Author: Aurelia George Mulgan, UNSW@ADFA

The Hatoyama administration has approved a fiscal 2010 budget containing ¥561.8 billion in expenditure on a new ‘individual household income compensation system’ (kobetsu shotoku hoshō seido) for farmers, to be launched in April. This income subsidy will compensate farming households for losses incurred as a result of higher production costs and lower market prices. The scheme will begin with a ‘model project’ targeting rice farms nationally.

The process undertaken in determining the budget for the policy illustrates how little has changed in agricultural policymaking under the Democratic Party of Japan (DPJ) compared to the Liberal Democratic Party (LDP). Read the rest of this entry »

Guest Author: Kazuhito Yamashita, RIETI

Japanese agriculture is in a free-falling decline. In the years between 1960 and 2005, the share of agricultural output in GDP dropped from 9 per cent to 1 per cent, the food self-sufficiency ratio from 79 per cent to 41 per cent, and agricultural land, indispensable for food security, from 6.09 million hectares to 4.63 million hectares.

Meanwhile, the ratio of part-time farm households, which derive more than half their income from non-farm employment, increased from 32.1 per cent to 61.7 per cent. The percentage of farmers over 65 years old also jumped from 10 per cent to 60 per cent. Read the rest of this entry »

Raghbendra Jha, ANU

Indian policymakers pride themselves on the fact that the Indian economy was able to pull out of the Global Financial Crisis (GFC) relatively unscathed, with real GDP growth rate falling to 6.7 per cent in 2008-09 as compared to the 9 per cent in 2007-08 and expected to rise above 7 per cent in 2009-10. At the onset of the GFC, many commentators had expected a collapse of growth, with some even predicting a return to the sluggish growth of the mid to late 1990s.

Thankfully, the Indian economy proved the predictors of doom wrong. Read the rest of this entry »

Author: Aurelia George Mulgan, UNSW@ADFA

In the 2003 Lower House election, the DPJ, led by Kan Naoto, compiled an election manifesto that promised to create a system of direct payments to farmers. This matched the broad trend in government agricultural policy away from price supports to direct income subsidies to farmers.

Two years later, in the 2005 Lower House election, the DPJ, under Okada Katsuya, offered a ¥1 trillion direct payment system to all farm households marketing agricultural products. It also extended this offer to farm households in hill and mountainous areas and those whose agricultural production activities served environmental protection functions. Read the rest of this entry »

Author: Aurelia George Mulgan

The appointment of new Ministry of Agriculture, Forestry and Fisheries (MAFF) Minister Hirotaka Akamatsu – one of the most high-profile members of the DPJ, but a politician with almost no expertise on agricultural policy – is being interpreted as a symbol of the DPJ administration’s reform aiming to cut long-standing ties between Kasumigaseki (where Japan’s main ministries are located in Tokyo) and Nagatacho (where LDP headquarters is).

The Japanese press reports that MAFF bureaucrats, who, together with the LDP have controlled the country’s agricultural policy since 1955, have been gearing up for a war with the DPJ on the issue of transferring policymaking power from bureaucrats to politicians.

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Author: Aurelia George Mulgan

In what should be good news for Australian farmers, the recent Democratic Party of Japan’s electoral victory potentially clears the way for a radical shake-up in Japanese agricultural trade policy. Initial assessments have been pessimistic about the possibility of a breakthrough on agriculture in Australia-Japan FTA negotiations. But the chances of real change are highest at the WTO and over the medium, rather than short term.

During the election campaign, the DPJ backtracked on its proposal for a Japan-US FTA in the face of protests from farm leaders. However, in contrast to its cautious attitude towards bilateral free trade schemes, the party showed a much tougher attitude on WTO trade policy, and seeks an early conclusion to the Doha Round negotiations. While exceptional treatment for specific agricultural items can be built into bilateral trade agreements, it is much harder to secure the same sort of deals under multilateral arrangements.

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Author: Peter Drysdale

This week at the G20 meetings in Pittsburgh, there will be an important opportunity to shape the outcome of the Copenhagen meeting on climate change in December. Much swings on the position taken by China and the emerging economies. Ross Garnaut discusses that issue and others in the lead this week, one year after he presented his Climate Change Review to the Australian Government. In a tour de force [mp3 audio] on the subject at the ANU last week, he noted that the international regime he proposed in his report has received quite a lot of attention in China and India, as well as Indonesia. These countries are all important members of the G20, another reason why that group should be entrenched as the primary forum for global dialogue on economic and other issues. Read the rest of this entry »

Author: Aurelia George Mulgan

The selection of the new MAFF minister, Akamatsu Hirotaka, makes more sense in terms of well-established cabinet selection principles than in terms of his personal expertise for the job. Nothing in the professional background of the new MAFF Minister qualifies him specifically for the post in Agriculture. For the same reason, he could not be considered captive of agricultural interests, which may turn out to be a real strength in dealing with the Ministry of Agriculture, Forestry and Fisheries (MAFF) and the farmers’ cooperative organisation (JA). With no fixed ideas of his own, Akamatsu will be a cypher for the party leadership and its farm policy manifesto, which he can be expected to implement faithfully.

Akamatsu is a city boy, born in Nagoya, with a degree in Politics and Economics from Waseda University. He hails from the DPJ stronghold of Aichi (the urban constituency of Aichi 5), although in 2005, he was relegated to the Tokai bloc, having lost his constituency seat for the first time since 1996.

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Author: Kaliappa Kalirajan

Though India has demonstrated that there exists broad political support for its economic reform program, agricultural trade policy reforms need to be accelerated. The new government enjoys a better standing than before in terms of stability. Its challenge now is to mitigate the inefficiency that exists in Indian agriculture and to close the gap between its potential and actual performances by implementing a proper policy framework.

As a net exporter in agriculture products, India has more to gain than to lose from trade reforms. It has sufficiently high bounded rates on most products, and therefore flexibility can be ensured against unfair competition. It does not have to worry about its agricultural subsidies as they are already below the required ceiling. Also, it does not have any serious domestic opposition to reckon with. All of these factors place India in an advantageous position.

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Author: Aurelia George Mulgan

The DPJ’s policy switch on an FTA with the United States only serves to confirm that it prioritises farm votes over economic reform. Last week, DPJ leader Yukio Hatoyama declared that the party had revised its initial manifesto saying that it would to seek an FTA with the United States in order to promote liberalisation of trade and investment because of strong opposition from agricultural lobby groups. Hatoyama’s statement was followed by DPJ Vice-President Naoto Kan’s announcement that agricultural products would be excluded from any FTA with the United States. On 8th August, the DPJ published an officially revised version of its manifesto, which amended the section on the proposed Japan-US FTA to this effect.

There was certainly a crescendo of criticism coming from farm organisations. The Sankei Shimbun reported that nine major agricultural lobby groups, including JA-Zenchu (JA’s peak organisation) and its political arm, the National League of Farmers Agricultural Policy Campaign Organisations (Zenkoku Noseiren) had issued a joint press release strongly condemning the DPJ’s stance. The press release said: ‘it is inevitable that the United States would seek tariff abolition for products in their interest such as rice, wheat, pork and beef, which would have a catastrophic impact on Japan’s agriculture….The DPJ’s manifesto totally betrays farmers’ expectations for income growth and public expectations for increases in the country’s food self-sufficiency. This is absolutely unacceptable’.

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Author: Aurelia George Mulgan

The DPJ’s recent policy positions on agriculture raise doubts that it can be the party of economic reform. Not only has it backtracked on its own reform proposals; it has also actively undermined reforms being attempted by the LDP-led government since 2007.

As one of Japan’s chief laggard industries, agriculture is ripe for reform. Greater efficiency at home combined with more imports would lower food prices, thereby raising the real income of consumers. At the same time, agricultural reform has important implications for trade policy, particularly for a WTO agreement as well as for Japan’s Free Trade Agreements (FTAs) with Asia-Pacific partners.

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Author: Rajiv Kumar

With the new government due to take office (hopefully soon), it is now open season for offering ideas, advice and suggestions for policy reforms.

And we are all very good at giving advice and don’t really bother if most of it goes unheeded. It is crucial in my view to retain the policy focus on the most critical issues to give them some sense of urgency and priority.

Drawing up a long list of desirable actions can often end up in virtual policy paralysis due to the inevitable trade-offs amongst the objectives and not enough implementation capacity.

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Guest Author: Virginia Horscroft

While our attention is focused on the political crisis in Fiji, a development that could prove critical to the Pacific is passing almost unremarked.

This week will reveal whether members of the Pacific Islands Forum are able to cut a deal to negotiate a regional trade agreement.

If they manage that, it will be a major achievement for regional engagement – a welcome positive in a year that has so far not been a good one for the Pacific.

Read the rest of this entry »

Author: Aaron Batten

PNG had another interesting year in 2008. The first half of the year saw economic growth remain strong as the country continued to benefit from yet another boom in the price of its commodity exports. High resource prices underpinned a significant expansion in the manufacturing, construction and agriculture sectors. Towards the middle of the year, however, poor monetary responses to a prolonged growth in domestic liquidity, coupled with a continued strong external sector, meant that inflationary pressures began to increase, with inflation rising to 13.5 per cent in September 2008.

September, of course, also marked the onset of global financial crisis. Barring a couple of jitters on the PoMEX, PNG’s economy weathered the direct impacts of the crisis relatively unscathed. In large part this was because of the healthy supply of foreign exchange reserves and domestic bank liquidity built up over previous years which gave the financial sector sufficient flexibility to cope with any adjustment costs.

The flow on effects of the crisis have led to a large downturn in the price of many of PNG’s key commodity items which had been driving revenue and output growth. This has had an immediate impact on the Government’s fiscal position with the 2009 Budget predicting a 25 per cent overall decline in domestic tax revenue.
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Authors: Christopher Findlay and Andrew Watson

We’ve enjoyed reading the comments of Sherry Kong and others on the confirmation of a policy on the ability to trade in the use of land (both long term holdings and a short term rental market).

It will take some time to see the full impact of the policy and we can expect considerable regional variation. While there is likely to be an effort to protect arable land and the likelihood that many villages will continue to conduct informal land contract adjustments based on their local sense of equity and family structures change, some of the potential effects of this in agriculture could be greater ability to consolidate land into larger plots for higher levels of productivity, encouragement for migration given clarity of tenure over land, and the possibility of new forms of organisation and corporate structures in agriculture. Greater capacity to use the more liberal capital markets foreshadowed in the decision by borrowing against the use right in order to facilitate investment is also a possibility, though many observers in China still argue against developing the right to mortgage land.

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