Japan’s Agro-Food Sector

Even the most casual and short-term visitor to Japan cannot fail to make some pertinent observations about Japan’s agro-food sector: landing at Narita airport he views the tidy, parcelled and densely settled paddy cultures of Northern Chiba prefecture. In food stalls and convenience stores he purchases neatly packaged high-quality foods at extravagant prices. Restaurants serve one of the world’s best cuisines usually for an even more exorbitant bill. The agro-food sector accounts for 22% of all employment, 11% of all production, 30% of all consumer expenditure and easily qualifies as the most important single component of the Japanese economy. Yet with an average farm size of only 1.2 ha and the paramount food security arguments enjoyed in a traditionally relatively isolated island nation, the ‘backwardness’ and high cost structure of Japan’s strongly protected agro-food structure at first sight might appear plausible.

This chapter will review three major elements in Japan’s post-Tokugawa agricultural policies: the development in production factors (land, labour, capital), the unfolding and effects of key events and movements (Rice Riots of 1918, the interwar tenants’ movement, and the post-war land reform), and the development of theories on the role of agriculture in Japan’s society and economy. All these elements obviously have repercussions on contemporary structures and policies in Japan’s agricultural system.

Japan’s farm structure, similar to that of most other Western industrialized countries pursuing protectionist agricultural politics, is a triple one comprising:

Every town or village has its cooperatives (Nokyo). In all Japanese towns two types of cooperatives exist. There are multipurpose cooperatives (4300 in 1985) providing banking, insurance, welfare services, agricultural inputs, and general household necessities to all member farm households, as well as those ‘single purpose’ cooperatives (about 5000) comprising producers according to their sectoral specialization (vegetables, fruits, dairying, beef cattle, pig fattening, poultry, sericulture, etc.). All are organized in about 700 prefectural federations (see Figure 4.1), the functions of which increase with the growing sophistication and diversity of members’ demands (especially in non-agricultural matters) on their cooperative. At prefectural level these federations also have their proper union to facilitate coordination of activities and policies.

The process of substituting land and labour by capital (i.e. agricultural chemicals and machinery) has gone on intermittently since the 1960s. Time worked for 10 ares of paddy fields has been cut from 207 hours (1950) to 150 hours (1964), to 100 hours (1973) and more recently further reduced to 54 hours (1984). At the same time average yields have increased from 305 kg (1948) of rice for the same 10 ares to 479 kg (1984).¹ It should be noted that given the rice production structure, this tremendous gain in productivity was achieved by weekend farmers mainly, which should indicate some scope still for further improvement.

Next to her high cost agricultural production, Japan’s cumbersome distribution system with its large mark-ups charged along the way is considered as a major factor increasing retail prices and hence limiting consumption.

Japan’s post-war political system centred around an uneasy coalition of the ruling LDP, organized business interests, and the central government bureaucracy, whose policies were supported by an essentially conservative electorate. In agricultural policies this basic equation becomes troubled through the inclusion of the agricultural lobby, as organized by Zenchu, whose protectionist policies are opposed by big business — voiced by Keidanren, Japan’s industrial federation.

According to OECD estimates for 1979–81, which are based on extrapolations of the products covering 60% of total production, Japanese agriculture was subsidized by taxpayers at 10.2 bn ECU p.a. (41.4% of the total) and by consumers at 14.4. bn ECU p.a. (58.6%).¹

Agricultural protection which reduces import demand effectively depresses world commodity prices. Though Japan does not subsidize her agricultural exports, her ever-growing trade surplus due to competitive industrial production enhances political pressure on the part of all major agricultural exporters — the US, the EC, Australia, Canada, New Zealand, Thailand, etc. — which demand liberalized import access on foodstuffs on which they happen to enjoy greater competitive advantages.

This concluding chapter will summarize the major challenges facing the farm sector and its associated upstream and downstream industries: structural shifts, the problems of demography, the challenges arising from biotechnology, environmental concerns, internationalization, and changes in the political economy equation.