Japan struggles to save shrinking, aging agriculture industry

NIIGATA, Japan — It doesn’t look like much: a few mismatched plots of farmland wedged between busy highways and commercial developments on the outskirts of this midsized city.

But if Ryusuke Goto, 27, can find success as a rice farmer under relaxed rules and regulations introduced last year, he could help spark a turnaround in Japan’s long-declining agricultural industry.

“The situation has become very serious. The population is shrinking; the number of farmers is declining. But I think we are beginning to see a change. I’m actually quite optimistic,” said Goto, whose fields are in a special farming district created last year.

Japan’s agricultural sector has long been a model of inefficiency: tiny farms burdened by heavy regulation, propped up by government subsidies and protected by a vast array of tariffs and import controls. Though food is plentiful and quality is high, prices paid by Japanese consumers can be twice as much as those in other countries.

The number of small family farms is  shrinking in the USA also, and the average age of farmers is rising despite government subsidy programs that encourage small operations. But the average farm size is much larger than in Japan, given the USA’s greater land mass, and agribusiness increasingly accounts for most farm production. The result is that the USA has one of the most efficient food production systems in the world and among the lowest prices for consumers.

The Japanese model has become increasingly untenable. Japan’s farm and general population are both getting smaller and older, and a pending 12-nation trade agreement — the Trans-Pacific Partnership (TPP) — will end government support and protection for scores of farm products.

According to the Ministry of Agriculture, Forestry and Fishing, the number of Japanese engaged primarily in farming dropped to 1.7 million in 2014 from 1.86 million in 2011. About 515,000 farmers were 75 years or older in 2014. By comparison, only 83,000 were 39 years old or younger — and that number was down by 7,000 from three years earlier.

Forecasts  don't bode well: Japan’s population is shrinking by a quarter of a million people a year, and the number of births in 2014 was the lowest since record-keeping began in 1899, according to the Ministry of Health, Labor and Welfare.

“The average age of active farmers in Japan is now more than 66 years old. This is very serious. If we let this continue, the average age will be 70 in a few years, and that will be the end of Japanese agriculture,” said Choe Okuno, president of JA Zenchu, Japan’s largest farm cooperative.

The TPP is designed to open markets and opportunities among member nations, which include Japan and the United States. Embraced by the administration of Japanese Prime Minister Shinzo Abe, the pact will abolish tariffs on more than 8,500 of the roughly 9,000 items included in the agreement, including most farm products — with the exception of rice. The pact is likely to be ratified by member nations next year, and most tariffs and protections would be phased out over a number of years.

Across Japan, farmers and farm officials scramble to avoid a potential crisis. Last year, the Abe administration  created four special farming zones — including one in Niigata — where regulations were eased and  officials were encouraged to experiment with ways to boost the industry.

Goto is an early beneficiary. He formed his own farming company, thanks to streamlined bureaucratic rules. He negotiated an agreement with the nation’s largest convenience store chain, Lawson, to buy the entire crop from about one-third of his acreage, bypassing the cumbersome and costly cooperative distribution system. He grows just rice but plans to branch out to vegetables soon.

“Income instability is one of the biggest problems all farmers are facing,” said Goto, who spent a year in California on a training program after graduating from agricultural school in Japan. “The stable revenue stream that I’ll get from Lawson is one of the main attractions.”

Problems remain. Goto has 37 acres under cultivation, big by Japanese standards but  too small to achieve significant economies of scale. Nor does Goto own any of the land. Most is leased from retired farmers who are reluctant to sell.

“It is very difficult to put together enough land to achieve economies of scale in Japanese farming. We need to have larger-scale operations, not just family farms,” said Fujio Tsubokawa, managing director of the Niigata City Agri Park, an educational and promotional facility.

But Goto said he’s encouraged: “I think there is going to be a dramatic change for the better."