Q+A: What is the Democratic Party of Japan's farm policy?

Wed Sep 16, 2009 3:40am EDT

By Chikako Mogi

TOKYO (Reuters) - The new Japanese government has pledged to protect and revitalize agriculture, a policy that may be incompatible with a global push to free up world trade.

The Democratic Party has said it would introduce income support for farmers, including small farms, to foster rural communities, while aiming for self-sufficiency in major grains.

Critics say these steps are just temporary remedies for Japan's sagging agriculture sector and run counter to making agriculture more efficient and reducing costs in a country where the staple food, rice, sells for about 10 times world prices.

Japan has traditionally protected farmers by putting high tariffs on some agricultural imports, especially rice.

Yet the drive to feed itself has failed. Japan is the world's biggest net importer of food and manages to produce only around 40 percent of its own food needs.

The following are questions and answers on what the new government means for farm policy.

HOW COMMITTED WILL THE NEW GOVT BE TO FREE TRADE?

The Democrats are caught between a desire to boost food self-sufficiency and help farmers and a desire to pursue free trade, just as fresh efforts are being made at the World Trade Organization to get global talks back on track.

Ahead of the election, the party was forced to water down proposals for a free trade agreement (FTA) with the United States because of complaints from farmers.

Katsuya Okada, Japan's new foreign minister and previously the party's No. 2 executive, said last month that boosting Japan's food self-sufficiency and pursuing free trade were not incompatible. He said his party aimed to boost food self-sufficiency to 50-60 percent.

However, a small coalition partners, the Social Democratic Party, has put self sufficiency in food as a top priority and has said it may push for this in global trade negotiations in order to protect domestic farmers.

The United States is Japan's second-largest trading partner after China and the biggest exporter of agricultural products to Japan. Nearly one-third of Japan's agricultural imports come from America.

Japan was the biggest export market for U.S. beef until bovine spongiform encephalopathy (BSE) was found in the U.S. in December 2003, prompting Tokyo to impose a ban.

Tokyo resumed U.S. beef imports in 2006, but on condition that it be limited to meat from cattle aged 20 months or younger -- a limit that angers U.S. exporters who argue it has no basis in science and costs them billions of dollars in lost sales.

Japan, the world's fourth-largest wheat importer, buys about 5 million metric tons of milling wheat a year from overseas, which accounts for almost 90 percent of local consumption.

HOW WILL THE DEMOCRATS TREAT RICE?

The Democrats campaigned that they would pay household income support direct to farmers, promote income compensation for livestock and dairy farmers and fishermen, and introduce direct payments for forestry.

It has pledged to revitalize farming, which is plagued by the increasing age of farmers and an unwillingness of the younger generation to join a sector seen as having limited prospects.

Coalition partner the Social Democratic Party has gone further, saying it may review rice imports, including an option of ending promises to maintain a minimum level of imports.

Japan produces more rice than it consumes, but international trade agreements mean it must purchase some 770,000 metric tons of rice a year from overseas -- around 9 percent of consumption.

Masayoshi Honma, professor at the University of Tokyo, who has advocated making Japan a rice-exporter to fully utilize its expertise in rice farming and excess production, said the Democrats' way of throwing money around will not resolve the country's serious farming problems.

Protecting smaller farms and especially agricultural cooperatives have led to inefficiency, he said, adding that the Democrats has said little about how to deal with cooperatives that many farmers are beholden to.

"Protecting the weakening domestic farmers is fine but there is no broader strategy for the future beyond what is a mere short-term solution," he said. "There is no vision for what the DPJ wants to do to make Japanese farming competitive globally."