These conditions seem to offer a classic demonstration of ‘political capture theory’, whereby powerful sectional interest groups, particularly those of producer or provider groups, control policy in their sector to the exclusion of consumer interests and the wider public interest, constraining economic growth and hampering the efficient allocation of resources.
In Japan’s case, the government has neither formally entered the Trans-Pacific Partnership (TPP) negotiations nor signed a free trade agreement with Australia, despite two successive prime ministers — Kan and Noda — expressing their desire that Japan join the TPP negotiations, and despite five years and 16 rounds of trade negotiations between Japan and Australia. But both initiatives would require Japan to make major concessions on agriculture.
The JA-led farm lobby has penetrated Japanese government in two important ways: through direct political representation and by being incorporated into the agricultural administrative structure of the state.
Direct political representation involves former executives and employees of JA and related organisations seeking political careers in the Japanese Diet, which provides a channel for JA to insert its policy preferences into government processes. JA’s political offshoot organisations provide campaign, voting and financial support for candidates with direct links to the co-ops. JA’s executive, staff and farmer members number around five million votes.
In the current DPJ administration, the minister of agriculture, forestry and fisheries, Akira Gunji, was previously secretary-general of the Ibaraki Prefecture Federation of JA labour unions, the trade union body that organises all JA employees in the prefecture. He was one of only 16 candidates in the 2010 Upper House elections to receive endorsement from JA’s national political arm, the National Federation of Farmers Agricultural Policy Campaign Organisations. Not surprisingly, JA was very pleased with his appointment as minister, particularly as he had served as vice-chairman of the ‘group to think cautiously about the TPP’, an intra-DPJ group opposed to TPP participation. He has maintained this ‘cautious’ stance as minister.
Other JA politicians in DPJ ranks are Kozo Watanabe, who used to be chairman of an agricultural cooperative in Fukushima Prefecture and who supported JA’s petition opposing participation in the TPP negotiations; and former farmer and staff member of a Hokkaido agricultural cooperative Yoshio Hachiro, who served as chairman of the DPJ’s Economic Partnership Project Team examining the issue of Japan’s joining the TPP.
Although not great in number, these direct political representatives can be great in influence, particularly if they occupy strategic positions in the policy-making process. It is a pattern of agricultural representation that has been evident for decades and has altered little since the DPJ came to power, although numbers of JA representatives have declined over the years and have been far more prominent in the ranks of the Liberal Democratic Party.
Corporatisation involves JA’s performing various administrative tasks as an adjunct to the bureaucracy. Rather than being an ‘independent’ interest group, JA is firmly anchored in the administrative system for agriculture. The Ministry of Agriculture, Forestry and Fisheries (MAFF) has to be mindful of JA’s interests in designing policies, including how agricultural reform will impact on JA’s organisational and business interests, which rest substantially on keeping producer prices high and maximising the number of its farmer members and, therefore, maintaining large numbers of part-time, small-scale producers, who make up the majority of JA members.
For example, the MAFF contracted out the administration of rice production adjustment (gentan) to JA in the mid-2000s, including the setting of production volume targets. This JA-cum-producer-run cartel helped to keep the domestic price of rice high by restricting supply. JA benefited because the higher the producer price, the more JA earned from its marketing commissions as a fixed percentage of the sale price. The gentan has now been replaced with direct income subsidies to rice farmers, which are conditional on their compliance with a MAFF rice production plan.
The new scheme achieves the same goal of reducing rice production but by a different method, and so benefits JA for the same reason the gentan did. The problem is Japan cannot participate in the TPP unless it abolishes rice volume control, which keeps rice prices high, because if rice tariffs were abolished, cheaper rice would be imported, and the high domestic rice price could not be maintained. So the real issue with the TPP is JA’s economic interests rather than farmers’ incomes per se. Direct income subsidies would protect farmers against rice price falls, but JA would lose from declines in marketing commissions.
JA also accounts for more than 50 per cent of the ‘agricultural land use and aggregation facilitation groups’ that mediate the buying, selling and leasing of farmland to encourage consolidation of farmland and scale expansion of farm operations. According to a Nikkei report released on 30 March 2012, the fact that JA is mediating many of these transactions has hindered businesses and agricultural production corporations from making these land deals and taking up farming. As a result, consolidation of farmland is not making much progress.
JA’s shortcomings in administering land transfers have come to light in the wake of the Noda government’s Basic Policy and Action Plan for Revitalising Agriculture. The plan advocated agricultural structural reform centring on expanding the average size of farms to 20–30 hectares over five years in order to increase the competitiveness of agriculture and lay the foundations for agricultural trade liberalisation. However, JA favours groups of small-scale producers forming ‘community farms’ over full-time, professional farmers and non-JA agricultural corporations, and it is now in a position to inject this bias into its judgments about who gets the agricultural land being transferred. Its plan for land consolidation centres squarely on community farms forming management units of 20–30 hectares that rely totally on JA’s purchasing and marketing services. Either JA or JA-financed agricultural corporations will manage farmland difficult to consolidate into these management units. JA has also been demanding complete adherence to rice production adjustment from community farms for the purpose of maintaining the rice price.
For the MAFF to use an organisation that has a vested interest in small-scale owner-farming as a key broker in agricultural land consolidation looks like wilful sabotage or blind incompetence. JA was a logical choice, however, because of its long-standing, corporatised role in administering government-sponsored agricultural land programs. Its new task merely reflects continuity of administrative systems, underscoring how this aspect of state–farm interest group relations can influence the design of policy and its implementation, and, as a consequence, the entire structural adjustment process. A corporatised partnership exists between the MAFF and JA in which the MAFF colludes with agricultural producer interests at the expense of consumers.
The avenues through which the JA-led farm lobby captures agricultural policy provide important ‘structural’ elements of the explanation for the policy immobilism that characterises Japan’s agricultural policies and which impacts on agricultural trade.
Aurelia George Mulgan is Professor at the University of New South Wales, Australian Defence Force Academy, Canberra.
This article appeared in the most recent edition of the East Asia Forum Quarterly, ‘Japan: leading from behind’.