Action 44. Make Agriculture a Growth Industry – Encourage New Entries and Promote Scaling Up and Streamlining!

Agriculture is protected by the hardest of the so-called “bedrock” regulations. In discussing issues regarding trade liberalization, such as the Trans-Pacific Partnership (TPP), the structure of “manufacturing versus agriculture” is often mentioned. This is an erroneous characterization. What actually exists is a conflict of interests between small-scale farmers with vested interests protected by regulations versus new entrants and agricultural reformers. Even under the current situation in Japan, there is some agriculture that is still globally competitive. It is necessary to transform Japanese agriculture, which has been locked up by regulation and thereby weakened, into a strong growth industry.
1. Amend the Agricultural Land Act to Remove the Basic Principle of Owner = Manager = Cultivator! Liberalize Corporate Ownership of Agricultural Land!
The basic idea behind the Agricultural Land Act is “owner = manager = cultivator.” These are not necessarily the same person. Management should be conducted by management professionals. In agriculture, it is also reasonable that marketing and risk management are conducted by professionals in each area. To make agriculture a growth industry, it is necessary to eliminate the basic principle behind the Agricultural Land Act in order to promote new entry and intensify agricultural land use, and to eventually to enhance agricultural competitiveness through large-scale management and streamlining.
The next action to take is the complete liberalization of regulation to promote the more active entry of corporations into agriculture. More specifically, it is necessary to abolish the structure that is extremely unique to “agricultural production corporations,” where investment from parties other than farmers is restricted and a majority of board members are full-time farmers. It is also necessary to liberalize the entry of corporations into agriculture and remove the restrictions on their ownership of agricultural land.
2. Impose Penalties on Owners of Abandoned Agricultural Land to Promote Transfer of Farmland Rights!
It is essential to enlarge the scale of business in order to strengthen the international competitiveness of Japanese agriculture. In Japan, there are 1,630,000 family-run farms. Of them, a mere 90,000 farmers cultivate an area of five hectares or more and the average area of cultivated fields operated by each farmer is small, at 2.2 hectares. Meanwhile, the amount of abandoned agricultural land has been increasing to reach some 400,000 hectares (almost equal to the whole of Shiga Prefecture). It is important to consolidate farmland, including abandoned farmland plots, for use by motivated young people and businesspeople with capital to invest.
Penalties should be imposed as a matter of government policy on inefficient use of farmland and abandoned agricultural land through the abolishment of subsidies to small-scale farmers and an increase in fixed asset taxes on abandoned agricultural land.
3. Replace Subsidies like Door-to-Door Compensation for Farmers with Investment and Lending Policies and Preferential Tax Policies!
The annual budget of the Ministry of Agriculture, Forestry and Fisheries (MAFF) is about 2.2 trillion yen, of which 650 billion yen is allocated to public works. A large part of the 1.6 trillion yen allocated to the category of “other” is used for subsidies. MAFF provides more than 470 subsidies, many of which are used not for “enhancement” of agriculture but for “protection” of farmers, which is problematic. The Ministry should review all these subsidies with a view to abolishing those provided for the purpose of protecting producers and retaining those intended to increase cost competitiveness and promote the streamlining of management. The review should be followed by the implementation of measures to protect agriculture not through subsidies but by investment and lending policies and preferential tax policies. At present, the amount of corporate taxes paid by agriculture-related corporations is only 22 billion yen. We should therefore instead offer preferential tax treatment that exempts corporations that have newly entered agriculture from corporate taxes for the first five years.
4. Profitable Agriculture – Promote the Entry of Corporations into Agriculture to Encourage Young People Back to the Land!
The farming population of Japan is 2.5 million. Of these, those aged 50 or older account for about 90% and those aged 65 or older about 59%, evidencing significant aging in this segment. On the other hand, there are also an increasing number of motivated and competent young businesspeople who have entered the agriculture sector. One example is Hiroki Iwasa, who produces Migaki Ichigo strawberries. Mr. Iwasa returned to his hometown in Miyagi Prefecture to help with the restoration work after the 2011 Great East Japan Earthquake. He went on to establish an agricultural production corporation named GRA. Agriculture has not been profitable in the past and therefore young people have refrained from engaging in farming. If there are more success stories as a result of the total deregulation of entry by corporations into agriculture and the implementation of preferential taxation and investment and lending policies, I am sure that more young people will join the industry.