Reforms should not be hobbled by vested interests.

In dealing with agricultural issues as a high policy priority, China faces the daunting challenge of narrowing the huge income gap between rural and urban areas created by the nation's rapid industrialization. Japan has equally serious agricultural problems, but of quite a different nature.

Japan has been eagerly protecting its agriculture with prohibitive tariffs on farm imports and lavish supplies of subsidies to support farmers' income. The urgent task for Japan is to revive the domestic agricultural sector, which is enfeebled after decades of heavy protection.

An advisory panel for the Ministry of Agriculture, Forestry and Fisheries has put together a new plan for agricultural reform. Japan's agriculture sector is threatened by the rapid aging of the farming population and growing international pressure on Japan to open its farm market to exports. With the situation becoming increasingly perilous, the government has decided to abandon its farm reform blueprint drawn up five years ago to find more effective ways to re-energize the sector.

The first job the ministry had to tackle was to develop a plan to terminate the current uniform farm subsidies and concentrate the limited financial resources on competitive farmers and farming businesses.

The ongoing new round of global trade talks under the World Trade Organization (WTO) and negotiations for bilateral free trade agreements with Japan's major trading partners could lead to farm-trade deals that can cause waves of cheap farm imports to wash into the Japanese market.

The new reform plan is designed to help the domestic agricultural industries survive the crisis by promoting consolidation of farming land. This would allow a smaller number of farmers to cut costs through economies of scale for higher productivity and competitiveness.

The plan would also scrap the subsidies to support the prices of rice, wheat and other crops, leaving the markets to determine their prices. Direct payments to farmers would be used to narrow any wide income gap between farmers and workers in other industries.

Unlike price-related subsidies believed to seriously undermine the fairness in farm trade, direct payments to farmers are permitted under the WTO rules. This approach would enable the government to support domestic agriculture with taxpayer money while slashing tariffs on imports for lower prices at home.

But there are several huge difficulties in moving from these basic principles to specific policy measures. Some tricky issues must be sorted out. How much income support should actually be paid, for instance, to farmers who are growing rice or other crops in more than 10 hectares of land?

It is also crucial to secure funds for such support through steps like cutting expenditures for agricultural public works that are no longer necessary. All these measures involve decisions that would clash with vested interests.

The farm ministry initially showed great enthusiasm about wrestling with these issues, but unfortunately, the zeal has fizzled out.

The tide changed after the Upper House election last summer. During the campaign for the election, the opposition Minshuto (Democratic Party of Japan) proposed a plan to reinvigorate the agricultural, forestry and fisheries industries with an income support program that would provide 1 trillion yen every year to workers in these industries, including farmers with a side job. The ruling coalition denounced the proposal as an example of bad dole-out politics. But the ruling camp's poor showing in the poll shook the confidence of policy-makers.

Consequently, the panel's proposals include a loophole that would make even small-lot, part-time farmers eligible for income support if they are deemed to have a promising future. In addition, debate on the details of the plan has been postponed until the work to draft the budget for fiscal 2006 starts in autumn.

Prime Minister Junichiro Koizumi, who champions an aggressive turnaround strategy for Japan's agriculture, has been calling for efforts to increase farm exports. But such heady talks do little to help Japan's inefficient and highly protected agricultural sector survive the waves of farm liberalization without painful structural reforms.

Agriculture provides social benefits not valued by the market, including the preservation of vital natural resources like land and water. But these benefits do not provide good rationale for procrastinating on reforms to boost efficiency in agriculture.

--The Asahi Shimbun, March 10(IHT/Asahi: March 11,2005)