Payments for rice farmers to start in fiscal 2010

The government will deliver hundreds of billions of yen in direct income support to rice farmers one year earlier than expected in a move to bolster support before next summer's Upper House election, sources said.

The Democratic Party of Japan pledged in its Lower House election manifesto to introduce the direct income compensation in fiscal 2011.

But the farm minister and his deputies agreed to fast-track the program on Tuesday by including the money in the fiscal 2010 budget.

The government will pay out the income support to any farmer who incurs greater costs than the selling price.

The program was first proposed by party Secretary-General Ichiro Ozawa when he was party president. It was included in the campaign platform for the 2007 Upper House election, where the DPJ won strong support in rural prefectures and squeezed the Liberal Democratic Party-led coalition into a minority.

The party had planned to introduce the income support from fiscal 2012. But Ozawa and new party president Yukio Hatoyama brought the start date forward to 2011 for the Lower House election campaign. Now the party plans to move the program up by another year in a bid to woo rural voters ahead of next year's Upper House election, the sources said.

The DPJ originally wanted to test the program in a small number of regions in fiscal 2010 before introducing it nationwide. But the process of selecting regions for testing posed too many problems.

Under the new plan, the party will offer the payments across the whole country--but only for rice farmers--and iron out any problems for fiscal 2011.

In its manifesto, the DPJ said it would need to spend 1 trillion yen on direct income support for primary crops such as rice and wheat, and a further 400 billion yen to cover other sectors such as dairy and livestock farmers and fishermen.

Rice farmers will be allowed to choose whether or not to participate in the program.

That will set it apart from the current compulsory program by which the government pays farmers to take their fields out of production.

Farmers who agree to the production volume targets set by the central government will be eligible for the new direct payments. Other farmers seeking greater income will be allowed to grow as much rice as they want, but must also bear the risks that flow from their decision.

According to the sources, allocation will depend to some extent on a comparison between the national averages for the selling price of produce and a farmer's production costs.

Rice farmers who stick by the production volume target will receive the payments even if they do not suffer a loss.

That decision was made to avoid the vast amount of paperwork required to calculate whether each farmer has made a profit or loss.

The program will also include additional payouts to encourage efficiency.

The payouts will go to farmers who take cost-cutting measures by expanding their farm acreage or those who grow higher added-value rice, such as by using less chemicals.(IHT/Asahi: October 15,2009)