TPP and Agricultural Reform Under the Abe Administration
Last September 15 and 16 Japanese Professor Masayoshi Honma, a world famous agricultural economist, delivered his lecture on the “Trans-Pacific Partnership (TPP) Under the Abe Administration” at Taiwan’s Council of Agriculture and the Department of Agricultural Economics, National Taiwan University
Dr. Honma is a Professor of the graduate school of agricultural sciences, University of Tokyo in Japan and is a consultant of Prime Minister Shinzo Abe, especially on matters concerning agriculture and economic trade. TPP, as Professor Honma explains, is a new stage of Free trade Agreement in this age of globalization, and as more countries are getting into this partnership, everyone is curious as to how Japan is getting itself involved. Professor Honma’s lecture was organized by FFTC, Department of Agricultural Economics, NTU and the Council of Agriculture, Executive Yuan.
Below is the complete text of his lecture.
Thank you very much for inviting me. I am very honored to be here to talk about some current issues regarding Japanese agriculture, and the current situation of the TPP negotiations. I love Taiwan. Every time I come here. I always enjoy my stay here, whether it be giving a seminar or going on leisure trips because I have many friends here.
Now let’s talk about TPP under the Abe administration—a topic that you are all interested in. The TPP for Japan, I’d like to address fast. The TPP is one of the Free trade Agreements or FTAs but beyond the traditional FTAs. It is like a new stage of FTA in this age of globalization. Now, why does Japan need TPP? First is to reduce export barriers and escape from the long-term economic stagnation. As you may know, Japan is under recess for the past 20 years. So we need to get rid of that situation and so exports are very important. I will say not only the exports, and I will say this a little bit later. When we say traditional FTAs, it is mostly to eliminate barriers. But beyond that, we need to liberalize other aspects of economic conditions.
But as far as trade is concerned, we need to export more for economic growth. Right now, we are very much behind South Korea especially in trade liberalization, and also FTAs. And so we need to catch up with Korea. That is the first motivation for Japan to promote TPP.
Another is as growth strategy, to make common rules for promotion of investment. This is very important for trade facilitation. It means to make trade easier beyond tariff reduction, from administration to quarantine, some processing and so on.
As far as China is concerned, Japan and US have some common strategy in dealing with China. China has different value and standard in investment procedures when compared to other countries in the world. We suffer from some bad strategies of China. There are opposing selfish economic policies, such as resource export ban, investment restrictions, state-owned firms in Mainland China. So we should establish some international rules to which we can invite China to follow. This is important for establishing TPP and also to strengthen Japanese agriculture. Of course reduction or elimination of tariffs for agriculture goods is very serious. It could damage Japanese agriculture in the short term but it could be the triggering point for structural reform. And also to process some very difficult subject bilaterally. For example, food safety and some standards if we discuss bilateral conditions like US-Japan negotiations, the US would enforce some lose standards like food safety and so on. But in the case of TPP, that is a multilateral framework so we can cooperate with countries like Australia and New Zealand, which also have very strict standards for food safety and so on.
The multilateral framework is very important in getting some harmonized standards.
This is a figure of the GDP—the trend of China, Japan and the US. While Japan is facing stagnant economy over the last 20 years, this figure is very shocking because we had in mind the economic recess for 20 years, but this figure dramatically shows the reality. Other countries including the United States and China are catching up beyond the Japanese economy, and we are staying in the same level as we were 20 years ago. So we should escape from this situation.
Now we go to the present stage of TPP negotiations and its future prospects. It was the visit of President Obama in Japan last April. Many Japanese expected much progress with the discussion of President Obama with the Japanese government. But in reality, nothing happened because at that time, Obama has no room to compromise with Japan in the general base of reduction of agricultural commodities. If the positive tariffs were left in the negotiations, Obama would be criticized because US Congress and US business people are asking Japan not only to reduce but to eliminate tariffs. So positive tariffs, say for beef and pork, for would be very much compromised for Obama. So Congress would not accept such a compromise. And still, Obama’s administration does not have the Trade Promotion Authority or TPA, that is for the President to be safe in Congress—the permission to negotiate trade issues. The Congress has to admit the whole contents of the negotiations agreement. That is the procedure in the United States in order for Congress to accept the agreement that the President made. Now this kind of TPA was not given to President Obama.
Under these conditions, Obama did not have any room for compromise, so we could not expect any progress and that is the reality as of April this year. But it was found that the negotiations between Japan and the United States, the arguments were packaged in a way that instead of tariff reductions by commodity like rice, beef and so on. It became a package of commodities and a combination of degree of tariff reduction and time of implementation period. This means that if tariff reduction were large, then the implementation period would be longer. Implementation period would mean to get tariff reduction or that to eliminate tariffs would take some time. If the tariff reduction would be very huge, then the country would take longer time. The US for example committed that the automobile tariff reduction would take 20 years or more, and maybe there is no reduction for 19 years. But last year, being the 20th year, there would certainly reduce or eliminate of tariffs.
And then there’s some discussion on the levels of reduction and length of implementation. So this combination would matter or would be found in two-country negotiations between Japan and the US in April. So now, tariffs for rice has been exempted from tariff elimination, also wheat, barley—those would be exempted. That’s my judgment and not a government announcement. What would matter would be beef and pork. The discussions in April and May talked about issues on tariff reduction on beef and pork particularly the FTA agreement with Australia, wherein beef and pork became the matter. We already made a commitment to reduce the tariff for beef and pork, so Australia would have an advantage over the United States because Australia would export a lower type of pork and beef to Japan compared to the US. In this case, the US would be rushing to an agreement regarding beef and pork but still, there is no room for Obama.
Of course the US has some winning to make an agreement with a positive type but that would not be admitted without a TPA.
Japan had negotiations with EU for FTAs. The number of our country partners in the FTA is increasing but the contents of the FTA are quite different between the TPP and FTAs.
The importance of TPP is communalization of competitive conditions especially the application of most favored nations treatment and national treatment to investment beyond abolition of tariffs. What I mean here is the core of TPP is the liberalization of capital. Liberalization of trade in goods and services were already made and GATT negotiations were already made for the past 50 years.
The next of course is liberalization of money or capital for business. I think this is the most important thing to recognize—that the TPP is a negotiation mostly for money.
The most favored nation treatment is a very basic principle for WTO or GATT. That is the established platform for trade of goods and services. This means we should discriminate the members of the FTA or in the case of the WTO, all the members should be treated equally. So once we make an agreement with US, the contents would also be applied to Australia or any other member countries as well. This is the most favored nation treatment.
On the other hand, the national treatment means we should not discriminate the foreign products once it enters the domestic market. This kind of principle should me applied to capital—money. Why not? It doesn’t matter. Sometimes we say that capital or money is quite different from goods and services. That means that money is rapidly moving from country to country. Just like in the case of oil money as investment. So the investment and capital movement are quite different from the case of goods and services. But TPP and globalization need some liberalization of capital so we should establish the common rule. Communalization means the common basis so we should have common rule and common institutions to treat the movement of capital for both investments. This is the key issue of TPP. But on the other hand, agricultural products, we still have very high tariff rates as you know and in a sense the agricultural sector is a front-runner of delay in globalization. It looks like a front-runner but it is also much behind in meeting the conditions for liberalization.
In the bilateral negotiations between US and Japan, the US is committed to take 20 years of tariff elimination for automobiles. Just 2.5% for the regular class and 25% for trucks. Twenty-five percent is large, but 2.5% is a very small amount and the exchange rate takes over the difference. But still, the US insists and sticks to the tariff of 2.5% for automobiles. And they say it would take 20 years. So I would say, why not the same for Japanese agricultural products? So this is the commitment between US and Japan in the bilateral negotiations, and I think this is a US weak point. As I said, if you take 20 years—why not for Japanese agricultural products?
If it can take 20 years to reach an agreement and implement domestically, it would take more time. If we have 20 years, then the tariff rate, let’s say for rice, would be maintained at Y170 per kilogram. That is very high. Now it’s Y141 per kilogram—that’s the tariff for rice. Later it would be half of that, but still very high tariff rate for rice. There would be no imports for this high level of tariff on rice. So we could take 10 or 12 years for domestic reform on rice. That would be enough. Of course some opposition would say it’s not a long time—that 10 or 12 years is very short, and it’s impossible to do reform. If we cannot do reform in 14 years, we would never do reform on rice agriculture. So 10 years is a very important period. We should all be rushing to reform on that sense.
Later on, I will talk about the current and some of the drastic proposals for reform in Japanese agriculture. As I said before, TPP is quite different from the traditional FTAs. But TPP and also RCEP???, RCEP is a moderate FTA compared with TPP. However, all these FTAs and some international framework for liberalization is just a step for further globalization and also this kind of negotiations of rule-making and criminalization would be leading to promote the WTO negotiations aspect.
Japanese agriculture tariff, on the average is relatively low. The OECT estimates the average is just 12% for Japanese tariff. However we have small number of items with very high level of tariffs. For example, rice, the actual tariff is Y341, and it’s about 800% high in ad valorem tariff equivalent. Wheat and barley and skimmed milk are about 100%, and starch, about 600% and so on. These are what we call the sensitive commodities, or politically sensitive commodities so Japan is requesting to eliminate these products from tariffs or reduce their tariffs in the TPP negotiations.
On the other hand, these are the number of tariff lines. Rice is not considered a single commodity on the tariff lines. Rice is classified into 58 tariff lines. We have rice barley, brown rice, “broken” rice and so on. We also have some rice products. They are classified into 58 tariff lines for rice or classified as rice and the value: Wheat and barley; 109; beef and pork, each about 50; sugar, 81; dairy products, 188; starch, 50. All these, from starch to rice are considered very sensitive—these five items. Beef and pork would be in one item. Sugar and starch. Starch would be used for some sweets, so it is considered as same as sugar in the group. Some of these tariff lines are like 586 I think. These are 6.5% of the total tariff lines. So right of the liberalization would be only 93.5. Japan is supposed to liberalize 95% of the tariff lines but we couldn’t reach it if we exclude all these five items. From the initiation, we could not protect all of the five items if we commit 95% of the liberalization in tariff lines.
The matter for negotiations would be beef and pork. These would be the target items for reducing the tariff and elimination. And rice, wheat and barley, as far as the US is concerned, they are not interested in these commodities because they do not have the competitiveness. In the case of rice, maybe Vietnam would increase the exports to Japan. But in the case of rice, we give the US 50% of share in minimum access import. This is the commitment of the Uruguay Round agreement on agriculture in the WTO, we are now importing about 800,000 tons of rice as minimum access. Half of them are imported from the United States. It’s a kind of managed trait. It is not reserved for competition because minimum access is imported and is considered state trading. State trading means the government of Japan could assign the amount of rice to import to each exporting countries. So China and Vietnam are always complaining the share of trading with the United States in Japan. It’s another side of the competition and a political assignment.
So the US would like to maintain that share. My guessing is that US and Japan have an agreement on rice to expand that minimum access for TPP. If it would be to be 200,000 to 300,000 tons assigned to US that would be better for the US as a totally liberalized rice market for Japan. In the case of Fetal valley, the most competitive exporter is Canada. And the US is relatively, not really strong in that sense, and also the share of imported feeds is very stable among US, Canada, Argentina and Australia. It’s also the result of state trading. For Japan, the government would purchase feeds and then sell to the US wheat and Feeds Company and so on. It’s like a demolished trade—in the case of rice. The matter of beef and pork—of course that would be exempted from tariffs because US is big on protein and sugar and would be on their tables.
Now let’s talk about Abenomics. Derived from the name of our current Prime Minister, this is the Economics of his administration. As far as agriculture is concerned it should be aggressive agriculture, forestry and fisheries. And last year, Minister Abe mentioned four points for his agricultural reforms. One is making exports double in agriculture, forestry and fishery products by 2020. Now we have about 500 billion yen in exports, not only in agricultural exports, but also some other activities related to primary industries, so it should be up to 1 trillion yen by 2020. And also the expansion of the 6th industrialization market. It means agriculture should have more value-added including the activities of the secondary and tertiary industries. Just like processing of milk, rice and vegetables and also marketing to the retail outlets—not only in retail outlets but also to cook in the restaurants. So if farmers have their restaurants where they can cook their products, it would be the 6th industry. This is a concept that is very popular and utilized in Japan now. And the government will fund for that so the farmers can cooperate with known agricultural corporations for other regions other capital would be added to government funds.
Also, there is the foundation of farmland consolidation bank. This is kind of promotion of rental market for farmland. So each prefecture has its own farmland consolidation bank and they collect used farmland whose owners would like to lease. And after that, they consolidate the land, collect it and list some candidate of very large campus. This is their system. Just last year, the government started this and we expect that the size of this operation would be enlarged. Also there is income doubling, not only in exports but also doubling the incomes in the rural areas. After the reform, the number of farmers would be reduced, and the average income would be doubled. So not all farmers would be benefitted but only some selected farmers. Then with 80% of farmland covered with core farmers and more efficient distribution of farm inputs, the cost of rice production is supposed to be reduced by 40%. That’s the expectation of the government.
But the reality is that in agriculture, about three trillion yen has been lost for the past 20 years. Particularly for rice, the income share was reduced by about 20%. Until 1990s there was really a downward trend. During the past 20 years, there was no reduction of tariffs or trade barriers. In 1995, we started the commitment for WTO, but most of the tariffs were very high, so there was no effect on world trade.
In terms of exports, government tried to double its efforts and targeted 2020 but processed foods and fishery products topped the agriculture market. Agricultural products like rice, beef and vegetables—the export figures for these were recorded at 55 to 80 billion yen. The destinations for these products were mostly Asia like Hong Kong and Taiwan, etc..
In 2013, it was still processed foods, which contributed to 27% of the total agricultural exports. Other products like livestock and vegetables, they contributed around 8 billion yen. So the processed foods and fishery products are the major contributors to the business. These products are mostly shipped in different parts of Asia.
According to Japan’s Ministry of Agriculture, we say that we have three strategies of farm exports. And we call this the FBI strategy. It means From Japan, by Japan, in Japan. Made from Japan means the materials are made in Japan but some collaboration in foreign countries’ companies and restaurants and some food materials are from Japan. Made in Japan means the traditional export. The products are made in Japan and are exported to other countries. Made by Japan means the Japanese are going abroad to produce the products. This does not only include production but also some food businesses, which are developed in foreign countries. This strategy makes use of Japanese human capital and knowledge in agriculture. So this combination is used to promote export of Japanese agricultural products.
If we look at the future market, particularly for meat and cereals—for cereals, the forecast for year 2021 is not much in Asia but in China. Not really much increase. But in the case of meat consumption, Asia registered about 30% of its market. In terms of China, that’s a 137% expected increase. India is about 50% expected increase, but the basic consumption is very small so it’s very hard to increase meat consumption by 7 kilograms per year per person. So, the target here is China, particularly for meat consumption. This is not only in terms of Chinese food style. Japan has an opportunity to export Japanese type of beef, I believe or pork. This means we should investigate more about the China market.
There are three main points Abe Administrations Regulatory Reforms. First is the re-examination of the agricultural committee. This is the authority for land transactions and the land market. So the recommendation is to change the role of the Agriculture Committee from the guardian of the Agricultural land Law to be the manager to prevent abandoned farm land and apply the restrict ban on conversion of farm land to non-agricultural uses. Agricultural committee is strongly related to the agricultural land law. It used to have a very strong role to control the shift of producing rice from one to another. But it’s relatively liberalized through the law. Most of the land transaction does not use the agricultural land law but they utilize the so-called by-pass institution. So the role of the agricultural committee is different. Now the management would focus on abandoned farmlands, and that would be increasing a lot—around 420,000 hectares of abandoned land. We should reduce the farmlands. We also have a strict rule for land conversion—farmland to agricultural basis. This is the problem. The Agriculture Committee therefore should watch these transactions.
Second, the agricultural land production corporations are also related to agricultural land law. Currently, the corporation cannot own the farmland. They can lease the farmland but they cannot own the patches of agricultural land. The exception is agricultural production corporations. Farmers dominantly own them. The non-agriculture people are always requesting to liberalize or deregulate this condition to make other companies own farmlands.
Third is the reform of agricultural cooperatives or the so called JA-Zenchu. The Central Union of Agricultural Cooperatives, that is the headquarters of the JA system national leader. And the JA Zenchu has a role to give guidance to individual and local JA and do some audit of the individual JA and JA groups. That is one. Now the second one is the JA-Zen-noh or the National Federation of Trading System of JA. That should be a corporation rather than cooperative. So there is also a strong message of deregulation. The cooperative associations then convert banking and insurance business to an agency business.
You may not be familiar with the Japanese JA system. It is very strong in Japan. It practically covers everything in the rural areas. We often call them from cradle to grave because everything can be covered by JA activities. This is often described as very bureaucratic and a talk-down system. For that purpose, is the three-tire system in the system. At the bottom is the local primary JA, and the prefectural level of the association and national federations by kind of business. The nature of business of JA is threefold. One is trade—just economic transaction. The purchasing of fertilizers and chemicals also the selling of the outputs or products which members have produced. This is the major one. And second is the banking system or the so-called JA Bank. The third one is the insurance. JA handles these three major activities and it’s a very huge organization. It’s made up of close to 5 million regular members and more than 5 million non-farm members—totaling about 10 million in memberships. So the farm household is only 2.5 million. Much or more of the farm households are members of JA. And also, JA members are given special treatment. Not only JA but also general members of the cooperatives. But JA is much huge compared to other cooperatives. Part of the various special treatment is the exception of other business prohibition of a financial institution. Any bank cannot sell agricultural products. But in the case of JA, it is a bank and they can also sell rice. They also have the exception of the ban on life and non-life insurance operation together or what they call JA Mutual Insurance. There is also the inapplicability of the Anti-Trust law, the joint procurement or the pooling account. Also the corporate tax is lower than the regular corporation.
And the share of JA in trade is like this. There is rice, vegetables, fruits, flowers and so on. Now these are the shares of production in the Japanese market. Rice is about 40%, reduced from 80%. But it’s still more than 40% share. The total for agricultural transaction—more than half is from JA. In terms of the structure of JA, the number of primary local JAs is more than 700 but it reduced rapidly because of the margin of the bank. It used to be more than 10,000 cooperatives but is now also reduced to only 700. The number of members is about 10 million. Now the new members are exceeding the regular members.
Sales value is recorded at 4 trillion yen. But the purchasing value—that means the purchasing of fertilizers, chemicals and farm machineries two trillion yen, that’s a huge number. But the agriculture trade as a business—it’s in deficit. The black triangle sign means negative. JA bank as a business is making profit, but the trading production activities are in deficit. This deficit is compensated by the profits. In total, they are making positive profit. The problem is that this agricultural trade, that is the major activity of JA. Banking and insurance are not their major business in a sense but other business nowadays is now considered major. JA should concentrate on trading business to make agriculture more efficient among the farm members. So we used to insist that the accounting system should be independent among bank insurance members.
JA issues and institutional reforms. Let me say in detail what JA is, especially its relations to agricultural policy. We have had long-term rice acreage increase control program. It started in 1970. At that time, we already faced overproduction compared with consumption. Consumption of rice started in small degrees started in 1962 and it appears we had overproduction of rice in 1970 so the government introduced the rice production acreage control first. It was considered a temporary policy but it lasted more than 40 years now. Because it was very beneficial for the JA. In fact the price was higher than domestic equilibrium for the JA, the small rice farmers can continue to do farming. So the small farmers are very important for JA because the number is a symbol for the political farmers. So the reduction of acreage control made the price higher than the equilibrium—that was very beneficial to the JA. For the part-time farmers, JA was very convenient. They do marketing for small-part-time farmers. Since they do not have time to do marketing and do research on their markets. They just hand their products to JA. And regardless of price of fertilizers, chemicals, etc. JA just carried into their own house. It was very convenient for small farmers. So JA has an interest to maintain the number of small, part-time farmers. For the purpose of rice production control, this is very important. And also nationwide organization initiatives. That used to be working but nowadays, it’s quite troublesome for individual local Jas because it’s a top-down order. So the individual JA should follow the bureaucracy. And JA should now take advantage of the local resources efficiently because it is under competition. Even now with globalization, the local JAs have their own strategy. But sometimes, it’s in conflict with the top-down JA order.
JA covers all the nations. So every commodity produced in Japan is considered important. So there is no compromise in TPP negotiations. The cooperatives themselves are considered groups that have mutual interest and make some common or mutual transaction activities. But Japan is just like any bureaucracy. Just like all nations, all their organizations have pyramidal structures. Also, the popular farmers are the users of the JA Banks and JA Insurance, but I must say most of them are not really interested in agriculture. Sometimes, JA Banks are just conveniently located near their homes, and JA insurance covers everything so it’s very easy. It used to be that the users of trade –I mean the users of trade, banks and insurance are all farmers. But nowadays they are split. The users of trade are very few because the number of farmers is decreasing. But the users of banks and insurance are increasing so there would be some conflict among the users. The deficit of transaction or trade would be fulfilled by the profit of JA Bank and JA Insurance. If you were a member or user of the JA bank, you would receive more interest, especially if they don’t compensate for the benefits of the trading division. But the purpose of the JA, given the interest of the farmers, is that JA acts as a cooperative and a Union for farmers. This kind of characteristics would be fading. And also JA Central Union Organization conducts the audit. We made it a point that an outside accountant would conduct the audit.
Now, there is also an inventory of non-JA members. So there should be an introduction of activities to spur competition among cooperatives.
The Regulatory Reform Council’s final report and initial draft compares the very radical recommendations on the right hand side. It’s dated May 14 but it’s revised with consultation from the body—LDP, which is also a farmers’ group.
Sometimes, it’s difficult for foreigners to understand but it is required to shift the Central Union of Agricultural Cooperatives, JA-Zenchu Headquarters. That’s the top of the administration of JA. They have a role to give guidance and do audit. But nowadays the individual local JA should be more independent. From the Central Union of Central Cooperatives, the JA-Zenchu shifted to a new autonomous system after preparing the suitable transition period of reference. So that is the first recommendation of the Council of Regulatory Reform.
The second recommendation is about Zenoh. It is the Federation of individual local JA . But this one is shift of Zenoh to convert into an incorporated company. Why is this necessary? Because JA has only one vote right to control Zenoh, the trading company federation. It’s the shift to the cooperation. These are the bigger shareholder who are made up of individual cooperatives. They can control the Zenoh trading company. So to recover the power of the local JA, Ze-noh’s shift to cooperation is necessary. That we consider. Also this is a device to eliminate the exemption of the application of the Anti-Trust Law. More than half of the agricultural transactions come from JA, particularly Zenoh. There should be more competition among agricultural cooperatives, so the exemption of the Anti-Trust law should be eliminated. This is the purpose for this recommendation.
Also, in order that Primary JA may aim at mitigation of unnecessary risks, particularly banking operation. It is recommended that the business of banking and insurance should be shifted to the agent of the National Federation—this is the Norinchukin Bank and JA Zenkyoren. This could be better for Primary JA to operate.
Possibility of Japan’s rice exports
We expect rice to be exported in the future from Japan. Nowadays, the rice sector is very fragile because of the less consolidation of the farmland, and also because the rural society is very conservative, and they refuse new entry from outside agriculture. But the quality of Japanese rice is very well recognized, but the problem is just the cost. Nowadays, there are several moves to reduce the cost of rice.
Rice is the most promising agricultural product if we consider the size of the market in the world. Of course we are exporting some fruits and vegetables and strawberries, but these are niche markets, so we could not expect the expansion of this market in the world. The most promising is still the rice market, and this does not only include Asia. If we produce the long grains, the market will continue to expand—Europe, United States, Latin American and African countries. They are all eating rice.
If the cultivated lands were consolidated, the cost of production would be remarkably reduced. Also we have some new developments to plant directly the paddy rice into the field, particularly dry land and also to utilize machineries for the fields and valleys. So we no longer use very slow planting machines, or very slow harvesters. If these technologies are applied, the farmers can produce rice with the cost of 100-200 yen/kg –equivalent to the US California rice. In consideration of this new development, I expect the export of rice in the near future.
This is our calculation using the Frontier production model. This is by the size of the farm. It’s 0.5 hectares or less, the farmers are producing rice at the cost of 25,000 yen. So the selling price is about half, less than 15. Why are they producing rice with this high cost? Because they don’t have other benefits aside from selling the rice. Maintenance of paddy fields has many fringe benefits. Tax exemptions or some expectations of land to be sold. The reality is that they are producing rice in deficit. But even in large farms with 50 hectares or more, the production cost is still 10,000 yen. But in the frontier—from the actual data, the estimation, which is kind of a production function. It’s about 100 yen per kilo for 60 kg per 6000 yen and 100 yen per kg. If more farmers would realize this low cost of production, we can probably export with this kind of price.
And the second aspect of Japanese agriculture in the future is known as the food cluster. This is the non-rice sector, particularly vegetables, fruits and even the livestock sector. This is the base in which companies, universities, research institutes are consolidated geographically and working in a coordinated fashion to create new value-added and innovative ways through mutual cooperation and competition. You can imagine places like Silicon valley, where people can concentrate on research and develop new products. So this kind of base or cluster should be created in some place in Japan.
Important are the measures for the endogenous economic development by cooperating with research institutions and processing food companies and some marketing business together.
Development of the Netherlands food valley
The food cluster is very famous in the Netherlands, in Wageningen University. It started relatively early, recently about 20 years ago. It was collaboration between the University and the food research institutes. Then the research work was published and famous food companies collaborated and did more research and developed more food products. In their third term, they collaborated with 1500 companies with 15,000 researchers with a research radius of 30 kms.
The possibility of having a food valley in Japan has been promoted in several places, not on the national level but in the prefecture level. Niigata prefecture, Kama Moto prefecture, Hokkaido prefecture—these prefectures have their own ideas of how they are going to develop their own food valleys. Especially Niigata prefecture which has its own National Economic Zone, so they are trying to develop their own food valleys with their own specific conditions.
Finally, I have to summarize my own ideas for further development of Japanese agriculture. First is establishing agriculture independent of subsidies, farmers should stand on their own feet for their own businesses. We have a long history of subsidies—and protection for agriculture. But there is no industry to develop well for protection. That’s why agriculture should be independent from other industries. Of course there are some subsidies needed for direct payment for handicapped failure, but not to all the farmers. There should be conditions to support farmers or for some food security purposes or condition for production base.
Regional agricultural administration should know the advantage of their agriculture. So local administration should promote plans and measures made by farmers of the area. There should also be collaboration of farmers with non-agricultural companies. Through the 6th industrialization movement, there are many companies, together with the farmers creating new business—it’s new business but it should be promoted more, as I said I special economic zones like Niigata.
Three types of agriculture should be developed. Not uniform type of agriculture, but more of taking advantage of their unique, regional resources. There should be the development of Japanese business model for agriculture. I thought of three types depending on the area. One is food-based agriculture. This is traditional, efficient, large farm size operation particularly in Hokkaido. The second is just the cluster type of agriculture—the food valley in the Netherlands. These could be in Niigata, Hokkaido or Komo Moto. And the third one is the service of value-added agriculture. Not only the final products of agriculture that was developed as an industry. Of course the very high quality of products are important, but the value added should be created in the course of production. What I mean is the food exports could teach how to produce very tasty products like very high quality cabbage and so on. Just like in learning centers, may people would like to go and learn and won’t mind paying. We have a school type of farming system. This is very famous inside Tokyo. They are teaching the proper way of growing vegetables and the tuition is about 40,000 yen for three months. It’s very expensive but still, the list of applicants is very long. This is very applicable for elder people. They are very skilled and know the proper techniques and know-how to produce good agricultural products. So we should take utilize and take advantage of this resources before they die.
Agriculture is a very important resource in the rural area and its revitalization should be prioritized, but farmers do not know how to utilize agricultural resources. They have some ideas which they learn in exhibits of agri machineries and so on. But leadership is very important, and so is the export market. So farmers should learn how to market their agricultural products to the world. In Japan, we have good resources for that. We have companies like Mitsubishi and other successful trading companies. So Finally, if rice is realized and could cut on its production costs, then it can be developed into an export industry.
I have more hope than before because of this new development.
FFTC Director Yu-Tsai Huang, who acted as the master of ceremonies during the lecture of Professor Honma at the Council of Agriculture raises a question and interacts with the audience. On stage are Professor Honma and Dr. Jen Eau Tin, Director of the Graduate Institute of Southeast Asian Studies in Tamkang University. Dr. Tin acted as Japanese and Chinese translator during the question and answer portion.
Employees of the Council of Agriculture, academicians and students comprise the audience who attended the lecture of Professor Honma at the COA Lecture Hall.