do away with the policy.

This is completely the same situation as that currently faced by the U.S. in which President Trump talks frivolously without notes and government officials deny what he has said.

Unlike in the U.S., Japanese media seized on the fake news without corroborative data collection and shouted it from the rooftops. As a result, although Prime Minister Abe subsequently retracted his statement at the Diet, the fake news has not been corrected to date. Prime Minister Abe does not appear to have remarked that he would rescind the gentan policy since the retraction of his statement.

Only the Japan Agricultural Newspaper, a bulletin of the agricultural cooperatives, has reported correctly. In this manner, the abolition of the gentan policy, which is not going to happen, was etched in stone. We can say that it is "national unity" fake news.

The abolition of the gentan policy ought to have increased rice production while reducing rice prices. However, because the reverse is actually taking place, the TV special produced by NHK pointed out aging and labor shortage as the reasons for it. Maybe NHK wanted to argue, by providing such reasons, that the abolition of the gentan system advocated by Prime Minister Abe has not necessarily failed to achieve a desired policy effect (increase in rice production). It was as if NHK saw things from Prime Minister Abe's point of view.

With increased supply of rice for animal feed, the gentan policy strengthened

Let me set the record straight. A rice farming household with an acreage of 10 hectares cultivates rice in a 6-hectare rice paddy and other crops such as wheat and soybeans on the remaining 4-hectare converted rice fields. To plant crops other than rice in this manner is called "crop switching" or "gentan."

As prices of rice as staple food (total of rice for household use and that for business use) are higher than those of other crops, the government has, in order to encourage farmers to carry out crop switching or gentan, granted them subsidies so that they can gain the same level of income as they would have gained if they had continued growing rice as staple food. Viewed from the opposite side, the government has kept prices of rice as staple food high by reducing the supply of such rice through the provision of subsidies to farm households in return for crop switching or gentan.

In response to this gentan policy of the government, many part-time farmers had taken an extreme step called "sutezukuri," i.e. just planting crops other than rice without harvesting them. Nevertheless, because the objective of the policy, to dissuade farmers from cultivating rice, can be achieved even by sutezukuri, the government had, burying its head in the sand, provided subsidies to those part-time farmers as well.

However, this was not something that was praised. Considering that rice growers incapable of growing wheat must be able to at least grow rice, the government has decided to regard rice for animal feed, which is the same as rice for direct human consumption but used for a different purpose, as switched crops covered by gentan subsidies.

The review of the policy which Prime Minister Abe proudly declared as "abolition of the gentan policy" was in fact the significant increase in the amount of the gentan subsidies paid for the production of this type of rice for animal feed.

The supply of rice for animal feed worth almost nothing on the market has increased, but the supply of rice as staple food has not increased. The gentan policy has not been abolished. On the contrary, it has been strengthened and prices of rice have been on the rise.

"Farmers cannot grow rice due to labor shortage"-- A superficially plausible reason

However, it is too late for NHK to correct the fake news. Perhaps I should say they had no other choice but to argue that farmers could not increase the production of rice as staple food even if they wanted to, because of aging and labor shortage.

If gentan is abolished, then the gentan subsidies paid for the production of rice for animal feed will also be abolished. In that case, it would be natural that rice farmers choose to sell rice they have grown as rice as staple food at high prices on the market rather than as rice for animal feed worth almost nothing. Even if the total production volume of rice on the whole remains unchanged, the supply of rice for animal feed will decrease, since rice as staple food will increase by the corresponding volume, leading to a drop in prices of the latter. There is no need for farmers to add staff.

In a nutshell, if gentan is abolished, the production of rice as staple food will increase and therefore, "a rise in the price of rice" will never happen. In the first place, if there had been a lack of manpower in rice cultivation, farmers must have had their hands full with maintaining the production of rice as staple food; they could not have afforded to increase the production of rice for animal feed.

I cannot make an appropriate comment on the farming household in Hokkaido with a rice acreage of 33 hectares introduced by the NHK program, as the current business conditions of the farmer are unknown to me. However, considering that no changes have been made to the gentan subsidies, I believe that the household will implement crop switching or gentan in 40% of its farmland this year as it has always done in the past, unless they think revenues from cultivating rice as staple food will be significantly higher than those from crop switching. The production of rice as staple food will not increase. If farmers acquire additional farmlands and expand their business to increase the production of rice as staple food, they need to hire additional workers. However, this is a different story from crop switching or gentan.

It is like the Moritomo scandal in which one lie has led to another

There is a reason why rice farmers in Hokkaido cannot easily expand their business. With snowfalls coming earlier there, they must finish harvesting by September. Taking this harvest schedule and the growing season for rice into account, they have only about 10 days to spend in planting rice paddies. This means that the maximum extent of land that a married-couple farm household can take care of is around 10 hectares.

Farmers in other prefectures facing different natural farming conditions can spend as long as two to three months in rice planting and harvesting, by utilizing difference of elevation and planting rice varieties from early to late crops. Even in hilly and mountainous areas of the Chugoku Mountain Range with lots of sloping farmlands, there are some married-couple farm households cultivating 20 hectares of land each.

In addition, the majority of farmers in prefectures other than Hokkaido are small part-time farmers. If gentan (subsidies) is abolished, it will be easy for them to cease crop switching on a tiny piece of land and convert to production of rice as staple food. Planting rice that used to require a great deal of manpower and time can now be done by machines. At present, even a relatively large-scale rice farmer in prefectures other than Hokkaido with an acreage of one hectare is engaged in field work for only 30 days a year. Additional manpower is unnecessary. That is why production of rice for animal feed has increased.

Although the farm household in Hokkaido reported by NHK said that they did not have enough workers for rice planting, the method of direct seeding that eliminates the laborious process of planting seedlings is now widely practiced by large rice growers. The labor shortage problem can be addressed through the use of technology and capital.

It appears to me that NHK has reported another fake news story to cover up the previous one. Does it not remind you of the conduct of the Finance Ministry's bureaucrats in the Moritomo scandal who lied to cover up another lie and even falsified documents?

(This article was translated from the Japanese transcript of Dr. Yamashita's column in "Webronza" on May 18, 2018.)