The Japanese government has, against one of the strongest lobbies in the country, approved plans to overhaul a decades-old system of subsidies for rice farmers. This is a notable shift in policy for the government, and it signals progress on a much-trumpeted policy goal amid negotiations with the United States and other partners in the Trans-Pacific Partnership (TPP) trade pact. Japan’s entry into the TPP had been under pressure because of its known protection of rice farmers through subsidies and high tariffs, but this shift in stance should be welcome news for other members of the economic pact.
Direct payments have been made to hundreds of thousands of rice farmers, and this is at the heart of Japanese agricultural policy since 1970. But Japan’s agriculture minister Yoshimasa Hayashi announced on Tuesday that subsidies for producing table rice to quotas would be scrapped by 2019. A separate system of payments to rice farmers, introduced by the previous government in 2010, would also be abolished and replaced by a fund to support agricultural infrastructure in villages particularly affected by the changes, he said. The policy change amounts to “a historically great transformation”, said economy minister Akira Amari at a separate briefing. Amari said that the government hopes the reforms would spur consolidation of small, individually owned paddies into larger, more productive fields, making Japan’s farmers more competitive on international markets.
Japan’s complex system of subsidies and tariffs, which in combination guarantee that rice farmers’ incomes are well above those of most other rural households, has been a source of friction in TPP negotiations. Japan’s entry into the TPP is still in the balance, and last weekend there was a general failure to reach agreements after six days of intensive talks in Salt Lake City. One of Japan Prime Minister Shinzo Abe’s pledges during the Upper House election campaign this summer was to maintain tariffs on the “big five” farm products of rice, wheat, beef/pork, dairy and sugar. However, to do so would mean only 93 per cent of Japan’s farm trade was opened to free trade, well below the TPP’s 98 per cent target.