EDITORIAL: Protecting rice farmers

The farm ministry has started preparing for the introduction of a new income support program for farmers--one of the key platforms of the ruling Democratic Party of Japan in the Aug. 30 Lower House election. But the plan crafted by the ministry has serious drawbacks that could hamper, rather than help, the revitalization of the nation's flagging agricultural sector.

The biggest problem is that the program would preserve the long-standing policy of reducing the amount of land devoted to rice cultivation, which has been a major cause of decline of Japanese agriculture.

In addition, the program as envisioned by the ministry would hinder the consolidation of farmland. That is because most rice farmers would be eligible for the income support.

The ministry has requested around 560 billion yen as an outlay for fiscal 2010 to finance the program. This costly plan should not be allowed to end up degenerating into a giveaway to farmers at a time when the government is reviewing hundreds of programs and projects for major spending cuts.

The acreage-reduction program is, in effect, a production cartel based on cooperation between the government and rice growers. It is designed to adjust rice production to actual demand. Its aim is to prop up the finances of farming families by preventing rice prices from falling even when demand is sagging.

Some 7 trillion yen of taxpayer money has been poured into this program, which has been in place for four decades. As a result, Japanese consumers have been forced to buy rice at much higher prices and shoulder a heavy financial burden to support the program.

The prohibitive 778-percent tariff that Japan imposes on rice imports to keep cheaper rice from washing into the domestic market is also having a harmful effect. This measure to protect domestic rice farmers from international competition has been impeding Japan's farm negotiations under the World Trade Organization and its talks for free trade agreements with its key trading partners.

Despite the huge price paid for it, the acreage-reduction policy has undermined the vigor and the vitality of Japanese agriculture.

It has served as a powerful disincentive for production increases, thereby worsening problems that have long bedeviled the sector, such as the dwindling number of people willing to succeed the family farm and the increase in the number of plots of unused farmland.

The proposed income support program would provide subsidies to farmers when the sales prices of their crops fall below estimated production costs. Similar programs of direct cash payments to farmers have helped bolster farm production in Europe and the United States.

If it is designed and implemented properly, the program could radically alter the nation's unhealthy rice policy and help revive agriculture. But if the income support program is introduced while the acreage reduction policy is maintained, as planned by the farm ministry, it would provide no incentive for rice growers to increase output.

The ministry plans to make some 1.8 million rice growers eligible for the program, which would represent almost all farmers selling rice. This could discourage farmers who are cultivating rice only as a side business from parting with their farmland, thereby stalling the slow-moving trend toward concentration of farmland in the hands of full-time farmers.

The ministry should limit the scope of income subsidies to the less than 1 million families that are earning the main part of their income from farming.

The government should lay out a new vision for rice farming based on a liberalization policy. Under such a vision, production and imports of rice would be liberalized, but an income support program would mitigate the damage suffered by full-time rice farmers from expected drops in rice prices due to liberalization.

It could pave the way for future exports of high-quality rice from Japan. The proposed income support program represents a major pillar of reform that radically changes the government's agriculture policy. The government appears to be trying to push through the reform in an unreasonably short period. It should hammer out a better, more carefully designed plan than the current rough-and-ready one.

--The Asahi Shimbun, Nov. 16(IHT/Asahi: November 17,2009)