Report No.240101
Vol.24 No.1 September 2006

- Domestic -

Synopsis Finalized for Implementing Agricultural Policy Reform - Rice Production Adjustment Shifts to New System

The government and the ruling parties finalized a 'Synopsis for Implementation of [new] Farming Businesses and Incomes Stabilization Measures etc.' on July 21, that has translated the scheme of agricultural policy reform into concrete terms. Under the synopsis, rice production adjustment from 2007 crop will be shifted to a new system of supply and demand adjustment, which will be carried out by producers and agricultural organizations, the task hitherto implemented under leadership of the government. 

The three pillars of agricultural policy reform are 1) non-product specific farming business stabilization measures, 2) measures to promote rice policy reform and, 3) agricultural land, water and environment measures for enhanced resource conservation, with a total budget of the scale of 413 billion.

The budget related to production areas development measures, which goes to support conversion of rice to other crops and was the focal point of argument in drafting the synopsis, was secured at 160 billion*, a level almost equivalent to the present scale of budget as is actually outlaid. This production areas development support is introduced along with measures to deal with surplus rice under the new supply and demand adjustment system. The synopsis provides, as rice measures, for a countermeasure against a big drop in revenue of core farmers which may be caused by fall in prices due to surplus. 
  * See footnote of the table below.

As regards non-product specific farming business stabilization measures created for core farmers, the synopsis provides for fixed unit amount of payment of the grant to compensate for unfavorable production conditions for three years to secure stability of core farmers' farming businesses. Under the product specific measures applied so far the unit amount of support payment has been determined each year based on the cost of production, with which the producers had not been happy because "the unit payment fell in response to reduced cost achieved by producers' efforts." 

Benefits to core farmers are expanded this time so they could serve as an enzyme to facilitate the establishment of core farmers' businesses, i.e. the top priority of the agricultural policy reform. A comprehensive set of measures to upbring and secure core farmers will be newly installed (with a budget of 18 billion) for granting of aid to expanded rice production adjustment where there has not been production of rice conversion crops. The measures will also include interest-free loans to be newly created as well as aid for introduction of farm machinery which is also to be newly created.

Budget Scale of Farming Businesses and Incomes Stabilization Measures etc.
For FY 2007

Note: Sum of shoulder numbers 1-3 (7+148+5) = 160

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