Deal on Agricultural Reform

The Central Union of Agricultural Cooperative in Japan (JA) reached a deal with Liberal Democratic Party on its structural reform on Sunday. Power of JA on overseeing regional cooperatives will be significantly reduced. Private investment on agriculture will be less regulative. Although main purpose of the reform has been to reinforce competitiveness of agriculture in Japan, it is concerned that farmers will be less competitive in the race over quality of products.

The reform will be done in the form of amending Japan Agricultural Cooperatives Law. JA will be degraded from an association with legal privilege to a general incorporated association. With this reform, JA’s auditing on every regional cooperatives will be abolished. Auditing section of JA will be independent from the body. Regional cooperatives can have two choices for their auditing between that new body and private auditing firms.

What brought the cooperative giant to the deal was fatal need of maintenance of non-farmer members. Having status of taking advantage of JA services including finance or insurance, those members have been supporting management of JA. Since LDP offered abolishment of non-farmer status, maintaining current members were crucial point for JA. The organization rather chose its size of body than its influential power.

Receiving pressure to conclude negotiation over Trans-Pacific Partnership, LDP, associated with Shinzo Abe administration, has been annoyed with protests of farmers, who found fatal impact of TPP. For Abe administration, JA reform has a significance of promoting TPP as well as implementing international commitment of opening its market. Firm tie of agricultural community has been seen as one of the symbols of closed market of Japan.

The administration expects the reform to urge agricultural liberation in Japan. It believes that introducing private economy into agriculture will lead to higher competition with lower cost in production. Agricultural business can grow through finding new overseas market. Free trade over procurement of agricultural machinery or fertilizer will create new business chance.

However, the cooperatives have been carrying on safeness of agricultural products in Japan. Freshness and high quality of rice, vegetables and fruits are fundamental competitiveness of Japan agriculture. Japan once blocked American beef by laying high safety standard. Reform of JA may lead Japanese agriculture less competitive in terms of productive quality. In addition, Japanese farmers had been the strongest protesters against the government from the time of feudal era. It is likely that the government will face serious resistance in any way.