English translated version of "Business Prospect" on NHK Radio Channel 1 on July 9, 2013
1. Some claim that Japanese agriculture will suffer catastrophic damage if Japan joins the Trans-Pacific Partnership (TPP) agreement.
The TPP Committee of the Liberal Democrat Party has adopted a resolution whereby 5 agricultural products - namely, rice, wheat, beef and pork, dairy products and sweetening resources (such as sugar cane and beet) - must be exempted from tariff elimination under the TPP agreement and Japan will not hesitate to withdraw from TPP talks unless this exemption is secured. Similar resolutions were also adopted in the Committee on Agriculture, Forestry and Fisheries of both houses of the Diet.
The agriculture industry has been claiming that "both farmland and farm size are small in Japan, and therefore it cannot compete with the Unites States or Australia." It promotes capturing the domestic market by imposing high tariffs, thus preventing imports of foreign agricultural products. However, it is obvious that the domestic market will shrink due to the aging and declining population. If the current situation continues Japanese agriculture will inevitably decline even if an exemption from tariff elimination is obtained through the TPP negotiations.
2. Are you saying that there are no future prospects for Japanese agriculture?
The abovementioned claim by the agriculture industry assumes that Japan's agricultural products are not competitive in terms of cost. But competitiveness derives not only from cost but also from quality. Taking automobiles as an example, there are high-priced luxury cars and low-priced kei cars in the market. The same applies to agricultural products. Japanese-origin Koshihikari, one of the most expensive and high-quality varieties of rice, is priced 160% higher in Hong Kong than California-origin Koshihikari and two-and-a-half times higher than Chinese-origin Koshihikari. Most rice traded globally is low-quality and is exported mainly to low-income countries in Africa, South Asia and other regions.
Japan imports cars such as Mercedes and Ford while exporting Toyota, Nissan and Honda. The United States exports 3.5 million tons of rice while importing 0.8 million tons, mostly high-quality rice such as jasmine rice. Even if Japan were to import 0.1 million tons of rice for the catering and restaurant industry, it could export a million tons of high-quality rice. We do not need to be afraid of importing low-priced, low-quality rice.
It is true that cultivating larger farmland lowers costs. However, the fertility of farmland differs from country to country and from plot to plot, which determines suitable crops as well as productivity. In Australia, where soil is poor, cows are out at feed in the grassland while in the US, farmland is mainly used for corn production. The US imports low-quality beef for hamburgers from Australia while exporting high-quality beef from corn-fed cows to Japan. In Japan farmland is cultivated mainly for rice production.
When Japan's agriculture industry argues that it cannot compete with the US or Australia, it assumes that the Japanese government will not take any countermeasures when import duties are abolished. Although the size of farms in the EU is one-tenth of that of America and five-thousandth of that of Australia, its high productivity and the direct payment of government subsidies enable it to export wheat and other grain. In the United Kingdom the yield of wheat per unit area is five times larger than Australia's, meaning that the UK's wheat productivity is five times higher than Australia's.
The international price of rice has recently been on the rise, while the difference between domestic and foreign prices has been decreasing. This means that even if the Japanese government were to adopt the direct payment of subsidies to rice farmers the amount paid to them would be smaller due to the current smaller foreign-domestic price differential. Some rice farmers export Japanese rice to Hong Kong, Taiwan and other neighboring countries despite the current domestic price level. If high-quality Japanese rice gains price competitiveness by improving productivity and the direct payment of subsidies, this would only be more advantageous to high-quality.
3. Some claim that "agriculture is not the same as the manufacturing industry because only the former is influenced by natural conditions."
It is true that the burden of agricultural work varies from season to season, and thus it is difficult to use laborers consistently throughout the year. With rice farming, for example, labor is concentrated in the seedling transplant and harvesting periods. If you employ laborers to meet the needs when there is a lot to do, they have nothing to do at less busy times. This incurs large wasted costs.
It is also said that hilly and mountainous areas suffer unfavorable conditions due to sloping farmlands. However, farmers in those areas can take two to three months to transplant and harvest, taking advantage of the difference in altitude and temperature. Indeed, there are examples of couples who farm 10 to 30 hectares by themselves, despite the fact that the average farm size in prefectures other than Hokkaido is 0.7 hectares.
There is another example in vegetable farming which also takes advantage of the difference in altitude and temperature. A corporation new to agriculture in Tottori Prefecture produces radishes throughout the year on 70 hectares of farmland stretching from land reclaimed from the sea to sub-mountainous areas of Mt. Daisen, which boasts an 800 meter vertical drop.
Land in Japan has another character elongated from north to south. When producing the same kinds of vegetables, planting periods differ by latitude. One farming corporation owns farmland from Kyushu to Hokkaido and transfers its laborers and machineries from farmland in the south to the north. In this way, laborers can be utilized effectively and the operating rate of machineries improved. Mixed husbandry combining rice, vegetables and livestock aims to do the same. In other words, farmers who manage farming in a similar way to industrial production processes can be quite successful.
4. Are there any examples of cutting-edge technology in which Japan excels having been adopted for agricultural production?
Fertilizer costs can be saved if the various macronutrients are examined on smaller versus larger lot sizes, and the necessary fertilizers are applied in the right amounts to each of these lots. To accomplish this, so-called precision farming, which uses cutting-edge IT technology, must be adopted. It has become increasingly popular for farmers. More specifically, the location and size of farmland is accurately measured using a Global Positioning System (GPS) and satellite information, while fertilizer components on a particular lot of farmland are inspected using a soil sensor. Information gathered in this way is combined and put onto a map, which indicates the right amount of the appropriate fertilizers for a particular lot of farmland, which is then applied accordingly. Another example is a robotic system placed on a farm that is able to detect even slight changes in weather conditions, giving farmers predictive information about potential emerging diseases and pests and thus enabling farmers to apply effective pesticides. A system is also being studied which gathers regional agricultural techniques corresponding to different regional natural conditions which have been developed by farmers with practical expertise, and then disseminates information on appropriate countermeasures for when farmers encounter changes in natural conditions.
Nowadays, farmers do not practice advanced agriculture unless they are capable of using IT and other advanced technologies. And more and more, farmers are starting to use advanced agriculture.
Farm size is not the only decisive factor in agricultural productivity. Japanese agriculture can improve its future prospects by adapting to Japan's unique climate and environment and utilizing its superior industrial technologies.
(This article was translated from the Japanese transcript of Mr. Yamashita's speech in the "Business Prospect" session of the radio program "First in the Morning News" broadcast by NHK Radio Channel1 on July 9, 2013.)