TOKYO, June 24 Prime Minister Shinzo Abe will
announce steps aimed at weakening Japan's powerful farming
cooperative as part of a reform package on Tuesday, but the plan
has been watered down after lobbying and lacks details.
Critics say the diluted measures mean the government is
losing an opportunity to revive the country's moribund farming
sector, suggesting a long called for shake-up of Japanese
agriculture remains a distant prospect.
It could also be missing the chance to make significant
changes to the most powerful critic of its efforts to join a
trade agreement with other Pacific nations.
Abe will announce a so-called third arrow of reforms,
following the first two arrows of monetary easing and fiscal
spending to end deflation and nearly two decades of stagnation.
Reforms unveiled last year failed to excite investors and led to
a decline in Japan's stock market.
Abe had promised to take a drill bit to the "solid rock" of
vested interests such as the Central Union of Agricultural
Cooperatives which oversees about 700 regional farming
cooperatives, with a cabinet reform panel in May calling to
abolish the group, known as JA Zenchu.
But the plan's final draft - released last week and expected
to remain largely unchanged on Tuesday - simply says the body
should reorganise itself within five years, with the government
to submit related legislation next year.
"These proposals are heavy punches, but they will only
sting, not stop the group," said Hiroyuki Kawashima, an
associate professor in the global agriculture department at the
University of Tokyo.
Reforming the cooperative is seen as the first step in
changing Japan's heavily protected agricultural sector, with the
aim of boosting exports to 1 trillion yen ($9.8 billion) in 2020
and 10 trillion yen in 2030 from about 550 billion yen last
With licences to operate banking and insurance business, JA
differs from North American and European cooperatives that
generally only buy and sell agriculture-related goods.
JA's banking business alone boasted nearly 83 trillion yen
($810 billion) in assets as of September 2013, putting it on a
par with so-called megabanks in the country such as Mizuho
That financial clout and the group's large membership, which
also includes part-time and non-farmers, give it influence over
lawmakers in constituencies outside cities.
But JA has been criticised for being too uniform in its
approach to agriculture and stymieing innovations by farmers,
while focusing on its profitable banking and insurance arms.
Proponents of change say JA's business model has not altered
significantly since it was set up shortly after World War II
when there was a need to closely manage the country's food
supply, and that change is long overdue.
The group has also been the biggest opponent of Japan
joining the Trans-Pacific Partnership with the United States and
The government wants to transform a sector faced with
declining production, largely from small-scale family farms.
It hopes to build on plans announced in November to phase
out a 40-year-old policy under which the government paid farmers
in exchange for reducing rice output to protect prices.
Under the latest measures, it expects to boost the number of
corporate farmers to 50,000 in a decade from about 15,000 last
The reforms allow for non-food companies to take almost 50
percent stakes in farming entities, up from the current 25
percent, a measure that should increase the allure of farming
The government also hopes to set up investment funds to
sponsor new growth areas in fisheries, farming and forestry.
And it aims to open membership of local agricultural
committees to people outside JA, reducing the power of the
But many details remain sketchy, and the final version of
the growth strategy is unlikely to tackle key issues such as how
to solve the problem of a rapidly aging workforce.
"The government is getting tough with JA through these
reforms, but I think only half of the changes will materialise,
since JA is going to fight tooth and nail against them," said
Nobuyuki Chino, president of Tokyo-based Continental Rice Corp.
($1 = 102.0500 Japanese Yen)
(Reporting by James Topham; Editing by Aaron Sheldrick and