logo logo

JA at crossroads / TPP, agriculture can coexist / But reform of huge farming federation is unavoidable

Jan. 18, 2011

JA AT CROSSROADS / TPP, agriculture can coexist / But reform of huge farming federation is unavoidable

The Yomiuri Shimbun

Whether Japan should participate in Trans-Pacific Partnership negotiations is certain to be high on the political agenda this year. Although the trade deal would cheer Japan’s exporters, many domestic farmers are worried about the expected influx of cheap agricultural produce.

The success or failure of advancing Japan’s trade liberalization while strengthening the agricultural sector will largely hinge on the prospects for reforming agricultural cooperatives, known as JA.

Following is the first installment of a Yomiuri Shimbun series on JA.

"Stand firm against Japan’s participation in TPP negotiations!"

For Koyata, an electoral campaign goods printing company in Hanamaki, Iwate Prefecture, opposition to the transpacific trade deal has been a blessing. Its plant has barely been able to keep up with orders for sashes and headbands emblazoned with messages opposing the TPP that have poured in since autumn. Anger at the trade deal has generated a "TPP boom" at Koyata.

Most of the orders have come from agricultural cooperatives in Hanamaki and nearby regions, as well as from Hokkaido—areas with strong farming traditions.

Leading the charge against the TPP has been the national federation of agricultural cooperatives, the Central Union of Agricultural Cooperatives (JA-Zenchu). In December, it declared it would collect 10 million signatures for a petition opposed to Japan joining TPP negotiations.

JA-Zenchu President Mamoru Moteki, in his New Year greetings to federation members, urged them to "resolutely resist" the TPP, which he said will be the organization’s "No. 1 challenge" this year.

True to Moteki’s words, every branch of the JA organization has joined the boisterous anti-TPP campaign.

JA includes JA-Zenchu, representative of the JA groups; the National Federation of Agricultural Cooperative Associations (JA-Zen-Noh), which engages in business undertakings of the JA groups; the National Mutual Insurance Federation of Agricultural Cooperatives (JA-Kyosairen) in charge of JA members’ mutual aid activities, including insurance services; and Norinchukin Bank, the JA group’s banking arm, which also is known as JA Bank; as well as more than 700 agricultural cooperatives across the nation.

The JA group has wielded strong influence over the government’s trade policy. In the 1990s, the group stiffly resisted proposed trade liberalization of rice, as well as government plans to conclude free trade agreements with Australia and the United States.

The JA group has strength in numbers: It has 9.57 million regular and associate members.

Diet members from constituencies in farming regions cannot simply ignore or wish away the interests of the JA group.

Lawmakers of the Democratic Party of Japan were sharply split over the TPP issue last autumn, when Prime Minister Naoto Kan said the government would hold talks with the nine nations involved in the trade deal.

An influential DPJ legislator with vested farm interests reportedly visited each Diet member of the party, bearing a list of party lawmakers showing whether they were for or against the TPP negotiations. He asked the lawmakers to "act prudently and carefully" over the issue, telling those in favor of the multilateral trade partnership that he would hand the list to the JA group.

Giant organization

The JA is a gigantic organization. It has 224,000 salaried personnel, on par with the Japan Post group companies. The outstanding balance of the JA group’s financial businesses has reached 82 trillion yen, comparable to that of a megabank.

Its life and nonlife insurance policy contracts are worth 330 trillion yen, among the largest in the world’s insurance services.

The JA group’s marketing of farm goods and other products totals about 4.3 trillion yen a year, and it purchases fertilizer, agricultural chemicals and other items worth 3.3 trillion yen—figures a major trading house would be proud of.

In every corner of the country, the JA network offers financing services for members’ businesses and housing loans, as well as shipment of farm produce. It provides farming households with a range of commodities.

The JA group, in effect, is a lifeline for farmers.

However, it has made headlines for the wrong reasons from time to time.

In July, JA Shin-Hakodate Flowering Plant Production and Shipment Association in Hokkaido was warned by the Fair Trade Commission for forcing its members to make shipments to the local agricultural cooperative in violation of the Antimonopoly Law.

In December 2009, the JA branch in Oyamamachi, Oita Prefecture, was found to have tried to coerce several farmers to stop shipping produce to a JA rival firm, a practice the FTC ordered be eliminated.

Agricultural cooperatives were initially established to protect farmers from big businesses trying to force them to sell produce at unreasonably low prices and buy agricultural materials at high prices.

However, the JA group has been criticized in recent years for focusing more on maintaining its bloated organization than on helping farmers.

A report issued in 2003 by the Study Council on How Agricultural Cooperatives Should Be Changed—a panel of the Agriculture, Forestry and Fisheries Ministry—accused JA of being an "organization existing only to maintain itself," and pressed the group to change its structure and operations.

JA’s attempts to change itself are ongoing.

Japan’s farming sector stands little chance of coping with the challenges the TPP would bring unless the number of farmers with large-scale operations is increased.

The JA group, however, has been criticized by some for not doing enough to nurture large-scale farmers, and instead has placed priority on protecting small farming households that engage in farming but also have other jobs on the side.

As a result, the JA group apparently felt it had no option but to urge the government to adopt a policy that encouraged farmers to shrink their acreage, while keeping high tariffs on farm products, the critics say.

What role should JA play?

Kazuhito Yamashita, a senior researcher at the Canon Institute for Global Studies, a private think tank, said if Japan signed up to the TPP and trade tariffs were eliminated, domestic farmers would not necessarily be hung out to dry.

"The government’s income compensation for individual farming households means farmers’ income won’t decline even if prices of farm products drop as a result of trade liberalization," Yamashita said. "Trade liberalization would have little adverse impact on marketing vegetables because their tariffs are already pretty low."

Yamashita even suggested JA’s opposition to the TPP could stem from its own self-interests.

"The JA should be blamed for fanning farmers’ anxieties that the TPP could wipe out the domestic agriculture sector, primarily because the JA is afraid its farming produce-related revenue would decrease when prices of farm produce fall after liberalization," he said.

One JA-Zenchu executive even admitted JA "isn’t necessarily opposed to trade liberalization itself" and is "well aware of the benefits free trade could bring."

If so, the JA group should accept the simple fact that progress on Japan’s participation in TPP negotiations is inevitable, as long as the future of this nation rests on free trade with other countries.

Failure to reform the farming sector would be certain to invite further deterioration of the agriculture industry. But how can Japan’s agriculture be developed, and what role should JA play?

Whether JA can knuckle down to the task of self-transforming itself to boost the competitiveness of the farming sector will be key to the future of this country.

 source: Yomiuri Shimbun