Rice, wheat, beef, sugar, and dairy are called the “sacred five” in Japan, yet these industries have struggled recently. Inextricably linked to the country’s history and culture, the crops remain insulated from free market competition by heavy subsidies and tariffs on foreign imports—often upwards of 100 percent. Tariffs on rice imports may be the most egregious example at 778 percent.
The tough times are partly due to the country’s inherent economic, geographic, and demographic constraints. Production of Japan’s traditional agricultural products has dropped 32 percent in the past 50 years, while imports have risen 40 percent in the same period.
Meanwhile, Prime Minister Shinzo Abe has aggressively pursued new free trade deals to galvanize Japan’s lethargic economy—despite four years of stimulus, the Japanese economy is only 2.2 percent larger (in real terms) than in 2012 when Abe returned to power promising growth through massive structural reforms. He’s also trying to secure vital new market access for the country in the face of its dwindling domestic population. Since the Trans-Pacific Partnership (TPP) has been trumped by growing populism in the United States, Japan has continued to pursue bilateral trade deals with its former adversary and others.
Japan’s highly protected agricultural industry appears to be one of the main impediments to further liberalizing its economy. While the subsidized sacred crops have long been fiscally unsustainable, there have been recent flickers of hope for the country’s farmers: a weaker yen and a greater focus on high-quality commodities—such as apples, select beef, green tea, and whiskey—have lifted food exports by over 22 percent in the past two years. As Japan shifts away from the sacred crops, what can it do to ensure the future success of its agriculture industry?
Nearly as soon as Western traders reached Japan in the 16th century, friction between the two cultures precipitated a closing of Japan to foreigners—a period of isolationist policies known as Sakoku. Although these policies existed nominally until 1866, the arrival of American Commodore Matthew Perry in 1853 quickly began to erode the enforcement of these practices. A period of intense modernization was soon underway.
No longer shielded from the geopolitical influences and existential threats from the West, Japanese authorities moved to expand their nearly nonexistent manufacturing sector. While roughly 80 percent of Japan’s population were rice farmers during the Sakoku period, the need for factory labor during the Meiji Restoration drew droves of Japanese to the cities. Osaka, Hiroshima, and Nagoya, among others, quickly transitioned from seats of power for feudal lords to important centers for trade and commerce.
After the Second World War, employment in agriculture still constituted roughly 50 percent of the work force. As the US began to invest heavily in the reconstruction of Japan, especially its manufacturing sector, employment in agriculture began to plummet—to 23.5 percent in 1965 and down to 7 percent by 1988. Lifted by especially strong manufacturing and service sectors, Japan reached a level of nearly unmatched prosperity by the 1980s.
Japan entered a bubble economy in 1985 after the Plaza Accord led to the weakening of the dollar relative to the yen. Pyramiding levels of debt were used to speculate on stocks, real estate, and foreign assets. The bubble would continue to inflate until the Nikkei 225 stock average finally crashed in the early 1990s with losses of more than $2 trillion.
The aftermath of the crash would be felt for over a decade as efforts to revive the economy between 1991 and 2001 failed. The era, known as the “Lost Decade,” would continue through the 2000s with the global recession. Abenomics was introduced with the re-election of Abe for a second term in 2012. Most importantly to agriculture, the third of Abenomics’ so-called “three arrows” has been structural reform and the aggressive pursuit of new trade deals, as Abe has explicitly said himself.
Despite four years of economic stimulus, Japan’s GDP has seen relatively negligible growth. The agriculture sector accounted for roughly one percent of that GDP down from five percent in 1970. The services and industrial sectors accounted for 72 and 27 percent, respectively. Japan’s rural population has declined from 28 percent to 6.5 percent during the same period. Simultaneously, the country’s population employed in agriculture has fallen to under 4 percent in 2013.
Japan, as one of the most densely populated countries in the world, is fundamentally constricted in further developing its agricultural industry. Japan’s history of isolationism and self-sufficiency was only possible due to temperate climates and fertile volcanic soils, but the resources needed to fuel the population boom post-World War II could only be acquired through imports. Today, Japan imports roughly $60 billion of agricultural products annually—the fourth-largest such importer.
While Japan’s protection of its forests has been a boon to the islands’ biodiversity and fragile ecosystems, outdated regulations force the country to import lumber (about $10 billion net annually) from rapidly deforesting nations. The policy also reduces the amount of arable land within its own borders. Japan and Germany, for example, are the world’s 61st and 62nd largest countries by area and the third and fourth largest economies by nominal GDP, yet they consist of 68.5 and 32.7 percent forested area, respectively.
Although much has been made of Japan’s sacred five, industries that are relatively free of government interference show more efficiency. For example, seafood represents the largest food or agricultural export industry in Japan. Notably, unprocessed frozen fish and molluscs represent the two largest agricultural exports by value at $502 million and $482 million, respectively, in 2014. Even this bright spot, on average, has seen a gradual decline over the previous five-year period.
While Japan’s bountiful waters continue to support its fishermen, farmers have been far less fortunate. Since 1970, production of the sacred five has decreased 22 percent—from 12.8 million tonnes to 10 million tonnes. Sacred five exports have dropped 63 percent in the same period—from 950,000 tonnes to 351,000 tonnes. Imports have risen by 10 percent despite the country’s dwindling population during that period. Considering the inefficiencies and high production costs in Japanese farming—rice farmers receive at least four times more per tonne than in neighboring countries—these trends are hardly surprising.
Japan has found the most agricultural success in luxury and high-value added agricultural products by leveraging its skilled workforce and enforcing tough phytosanitary regulations. Rising incomes in East Asia have allowed more communities abroad to purchase imported food and beverages from Japan, which are often highly regarded for both their taste and safety. Following the 2008 Chinese milk scandal, in which mass quantities of milk and infant formula was found to have been adulterated with the toxic chemical melamine, Japanese exports of milk skyrocketed and have remained historically high since. In 2015, Hong Kong alone imported 24.7 percent of Japan’s total agricultural exports.
The highly-regarded quality of Japanese food and beverages has significantly helped to offset the higher production costs for other goods. With crops that can easily be branded as being uniquely from Japan—such as Fuji apples and Wagyu beef—the country’s farmers have seen notable increases in demand as populations within the region continue to exercise their newfound disposable incomes.
It makes sense that the more processing and additional value Japan tends to put into these items—or the health concerns surrounding the item—consumers are willing to pay a premium for Japanese imports. Together these few high-value crops and processed foods represent the increasingly rare bright spots in Japanese agriculture, accounting for the majority of the 22 percent Japanese food exports jumped in the past two years.
The largest obstacle to structural change in the country’s agricultural sector, the Japan Agricultural Cooperatives (JA), emerged in the wake of World War II. As a preventative measure to counter a potential black market for rice during a period of food shortages and rationing, the JA was backed by the government as a regulatory body. Overseeing insurance, banking, marketing, and the welfare of the 710 regional co-ops, as of 2012, the JA group is a powerful lobby group, with a voting bloc of 9.7 million members, that can push legislation to help subsidize crops or thwart proposed trade deals.
The JA also acts as a wholesaler, collector, and retailer, which affects the pricing of staple crops such as rice. This policy leads to inefficient farming practices with low yields by farmers who are only growing crops due to the subsidies provided by the JA.
With both stagnant growth and expenditures in mind, Abe has consistently pursued free trade agreements with many of his largest trading partners. Although the benefits of free trade deals and other economic partnerships are well known, Japan will benefit most from access to new markets, especially as the country’s population continues to both age and decrease.
Abe is under heavy pressure to negotiate further market access with other large economies, especially its top export destinations: China ($131 billion), the US ($128 billion), and South Korea ($52.5 billion). Between 2006 and 2007, Abe oversaw free trade agreements with Chile, Thailand, Brunei, and Indonesia, while laying the groundwork for other pivotal deals with both India and the ASEAN group.
Since returning to office in 2012, Abe has most notably secured a trade deal with Australia, which is projected to provide Japan with over $50 billion in trade gains by 2034 and a potential bump in total GDP. Of interest, Japan agreed to reduce tariffs on frozen and fresh beef to 19.5 and 23.5 percent over the next 18 and 15 years, respectively. The recent surge in Japanese beef exports, mainly high-quality Wagyu beef, demonstrates the country’s ability to simultaneously reduce tariffs and increase exports by focusing on higher value commodities. The deal still leaves much to be desired with wheat, sugar, and dairy products receiving nearly insignificant tariff reductions, while rice tariffs went completely untouched.
Within days of taking office, President Trump signed an executive order which signalled the end of the deal in its current state. The deal could be revised to remove the US’s required participation, but few expect this to happen. Meanwhile, Japan has been pursuing separate deals with its other largest trading partners.These talks have also been hindered by Japan’s inability to lower duties on agricultural imports, such as dairy.
Japan’s farmers continue to vehemently oppose any new trade deals. Yet the number of farmers in Japan continues to plummet—from 14.5 million in 1960 to just over 2 million in 2015—and the JA’s non-farming members may not continue to vote against trade deals which may be in their interest. With Japan’s highly protected agricultural industry (along with its automobile industry) representing the main obstacle in securing new trade deals, it pays to ask how long Japan’s farming organizations and cooperatives can withstand the pressure to liberalize.
During the mid-1800s, when Japan was threatened with encroaching and rapidly developing foreign powers, the country was forced to choose between modernization and further isolation. Although choosing the former led to a period of significant short-term instability, Japan quickly rose to become one of the world’s most influential powers.
While Japan may be more constricted in regards to agricultural success than as an imperial power, its general economic well-being in the future may be more tied to agriculture than one might expect. Despite being the fourth largest exporter by value in the world, Japan’s exports of agricultural raw materials and foodstuffs combined for only 1.7 percent of its total merchandise exports in 2015.
Although deft political maneuvering may help the protected groups within the agriculture industry avoid the inevitable structural pains, it seems likely that Japan will need to continue removing tariffs on fiscally unsustainable crops, especially the sacred five, as it pursues new trade deals and expanded market access for exports. Japan may need to start subsidizing retraining programs and help farmers switch crops to some of the exports which have seen success in the past few years to ensure their long-term success.
Japanese officials could also start to loosen draconian laws on migrant workers to help the relatively successful farmers whose growth has been hampered by labor shortages. Moreover, with 63 percent of the country’s 2.1 million commercial farmers currently 65 years or older, Japan will need to make significant improvements in attracting its youth toward the sector.
Just like the tough decisions made in its past, if Japan hopes to have a sustainable agricultural industry contributing to a healthy diversified economy in the future, officials will need to form a multi-party consensus to confront some of the traditions that are limiting its global potential before it’s too late.
What Information Do We Collect?
The information we gather enables us to personalize, improve and continue to operate the Services. We collect the following types of information from our users.
IP Address Information and Other Information Collected Automatically:
· We automatically receive and record information from your web browser when you interact with the Services, including your IP address and cookie information. This information is used for fighting spam/malware and also to facilitate collection of data concerning your interaction with the Services (e.g., what links you have clicked on).
· Generally, the Services automatically collect usage information, such as the number and frequency of visitors to the Site. We may use this data in aggregate form, that is, as a statistical measure, but not in a manner that would identify you personally. This type of aggregate data enables us and third parties authorized by us to figure out how often individuals use parts of the Services so that we can analyze and improve them.
Information Collected Using Cookies:
· Most browsers have an option for turning off the cookie feature, which will prevent your browser from accepting new cookies, as well as (depending on the sophistication of your browser software) allowing you to decide on acceptance of each new cookie in a variety of ways.
We collect statistical information about how users collectively use the Services (“Aggregate Information”). Some of this information may be derived from Personal Information. This statistical information is not Personal Information and cannot be tied back to you or your web browser.
How, and With Whom, Is My Information Shared?
IP Address Information:
Information You Elect to Share:
We share Aggregate Information with our partners, service providers and other persons with whom we conduct business. We share this type of statistical data so that our partners can understand how and how often people use our Services and their services or websites, which facilitates improving both their services and how our Services interface with them. In addition, these third parties may share with us non-private, aggregated or otherwise non Personal Information about you that they have independently developed or acquired.
Information Shared with Our Agents:
We employ and contract with people and other entities that perform certain tasks on our behalf and who are under our control (our “Agents”). We may need to share Personal Information with our Agents in order to provide products or services to you. Unless we tell you differently, our Agents do not have any right to use Personal Information or other information we share with them beyond what is necessary to assist us. You hereby consent to our sharing of Personal Information with our Agents.
Information Disclosed Pursuant to Business Transfers:
In some cases, we may choose to buy or sell assets. In these types of transactions, user information is typically one of the transferred business assets. Moreover, if we, or substantially all of our assets, were acquired, or if we go out of business or enter bankruptcy, user information would be one of the assets that is transferred or acquired by a third party. You acknowledge that such transfers may occur, and that any acquirer of us or our assets may continue to use your Personal Information as set forth in this policy.
Information Disclosed for Our Protection and the Protection of Others:
Information We Share With Your Consent:
Except as set forth above, you will be notified when your Personal Information may be shared with third parties, and will be able to prevent the sharing of this information.
Is Information About Me Secure?
We store all of our information, including your IP address information, using industry-standard techniques. We do not guarantee or warrant that such techniques will prevent unauthorized access to information about you that we store, Personal Information or otherwise.
What Information of Mine Can I Access?
You can access and delete cookies through your web browser settings.
California Privacy Rights: Under California Civil Code sections 1798.83-1798.84, California residents are entitled to ask us for a notice identifying the categories of personal customer information which we share with our affiliates and/or third parties for marketing purposes, and providing contact information for such affiliates and/or third parties. If you are a California resident and would like a copy of this notice, please submit a written request to the following address: 1156 6th Ave, 7th Floor, New York, NY 10036
What If I Have Questions or Concerns?
If you have any questions or concerns regarding privacy using the Services, please send us a detailed message to firstname.lastname@example.org. We will make every effort to resolve your concerns.
Effective Date: March 11, 2014
b. You shall not (directly or indirectly):i. take any action that imposes or may impose (as determined by us in our sole discretion) an unreasonable or disproportionately large load on our (or our third party providers’) infrastructure;ii. interfere or attempt to interfere with the proper working of the Services or any activities conducted on the Services;iii. bypass, circumvent or attempt to bypass or circumvent any measures we may use to prevent or restrict access to the Services (or other accounts, computer systems or networks connected to the Services);iv. use manual or automated software, devices, or other processes to “crawl” or “spider” any page of the Site;
v. harvest or scrape any Content from the Services;
vi. otherwise take any action in violation of our guidelines and policies;vii. decipher, decompile, disassemble, reverse engineer or otherwise attempt to derive any source code or underlying ideas or algorithms of any part of the Services (including without limitation any application), except to the limited extent applicable laws specifically prohibit such restriction;viii. modify, translate, or otherwise create derivative works of any part of the Services; orix. copy, rent, lease, distribute, or otherwise transfer any of the rights that you receive hereunder.c. We also reserve the right to access, read, preserve, and disclose any information as we reasonably believe is necessary to:i. satisfy any applicable law, regulation, legal process or governmental request;ii. enforce these Terms of Service, including investigation of potential violations hereof;
iii. detect, prevent, or otherwise address fraud, security or technical issues;
iv. respond to user support requests; or
v. protect the rights, property or safety of us, our users and the public.4. Third Party Services. The Services may permit you to link to other websites, services or resources on the Internet, and other websites, services or resources may contain links to the Services. When you access third party resources on the Internet, you do so at your own risk. These other resources are not under our control, and you acknowledge that we are not responsible or liable for the content, functions, accuracy, legality, appropriateness or any other aspect of such websites or resources. The inclusion of any such link does not imply our endorsement or any association between us and their operators. You further acknowledge and agree that we shall not be responsible or liable, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any such content, goods or services available on or through any such website or resource.5. Termination. We may terminate your access to all or any part of the Services at any time, with or without cause, with or without notice, effective immediately. All provisions of these Terms of Service which by their nature should survive termination shall survive termination, including, without limitation, ownership provisions, warranty disclaimers, indemnity and limitations of liability.6. Warranty Disclaimer.a. You release us from all liability for you having acquired or not acquired Content through the Services. We make no representations concerning any Content contained in or accessed through the Services, and we will not be responsible or liable for the accuracy, copyright compliance, or legality of material or Content contained in or accessed through the Services.b. THE SERVICES AND CONTENT ARE PROVIDED “AS IS”, “AS AVAILABLE” AND WITHOUT WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF TITLE, NON-INFRINGEMENT, MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, AND ANY WARRANTIES IMPLIED BY ANY COURSE OF PERFORMANCE OR USAGE OF TRADE, ALL OF WHICH ARE EXPRESSLY DISCLAIMED. WE, AND OUR DIRECTORS, EMPLOYEES, AGENTS, SUPPLIERS, PARTNERS AND CONTENT PROVIDERS DO NOT WARRANT THAT: (I) THE SERVICES WILL BE SECURE OR AVAILABLE AT ANY PARTICULAR TIME OR LOCATION; (II) ANY DEFECTS OR ERRORS WILL BE CORRECTED; (III) ANY CONTENT AVAILABLE AT OR THROUGH THE SERVICES IS FREE OF VIRUSES OR OTHER HARMFUL COMPONENTS; OR (IV) THE RESULTS OF USING THE SERVICES WILL MEET YOUR REQUIREMENTS.7. Limitation of Liability. IN NO EVENT SHALL WE, NOR OUR DIRECTORS, EMPLOYEES, AGENTS, PARTNERS, SUPPLIERS OR CONTENT PROVIDERS, BE LIABLE UNDER CONTRACT, TORT, STRICT LIABILITY, NEGLIGENCE OR ANY OTHER LEGAL OR EQUITABLE THEORY WITH RESPECT TO THE SERVICES FOR ANY (I) LOST PROFITS, DATA LOSS, COST OF PROCUREMENT OF SUBSTITUTE GOODS OR SERVICES, OR SPECIAL, INDIRECT, INCIDENTAL, PUNITIVE, COMPENSATORY OR CONSEQUENTIAL DAMAGES OF ANY KIND WHATSOEVER, SUBSTITUTE GOODS OR SERVICES (HOWEVER ARISING), (II) BUGS, VIRUSES, TROJAN HORSES, OR THE LIKE (REGARDLESS OF THE SOURCE OF ORIGINATION), OR (III) DIRECT DAMAGES IN EXCESS OF $50.00.8. Governing Law and Jurisdiction. These Terms of Service shall be governed by and construed in accordance with the laws of the State of New York, including its conflicts of law rules, and the United States of America. You agree that any dispute arising from or relating to the subject matter of these Terms of Service shall be governed by the exclusive jurisdiction and venue of the state and Federal courts of New York County, New York.9. Miscellaneous.a. Modification. We reserve the right, in our sole discretion, to modify or replace any of these Terms of Service, or change, suspend, or discontinue the Services at any time. Your continued use of the Services following notification of any changes to these Terms of Service constitutes acceptance of those changes.b. Entire Agreement and Severability. These Terms of Service are the entire agreement between you and us with respect to the Services, including use of the Site, and supersede all prior or contemporaneous communications and proposals (whether oral, written or electronic) between you and us with respect to the Services. If any provision of these Terms of Service is found to be unenforceable or invalid, that provision will be limited or eliminated to the minimum extent necessary so that these Terms of Service will otherwise remain in full force and effect and enforceable. The failure of either party to exercise in any respect any right provided for herein shall not be deemed a waiver of any further rights hereunderc. Force Majeure. We shall not be liable for any failure to perform our obligations hereunder where such failure results from any cause beyond our reasonable control, including, without limitation, mechanical, electronic or communications failure or degradation.d. Assignment. These Terms of Service are personal to you, and are not assignable, transferable or sublicensable by you except with our prior written consent. We may assign, transfer or delegate any of our rights and obligations hereunder without consent.e. Agency. No agency, partnership, joint venture, or employment relationship is created as a result of these Terms of Service and neither party has any authority of any kind to bind the other in any respect.f. Notices. Unless otherwise specified in these Term of Service, all notices under these Terms of Service will be in writing and will be deemed to have been duly given when received, if personally delivered or sent by certified or registered mail, return receipt requested; when receipt is electronically confirmed, if transmitted by facsimile or e-mail; or the day after it is sent, if sent for next day delivery by recognized overnight delivery service. Electronic notices should be sent to email@example.com. No Waiver. Our failure to enforce any part of these Terms of Service shall not constitute a waiver of our right to later enforce that or any other part of these Terms of Service. Waiver of compliance in any particular instance does not mean that we will waive compliance in the future. In order for any waiver of compliance with these Terms of Service to be binding, we must provide you with written notice of such waiver through one of our authorized representatives.h. Headings. The section and paragraph headings in these Terms of Service are for convenience only and shall not affect their interpretation.Contact. You may contact us at the following address: 1156 6th Ave, 7th Floor, New York, NY 10036.