Report No.240803
Vol.24 No.8 April 2007

- Domestic -

Tariff Elimination for Agricultural Products Decreasing Japan's Food Self-Sufficiency Ratio to 12%

-MAFF Estimates Decrease of Agricultural Production Value by 40% and Unemployment of 37.5 Million-

On February 26, the Ministry of Agriculture, Forestry and Fisheries presented its estimate that the domestic agricultural production value would decrease by approximately 3.6 trillion yen if tariff and other border measures for agricultural products in Japan were decided to be totally lifted during the international negotiations for World Trade Organization (WTO) and Economic Partnership Agreements (EPAs) in particular. This accounts for some 42% of the total agricultural production value. As a result, the food self-sufficiency ratio, that is already as low as around 40%, would dramatically drop to 12%, bringing about the complete collapse of the food security. The ministry showed its estimate to the Working Group for EPAs and Agricultural Reform under the Council on Economic and Fiscal Policy. The ministry will seek the understanding about the need to exclude rice, wheat, barley, dairy products, sugar and other sensitive products from an agricultural product list for a large-scale market opening as a result of WTO agriculture negotiations and for tariff elimination due to EPA negotiations.

The estimate was made at the request of private-sector members of the council that seek the "elimination of border measures", and based on the assumption that the financial burden and other additional actions would not be taken and that the domestic demand would remain the same.

The significant decrease in the domestic agricultural production by 40% was attributable to a prediction that a large number of items would lose their market share; mainly rice, wheat, barley, sugar, beef, dairy products and fruits to be processed whose domestic prices are much higher than those in foreign countries.

As the contradiction of the domestic agriculture in Japan, the impact should extend even to the agricultural production materials, feeds, agricultural machinery and other manufacturing industries as well as a transport sector. The decrease in the gross domestic product (GDP) is estimated to reach around 9 trillion yen, and the employment opportunities for approximately 3.75 million people, accounting for 5.5% of total number of persons employed, might be lost mainly in rural areas.

The area most severely hit would be Hokkaido, followed by Tohoku, Kyushu, Okinawa, Chugoku and Shikoku, all of which should be affected more seriously than the national average. On the other hand, the local economy in Kanto, Chubu and Kinki that contain a metropolitan area would experience a relatively small impact. The ministry pointed out that it could lead to the widening regional divide.

Estimated impact of lifting tariff for agricultural products

・Food self-sufficiency ratio
Decrease from 40 to 12%

・Domestic agricultural production
Decrease by 3.6 trillion yen

・Employment opportunity
Loss of the opportunities for about 3.75 million people

・Planted area
Decrease by 2.72 million ha throughout Japan
(Accounting for 60% of overall farm land)

Decreased Production by Item

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