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Evaluation of Agricultural Policy Reforms in Japan ORGANISATION for ECONOMIC CO-OPERATION and DEVELOPMENT Evaluation of Agricultural Policy Reforms in Japan ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT The OECD is a unique forum where the governments of 30 democracies work together to address the economic, social and environmental challenges of globalisation. The OECD is also at the forefront of efforts to understand and to help governments respond to new developments and concerns, such as corporate governance, the information economy and the challenges of an ageing population. The Organisation provides a setting where governments can compare policy experiences, seek answers to common problems, identify good practice and work to co-ordinate domestic and international policies. The OECD member countries are: Australia, Austria, Belgium, Canada, the Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Korea, Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, the Slovak Republic, Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States. The Commission of the European Communities takes part in the work of the OECD. OECD Publishing disseminates widely the results of the Organisation’s statistics gathering and research on economic, social and environmental issues, as well as the conventions, guidelines and standards agreed by its members. Corrigenda to OECD publications may be found on line at: www.oecd.org/publishing/corrigenda. © OECD 2009 You can copy, download or print OECD content for your own use, and you can include excerpts from OECD publications, databases and multimedia products in your own documents, presentations, blogs, websites and teaching materials, provided that suitable acknowledgment of OECD as source and copyright owner is given. All requests for public or commercial use and translation rights should be submitted to [email protected]. Requests for permission to photocopy portions of this material for public or commercial use shall be addressed directly to the Copyright Clearance Center (CCC) at [email protected] or the Centre français d'exploitation du droit de copie (CFC) [email protected]. FOREWORD – 3 Foreword This report is an analysis of the Japanese agricultural sector and Japanese agricultural policy. It was undertaken as a part of the OECD’s continuing work on Member countries’ policies and contains evaluation and recommendations based on the principles for agricultural policy reform as expressed by OECD Ministers. The report looks at the evolution of Japanese agricultural policy over the last several decades, but maintains its analytical focus on policies currently in place. In addition to reporting a wide variety of statistics, much of which were provided by the Ministry of Agriculture, Forestry and Fisheries (MAFF), use was made of the OECD PSE/CSE database and the OECD Policy Evaluation Model (PEM) for some of the analytical work. The authors of the report are Roger Martini and Shingo Kimura. Editorial and statistical preparation was carried out by Michèle Patterson. All the authors are with the OECD Directorate for Trade and Agriculture. The report has benefitted from input from many different individuals, including Dr. Shogenji and Dr. Ando of University of Tokyo, Dr. Ohga of Nihon University, and Dr. Shobayashi of Gakushuin Women's College. All responsibility for the final work remains with the authors. This report was declassified by the Working Party on Agricultural Policies and Markets of the Committee for Agriculture in April 2009. EVALUATION OF AGRICULTURAL POLICY REFORM IN JAPAN–© OECD 2009 TABLE OF CONTENTS – 5 Table of contents Executive Summary ................................................................................................................................. 9 Chapter 1. Issues and Objectives in Agriculture .................................................................................... 11 The changing face of agriculture .................................................................................................... 11 Trends in agriculture production and its role in the rural economy ................................................ 12 Trends in food consumption ........................................................................................................... 17 Farm labour and the structure of the farm enterprise ...................................................................... 20 Land use .......................................................................................................................................... 25 Agricultural trade ............................................................................................................................ 27 Chapter 2. Agricultural Policy in Japan ................................................................................................. 31 Overview of agricultural support .................................................................................................... 33 Food security and trade policy ........................................................................................................ 43 Policies for upland crops ................................................................................................................ 71 Land policy ..................................................................................................................................... 74 Policies in the livestock sector ........................................................................................................ 86 Fruit and vegetables policy ............................................................................................................. 93 Rural and environmental policies ................................................................................................... 95 Chapter 3. Future Directions of Japanese Agriculture and Policy Reform .......................................... 101 Evaluation of agricultural policies ................................................................................................ 101 Recommendations for future policy reform .................................................................................. 103 Conclusion .................................................................................................................................... 108 Annex 1. The Japan PEM Module ....................................................................................................... 111 References ............................................................................................................................................ 119 Tables Table 1.1. Farm size, 1965-2005 ..................................................................................................... 14 Table 1.2. Comparison of net product per worker .......................................................................... 23 Table 1.3. Comparison of labour productivity growth .................................................................... 24 Table 1.4. Comparison of household income between non-farm and farm household ................... 24 Table 1.5. Change in land use 1960-2005 ....................................................................................... 26 Table 1.6. Self sufficiency in food production, 1960-2005 ............................................................ 28 Table 1.7. Main imports and exports of agricultural goods, 2004-06 ............................................. 29 Table 1.8. Major trade partners, 2004-06 ........................................................................................ 29 EVALUATION OF AGRICULTURAL POLICY REFORM IN JAPAN–© OECD 2009 6 – TABLE OF CONTENTS Table 2.1. PSE Classification of selected agricultural policies .................................................. 34 Table 2.2. NAC and NPC, Japan and OECD average ................................................................ 36 Table 2.3. Explaining the change in the PSE between 1986-88 and 2004-06 ............................ 37 Table 2.4. Reforming the production adjustment programme combined with a larger direct payment ..................................................................... 39 Table 2.5. Drivers of change in MPS 1986-88 to 2005-07 ......................................................... 41 Table 2.6. Emergency responses specified in the Food Security manual ................................... 46 Table 2.7. Trends in consumption 2006-2012 ............................................................................ 46 Table 2.8. Estimated impact of trends in consumer demand ...................................................... 47 Table 2.9. Applied MFN tariff protection in agriculture, FY2006 ............................................. 51 Table 2.10. Agricultural goods subject to tariff rate quota ........................................................... 52 Table 2.11. Estimated impact of production adjustment programme on production and price .... 69 Table 2.12. Average number of animals on farm, 1960-2005 ...................................................... 87 Table 2.13. Payments to manufacturing milk ............................................................................... 92 Table 2.14. Existence of a natural fluid milk price premium ........................................................ 93 Table A.1. Factor Cost Shares ................................................................................................... 112 Figures Figure 1.1. Contribution of agriculture
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