New policy sidesteps reform aims.

Farmers who show profits will be paid bonuses to heighten their international competitiveness, according to a final policy report Wednesday that has raised concerns that more government funds will be doled out to the farming sector.

The report, compiled by an advisory panel to Agriculture, Forestry and Fisheries Minister Yoshinobu Shimamura, sets the direction of agricultural policy for the next 10 years. It was presented to Shimamura on Wednesday.

The Basic Plan for Food, Agriculture and Rural Areas is to be formally approved by the Cabinet later this month.

Direct income assistance payments to farmers will begin from fiscal 2007.

But troubles could arise over proposals in Wednesday's report to also subsidize part-time farmers tilling small plots, an idea that critics say could turn the new plan into yet another handout of government funds to the farm sector.

Tough discussions over which farmers should be eligible for subsidies will begin this autumn between reform-minded government officials watching the bottom line and the Liberal Democratic Party supported by the farm sector.

The Central Union of Agricultural Cooperatives is expected to strongly lobby LDP members who depend on the farm vote to win elections. Farm groups want to ensure the thousands of mom-and-pop farms aren't squeezed out.

Current farm policy keeps produce prices at prescribed levels through tax money. Farmers who harvest protected crops are aided indirectly through the price support system.

The government hopes the new policy would revise this universal system, paying direct income subsidies to only profit-making farmers who are certified by their local government.

The agriculture ministry plans to submit a bill in next year's ordinary Diet session to revise the subsidy system.

Analysts said the direct income payments would not violate World Trade Organization limits on subsidies that can affect international prices.

Income subsidies are already in place in the European Union and the United States.

The basic draft also includes the possibility of distributing the subsidy to districts where small farmers band together in community farming co-ops.(IHT/Asahi: March 10,2005)