Tokyo Report | Politics | East Asia

Abe’s Unfinished Business: Japan’s Agriculture Reform

Abe Shinzo is often considered Japan’s most powerful prime minister. But he faced steep political opposition in one of his primary goals.

Abe’s Unfinished Business: Japan’s Agriculture Reform
Credit: Depositphotos

Under the Abe administration, the power of the prime minister reached a new height. Abe Shinzo was the longest-serving prime minister in the history of Japan. During his tenure, he did not face significant intra-party challenges as he commanded the largest faction within the ruling Liberal Democratic Party (LDP). Abe was determined to transform the LDP from a clientelistic party to a Westminster party, which centralizes political power under the party leadership. His success in overcoming domestic pressures to reinterpret the Japanese Constitution and pass a security reform law in 2015 demonstrated his ability to defy opposition to achieve difficult reform. 

While Abe’s defense reforms garnered huge international attention, another prong of his reform efforts received far less attention: attempts to modernize Japan’s agriculture sector. These changes were a vital pillar of his structural reform, but Abe had only mixed success in seeing them through.

Abe wanted to “put Japanese agriculture on offense,” which aimed to make the agricultural sector profitable and internationally competitive. Abe’s long-time chief cabinet secretary, Suga Yoshihide, also played a tremendous role in the agriculture reform. Suga’s father was a strawberry farmer in northern Akita Prefecture who had feuds with the local Japan Agricultural Cooperative; since he was young, Suga understood the institutional weakness of Japanese agriculture and the urgency of reform. However, Abe faced a tremendous challenge from the Japanese Agriculture Group (JA), perhaps the biggest special interest group in Japanese politics.

The JA’s Political Clout

The origin of the JA can be traced to the traditional corporate movements prevalent in farming communities during the Tokugawa period. Following the Meiji Restoration, the new government abolished feudal rule and reorganized these traditional corporates following the Prussian Raiffeisen model. The government viewed these agriculture associations as an important rural social control tool and a medium to extract rural surplus; they played a tremendous role in funding the Japanese war machine during World War II. As a result, the General Headquarters (GHQ) of the Supreme Commander for the Allied Powers (SCAP) abolished agricultural associations as a symbol of rural exploitation and allowed the establishment of the JA as a replacement.  

Enjoying this article? Click here to subscribe for full access. Just $5 a month.

The JA has four primary functions. The Central Union of Agricultural Cooperatives (Zenchu) is JA’s political lobby arm and the most prominent political action committee in Japanese politics. It supports LDP politicians in elections, takes part in the Ministry of Agriculture, Forestry, and Fishery (MAFF) advisory council and issues proposals to MAFF regarding JA matters. The National Federation of Agricultural Cooperative Associations (Zennoh), meanwhile, collects rice and other agricultural products from farmers and monopolizes the sale of agricultural products to the national market. In 1985, Zennoh accounted for more than 95 percent of the Japanese domestic rice market. The National Mutual Insurance Federation of Agricultural Cooperatives (Zenkyoren) provides various types of insurance to farmers. Finally, the JA operates its own bank, JA Bank, which has the “largest branch network of any financial institution in the private sector of Japan.”

The JA plays both “top-down” and “bottom-up” roles in organizing Japanese farmers. The “bottom-up” function involves the JA’s role as a political lobby group representing the interests of farmers, especially small farmers. The “top-down” function refers to the JA’s role as the LDP’s vote mobilization machine in rural Japan. The institutional design of Japanese elections grants rural votes more value than urban votes because rural districts have fewer voters. Therefore, securing rural votes became critical to the LDP’s campaign strategy.

In other words, the JA’s ability to mobilize rural votes by issuing recommendations supporting LDP candidates to its members has been the foundation of the LDP’s one-party monopoly. The JA mobilized its members during elections and helped to elect important pro-agriculture politicians to the National Diet. These Diet members, referred to as the “agricultural tribe” (Norin Zoku), lobby for pro-JA national policies and generous subsidies for farmers. 

Abe’s Reform Plan and the Pushback

A major goal of Abe’s agriculture reform was to weaken the JA’s political influence. The Abe administration’s reform proposal had two major pillars. First, the reform proposal planned to remove Zenchu from the Japan Agriculture Cooperative. Zenchu would not be able to collect annual membership fees from its local branches, which would destroy its political lobby capability. 

Second, the proposal would corporatize Zenchu into a regular stock company, which would raise Zenchu’s tax rate from 19 percent to the regular corporate tax rate of 25.5 percent and eliminate Zenchu’s real estate tax break. More importantly, Zenchu was exempted from anti-monopoly law. The reform proposal would allow the government to apply anti-monopoly law on the corporatized Zenchu and break its monopoly over the distribution of food and agricultural inputs. 

Both agriculture tribe Diet members and the JA opposed the reform proposal. Nikai Toshihiro, the LDP secretary-general from 2016-2021, was one of the most prominent agriculture tribe members and a vocal critic of the reform. During the JA reform negotiation, he stated, “We should spend as much time as we should to discuss this matter carefully.” 

Following the Abe administration’s proposal, Nikai facilitated meetings between agriculture tribe Diet members, MAFF officials, and JA leaders to draft the LDP’s counterproposal – a mild reform plan that aimed to delay and water down any serious JA reform attempts. Under this alternate plan, the Zenchu would enjoy a grace period to shift toward the new system, and its power to guide and audit local branches would be reviewed. Intensive JA reforms would be set aside for five years, and the JA would determine its own post-reform organizational structure. Zennoh would transform into a joint-stock corporation unless there were further complications. 

After its release, the LDP gained approval from Komeito, the LDP’s ruling partner, and submitted it to MAFF. The result was the “Ruling Party Report,” the official counterproposal to Abe administration’s reform plan. Facing LDP pressure, the administration was forced to accept the “Ruling Party Report” in the second reform proposal and submit it to the prime minister for approval. After intense negotiation, Abe approved the formal agriculture plan. 

The formal plan eliminated Zenchu from the Agriculture Cooperative Law and turned Zenchu into a general incorporated association. However, it left Zenchu untouched at the prefectural level. Therefore, Zenchu could continue to collect membership fees and issue guidance through prefectural JA branches, which are Zenchu members. The continuing flow of membership fees would allow Zenchu to fulfill its political role and continue its support of LDP agriculture tribe Diet members in elections. 

Enjoying this article? Click here to subscribe for full access. Just $5 a month.

Furthermore, Zennoh itself would decide whether it wanted to become a joint stock corporation. Zennoh decided to retain its current status to retain its benefits and would not voluntarily become a joint stock corporation. This plan left the JA nearly unscratched following the reform; the LDP’s plan to water down and delay radical reform was a success. 

External Pressure: The TPP Factor

Abe had wanted to use the agriculture sector negotiation of the Trans-Pacific Partnership (TPP) to break down the protectionist barrier and internationalize Japanese agriculture, a classic use of external pressure. However, the agriculture tribe Diet members fiercely opposed the TPP. 

Moriyama Hiroshi was a heavyweight in the Japanese agriculture establishment. A close collaborator with the Japanese livestock industry, Moriyama was one of the most powerful anti-TPP Diet members within the LDP. He was the head of the Diet Agriculture Committee, overseeing agriculture policymaking. In addition, he was the leader of the LDP’s TPP Policy Committee, a position that gave him veto power over TPP-related policies. Moriyama therefore was in charge of approving all TPP bills before they could become laws. 

Under his leadership, the Diet agricultural committee adopted resolutions urging the government to exempt Japan’s rice, wheat, beef and pork, dairy products, and sugar, the so-called “five priority items,” from tariff eliminations under the TPP agreement. This demand, the committee said, should be treated as a top priority in the negotiation – meaning Japan should leave the negotiating table if it could not be met. The Japanese TPP negotiation team adopted this protectionist position. 

The negotiated agreement did not eliminate tariffs on these “five priority items.” Among these five items, the current tariff rates would be maintained for rice, wheat, and sugar; the import quota would be expanded for U.S. rice and wheat; and tariff rates would be reduced on beef, pork, and dairy products.

Despite a huge beef tariff reduction, from 38.5 percent to 9 percent, however, the TPP agreement did not hurt beef production significantly. Wagyu, which occupies the biggest share of Japanese beef production, was exempted from the tariff reduction. In addition, the TPP negotiations established a beef import safeguard, which allowed Japan to raise tariffs if it imports too much beef from the United States. The effects of tariff reduction were further reduced due to the weak yen compared to the dollar. The Abe administration, however, provided a 300 billion yen in compensation to livestock farmers after Japan joined the TPP and lowered the livestock-related tariffs. This subsidy was facilitated by Moriyama as a condition for the TPP agreement approval. 

When the United States pulled out of TPP and its agreement with Japan on farm trade, Abe’s plan for further structural reform also collapsed.

Looking Ahead

Abe viewed revitalizing the Japanese agriculture sector as one of the key pillars of his structural reform agenda – the third arrow of Abenomics. He therefore aimed to introduce competition, weaken the JA’s power, and liberalize agricultural trade. However, Abe failed to overcome the organized resistance from the agricultural establishment. The effort to reform the JA ceased as Abe left the Prime Minister’s Office in 2020, and the future of a successful agricultural structural reform remains dim. Abe’s successors could not maintain Abe’s political influence and power. As a result, the balance of power is gradually shifting back, favoring the LDP agriculture tribe and the JA. 

In addition, agriculture is not a critical theme of Prime Minister Kishida Fumio’s New Capitalism formula. The “Grand Design and Action Plan for a New Form of Capitalism” barely mentioned agriculture, and it does not indicate future agricultural structural reform. Kishida himself is not from the biggest faction within the LDP and could not reign over the party like Abe. He must spend his political capital on policy priorities, such as security policy reform and the New Capitalism agenda. It is unwise for him to alienate powerbrokers within the LDP on agriculture issues. 

In addition, there is no external pressure – like the TPP negotiations under Abe – to force Japan to adopt structural agriculture reform. A senior U.S. official admitted that the United States tries to keep trade disputes “under the rug” so it would not jeopardize Japan-U.S. security cooperation in the Indo-Pacific, which the Biden administration considers a top strategic priority. In general, there is no motivation within and outside of Japan to continue the agriculture reform initiative.