Evaluation of agricultural policy reforms in Japan [electronic resource]

2009·4.6 MB·English

by  Martini, Roger

Evaluation ofAgricultural Policy
Reforms in Japan
OECD
Evaluation ofAgricultural
Policy Reforms in Japan
OECD
ORGANISATIONFORECONOMICCO-OPERATION
ANDDEVELOPMENT
TheOECDisauniqueforumwherethegovernmentsof30democraciesworktogetherto
addresstheeconomic,socialandenvironmentalchallengesofglobalisation.TheOECDisalsoat
theforefrontofeffortstounderstandandtohelpgovernmentsrespondtonewdevelopmentsand
concerns,suchascorporategovernance,theinformationeconomyandthechallengesofan
ageingpopulation.TheOrganisationprovidesasettingwheregovernmentscancomparepolicy
experiences,seekanswerstocommonproblems,identifygoodpracticeandworktoco-ordinate
domesticandinternationalpolicies.
TheOECDmembercountriesare:Australia,Austria,Belgium,Canada,theCzechRepublic,
Denmark,Finland,France,Germany,Greece,Hungary,Iceland,Ireland,Italy,Japan,Korea,
Luxembourg,Mexico,theNetherlands,NewZealand,Norway,Poland,Portugal,theSlovakRepublic,
Spain,Sweden,Switzerland,TUrkey,theUnitedKingdomandtheUnitedStates.TheCommissionof
theEuropeanCommunitiestakespartintheworkoftheOECD.
OECDPublishingdisseminateswidelytheresultsoftheOrganisation’sstatisticsgatheringand
researchoneconomic,socialandenvironmentalissues,aswellastheconventions,guidelinesand
standardsagreedbyitsmembers.
CorrigendatoOECDpublicationsmaybefoundonlineat:www.oecd.org/publishing/corrigenda.
©OECD2009
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[e-mail]tnrseoffratnhci;saimsadt'eerxipalloiftoratpiuobnlidcuodrrociotmdmeerccoipiael(uCsFeC)[e-mail]ranceCenter(CCC)
FOREWORD3
Foreword
ThisreportisananalysisoftheJapaneseagriculturalsectorandJapaneseagricultural
policy.ItwasundertakenasapartoftheOECD’scontinuingworkonMembercountries’
policiesandcontainsevaluationandrecommendationsbasedontheprinciplesfor
agriculturalpolicyreformasexpressedbyOECDMinisters.Thereportlooksatthe
evolutionofJapaneseagriculturalpolicyoverthelastseveraldecades,butmaintainsits
analyticalfocusonpoliciescurrentlyinplace.Inadditiontoreportingawidevarietyof
Fstiasthiesrtiicess,(mMuAcFhF)o,fuwsheiwcahswmearedeporfovtihdeedOEbCyDthPeSMEi/nCisStErydaotfabAagsreicaunldtutrhee,OFEorCesDtrPyolaincdy
EvaluationModel(PEM)forsomeoftheanalyticalwork.
TheauthorsofthereportareRogerMartiniandShingoKimura.Editorialand
sOtEatCisDticaDlirpercetpoarraatteiofnorwTarsadceararineddAogurticbuyltMuirec.heTlheePraetptoerrtsohna.sAlblentehfeitatuedthforrsomarienpwuitthfrtohme
manydifferentindividuals,includingDr.ShogenjiandDr.AndoofUniversityofTokyo,
Dr.OhgaofNihonUniversity,andDr.ShobayashiofGakushuinWomen'sCollege.All
responsibilityforthefinalworkremainswiththeauthors.Thisreportwasdeclassifiedby
theWorkingPartyonAgriculturalPoliciesandMarketsoftheCommitteeforAgriculture
inApril2009.
EVALUATIONOFAGRICULTURALPOLICYREFORMINJAPAN-©OECD2009

1
TABLEOFCONTENTS 5
Tableofcontents
ExecutiveSummary 9
Chapter1.IssuesandObjectivesinAgriculture 1
Thechangingfaceofagriculture II
Trendsinagricultureproductionanditsroleintheruraleconomy 12
Trendsinfoodconsumption 17
Fannlabourandthestructureofthefarmenterprise 20
Landuse 25
Agriculturaltrade 27
Chapter2.AgriculturalPolicyinJapan 31
Overviewofagriculturalsupport 33
Foodsecurityandtradepolicy 43
Policiesforuplandcrops 71
Landpolicy 74
Policiesinthelivestocksector 86
Fruitandvegetablespolicy 93
Ruralandenvironmentalpolicies 95
Chapter3.FutureDirectionsofJapaneseAgricultureandPolicyReform 101
Evaluationofagriculturalpolicies 101
Recommendationsforfuturepolicyreform 103
Conclusion IQS
Annex1.TheJapanPEMModule Ill
Tables
Table1.1. Farmsize,1965-2005 14
Table1.2. Comparisonofnetproductperworker 23
Table1.3. Comparisonoflabourproductivitygrowth 24
Table1.4. Comparisonofhouseholdincomebetweennon-farmandfarmhousehold 24
Table1.5. Changeinlanduse1960-2005 26
Table1.6. Selfsufficiencyinfoodproduction,1960-2005 28
Table1.7. Mainimportsandexportsofagriculturalgoods,2004-06 29
Table1.8. Majortradepartners,2004-06 29
EVALUATIONOFAGRICULTURALPOLICYREFORMINJAPAN-©OECD2009
6-TABLEOFCONTENTS
TTaabbllee22..21.. NPSAECClaansdsiNfPicCa,tiJoanpoafnsaenldecOteEdCagDriacvuletruargaelpolicies 3346
Table2.T ExplainingthechangeinthePSEbetween1986-88and2004-06 37
Table2.4. Refonningtheproductionadjustmentprogramme
combinedwithalargerdirectpayment 39
Table2.6. DriversofchangeinMPS1986-88to2005-07 41
Table2.6. EmergencyresponsesspecifiedintheFoodSecuritymanual 46
Table2.7. Trendsinconsumption2006-2012 46
TTaabbllee22..89.. EAsptpilmiaetdeMdEimNpatcatriofffptrroetnedcstiionncionnsagurmiecurltduerme,anFdY2006 4517
Table2.10. Agriculturalgoodssubjecttotariffratequota 52
Table2.11. Estimatedimpactofproductionadjustmentprogrammeonproductionandprice....69
Table2.12. Averagenumberofanimalsonfarm,1960-2005 87
Table2.13. Paymentstomanufacturingmilk 92
Table2.14. Existenceofanaturalfluidmilkpricepremium 93
TableA.l. FactorCostShares 112
Figures
Figure1.1. Contributionofagriculturetotheeconomy,1960-2005 12
Figure1.2. Valueofproduction,1960vs.2005 13
Figure1.3. CompositionofagriculturalproductioninHokkaidoandotherregionsin2006 13
Figure1.4. Proportionoffarmlandcultivatedbydifferentsizeoffarm,2005 15
Figure1.5. Agriculturalproductionbyfarmtypes 15
Figure1.6. Shareoffoodconsumptioninhouseholdconsumptionexpenditure 18
FFiigguurree11..78.. CEvhoalnugteisoninofdapielryccaapliotraiefoinotdakseu,pp19ly6,01-926000-02005 1189
Figure1.9. Trendsinobesityratebyagegroup 19
Figure1.10. Projectionoffuturepopulation 20
Figure1.11. Sizeandagestructureofagriculturallabourforce,1960-2005 21
Figure1.12. Numberoffarmhouseholdsbytype 22
Figure1.13. Sourcesofhouseholdincome.2005 23
Figure1.14. Landuse 25
Figure1.15. Yearlylossoffarmlandbycause1970-2006 26
Figure1.16. Trendinlandabandonment.1975-2005 27
Figure1.16. Valueandvolumeofagriculturalimports,1960-2005 28
FFiigguurree22..12.. N%oPmSiEnailnPOSEP.CaDndco%unPtSrRie.s.1918968-6-280806and2004-06 3345
FFiigguurree22..34.. PPSSEECleovmeploasintdicoonm,pJoaspiatnioannbdyOsEupCpDortavceartaeggeo,ri2e0s.041-90876-2006 3367
Figure2.5. ProducerSCTbycommodity,1986-88and2004-06 40
Figure2.6. PercentageCSE,JapanandOECDaverage.1986-88and2004-06 41
FFiigguurree22..81.. ETovtoallutSiuopnpoorftGESsStEimatebycountry 4423
Figure2.9. Targetrateoffoodself-sufficiency 44
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EVALUATIONOFAGRICULTURALPOLICYREFORMINJAPAN-©OECD2009
TABLEOFCONTENTS-7
Figure2.14. Paddyareaandplantedareaofrice,1970-2006 57
Figure2.15. Ricepriceandmarketpricesupport.1986-2006 59
Figure2.16. %SCTforrice 59
Figure2.17. Productioncostofricebyfarmsize(Non-Hokkaido) 60
Figure2.18. Compositionofincomebytypesofricefarms 63
Figure2.19. Fannincomefromricefanningbyfarmsize 63
Figure2.20. Labourinputbyricefarms,1960-2005 64
Figure2.21. Off-farmemploymentofpart-timefanners 65
Figure2.22. Ageofricefarmers,2005 66
Figure2.23. Maintenancecostofpaddyanduplandper0.1ha 68
Figure2.24. SingleCommodityTransfertoselectedcrops,1986-88and2004-06 72
Figure2.25. Agriculturalproductioncorporationsbytype,1970-2005 77
Figure2.26. Landtenure,1965-2005 78
Figure2.27. Areaoffarmlandcultivatedbycorefarmer.2005 79
Figure2.28. Farmincomeandprofit,otherthanHokkaido 80
Figure2.29. Paddypriceoutsideurbanplanningzone,2005 81
Figure2.30. Exampleoffragmentedfarmland 83
FFiigguurree22..3321.. NRoeans-ofnasrmcihtoeudsfeohrolddi'sscosnhtairneuoiunsfalramndlarnedntoawlnershipandabandonedland 8843
Figure2.33. SingleCommodityTransfersforlivestockproducts 87
Figure2.34. Domesticbeefproductionandimports,1990-2006 88
FFiigguurree22..3365.. TMihlekdcefoincsiuemnpctyipoanyamnedntprsiccehse.m1e9f8o6r-c2a0l0v6es 9809
Figure2.37. Regionalcompositionofmilkproduction 91
Figure2.38. Milkproductionbyjype,1975-2006 91
Figure2.39. ProducerNominalProtectionCoefficient 94
Figure2.40. Comparisonofretailpricesofimportedanddomesticvegetables 94
Figure2.41. NumberoffannerscertifiedasEco-Farmers,2000-2008 98
Figure2.42. Estimatedamountofchemicalfertilizerandpesticideapplication 99
Figure2.43. Adoptionofenvironmentallyfriendlyfanningpracticeforricefarms 100
Figure2.44. Fertilizerandpesticidepurchasesbyricefarms 100
FFiigguurreeAA..21.. WLealnfdarmearckheatnsgeusndienrtthheemParrokdeutctfioornlaAnddjufsortmreicnetpPrroodugcrtaimomne 111134
Boxes
Box1.1.RuralcommunitiesinJapan 16
Box1.2.DefinitionofthefarmhouseholdinJapaneseagriculturalstatistics 22
BBooxx22..21..NPoelwicyBaEsviacluLaatwioonnMoFodoedl,AgricultureandRuralAreas 3382
Box2.3.Evolutionoffoodlabellingpolicy 54
Box2.4.Whatisacorefanner? 61
Box2.5.Agriculturalco-operativesinJapan 65
Box2.6.Forecastofagriculturalstructureandfarmmanagement 73
Box2.7.FarmlandownershipregulationsandtheAgriculturalLandAct 76
Box2.8.Farmlandusebyhobbyfarmers 86
Box2.9.Multi-functionalityofpaddyfields 96
EVALUATIONOFAGRICULTURALPOLICYREFORMINJAPAN-©OECD2009

EXECUTIVESUMMARY9
ExecutiveSummary
Agriculturefacesmanychallengesasitseeksitsrolein21stcenturyJapan.Forrice,a
majorstapleproductandformanythedefiningproductofJapaneseagriculture,these
challengesareparticularlyacute.Smallaveragefarmsizesandsmallandfragmented
ptlhoatnstohfelgaennderaarlefpoaprumleadtiboyn.aAwohrikstfoorrycoefthsautppisorotldaenrdthparnotaevcetiroangehaavnedraegsiunlgtemdoirnearaspeicdtloyr
thatmanyfeelisuncompetitiveandill-equippedtoparticipateonalevelplayingfield,
eitherwithothersectorsoftheeconomyorinternationally.
Atthesametime,manypartsofJapaneseagriculturearethriving.Productionof
livestockproducts,beefinparticular,hasgrownstrongly,andthereisevidencetosuggest
thatproducersoffruitsandvegetableshavebeensuccessfulatusingtheircomparative
advantagestoprosperinthemarketplace.Theseproductsareproducedbybusiness-
orientedfarmsthatarelesssusceptibletothescaleproblemsfacedbythericesector.
Exportsoftheseproductshaveincreasedby60%inrecentyears,andthisgrowthis
expectedtocontinue.Nevertheless,manyagriculturalproductscontinuetoreceivehigh
levelsofsupportandprotectionbyOECDstandards.
Recently,policy-makersinJapanhavefocussedtheirattentiononimprovingthe
competitiveness ofthe agricultural sector by directing some important payment
programmestolargerfanns,aswellasreforminglandregulationstomakeiteasierfor
farmstoincreaseinsize.Theseeffortsareagoodstartintheprocessofputting
agricultureinJapanonacompetitivefooting,buttobesuccessful,thisapproachwill
needtobereinforcedbyadditionalreformsthataddressthemarketdistortionsthat
adverselyaffecttheefficiencyandcompetitivenessofthesector.Barrierstocompetition
willneedtobelowered,firstamongfarmersthemselves,andultimatelywithother
economicsectorsandinternationally.
Whiletheamountofmarketpricesupporthasdeclinedbymorethan39%since1986,
thistypeofsupport,consideredamongthemostmarket-distortingandleasteffective
meansofimprovingfarmincome,continuestoamountformorethan90%ofallsupport
asmeasuredbythePSE.Stepstakentodatetoreformthemarketingofricehavelaidthe
groundworktoimprovemarket-orientation,andthenextstepistoscalebackpoliciesthat
havetheeffectoflimitingthedomesticsupplyofrice.Ultimately,movingfromprice-
basedsupportsuchastariffstopaymentsbasedonlandcanimprovefarmincomesmore
effectivelythanthecurrentpolicyset.Suchamovealsoholdsthepotentialtoincrease
theshareofpaddylandactuallyusedtoproducericeandimprovetheenvironmental
performanceofthesectorbypromotingmoreextensiveproduction.
Thepriceoflandisanimportantsignalfortheallocationofresources;currentlythis
signalisconfusedbyspeculationandbydisincentivesthatkeeplandfrombeingutilised
tbhyetmhaenmyosrtoleefsfipcaidedntyplraondducpelrasy.sT—heasobpjaercttiovfethtoepsorceisaelrvleanadgsrciacpuel,turaaslalbaunfdfeisrrfoorotweadteirn
flowsandasacontributortofoodsecurity.Policiesaimedatpreservinglandhavealso
EVALUATIONOFAGRICULTURALPOLICYREFORMINJAPAN-©OECD2009