MAFF Budget Proposal of 2,9672.2 Billion Yen Decided

 

Details of the government's FY 2005 budget proposal were decided by a meeting of the Cabinet on December 24, 2004.  The proposal allocates a total of 82,182.9 billion yen to the General Account budget and 47,282.9 billion yen to general expenditure, i.e. policy-related expenditure. The retrenchment of government spending has had a knock-on effect on the agriculture, forestry and fisheries budget which is to be reduced by 2.8% as compared with the FY 2004 initial budget, to 2,967.2 billion yen, falling below 3 billion yen for the first time in 28 years. In FY 2005, it will account for 6.28% of general expenditure, 0.13 points less than in FY 2004.

 

The share of general expenditure accounted for by the agriculture, forestry and fisheries budget was 7.1% in 2000 but since then has fallen by 0.1-0.2 points every year. The diminishing trend is set to continue in FY 2005, positioned as the start date for a major reform of agricultural policy and administration, which will see the budget cut for a fifth consecutive year.

 

The agriculture, forestry and fisheries budget breaks down into 1,312.4 billion yen of public works expenditure and 1,654.8 billion yen of non-public works expenditure, down respectively by 4.3% and 1.6%.

 

The reason that the greater reduction has been made in public works expenditure is that issuance of government bonds is being restricted as a matter of government policy. The Ministry of Agriculture, Forestry and Fisheries (MAFF) is also shifting its emphasis from public works to non-public works projects. The ratio of the FY 2005 agriculture, forestry and fisheries budget accounted for by public works projects is to be 44.2%, more than 7 points down from 51.5% in FY 2000.

 

At the same time, the FY 2005 budget increases funding in key areas such as direct subsides for farmland in hilly or mountainous areas, establishing new systems in conjunction with the reform of agricultural policy and administration, fostering "core" farming entities, promoting food awareness education, and promoting biomass utilization.

 

FY 2005 Agriculture, Forestry and Fisheries-Related Budget

	FY 2005 (million yen)	FY 2004 (million yen)
Rice policy      Ensuring steady progress of reforms Review of Basic Plan for Food, Agriculture and Rural Areas      Research prior to introduction of cross-product sector measures      Research on measures to preserve resources Proactive agricultural administration      Measures to promote exports Improvement of agricultural infrastructure and farming villages      Improvement of agricultural production infrastructure      Improvement of farming villages Rural development      Grants for direct subsidies for farmland in hilly/mountainous areas Food awareness education      Promotion of food awareness education Research & development      Development of new technology to help Japan overcome international competition and promotion of use of results Funding for institutional loans to "core" farming entities Agricultural mutual relief (insurance) Farmers' annuity pensions Conversion of subsidies to non-project specific grants	241,182   73 103   656   451,916 219,724   21,800   7,098   17,283   553,023 122,004 149,644 138,200	172,574   0 0   398   458,706 256,041   16,800   5,600   12,006   595,063 120,184 149,464 147,000

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MAFF Finalizes Organizational Change Proposal

 

On December 25, 2004, the Ministry of Agriculture, Forestry and Fisheries (MAFF) revealed that it had finalized the details of proposed organizational changes for FY 2005. To ensure the safety of livestock products, and strengthen the animal quarantine system that is a precondition for their safety, the Food Safety and Consumer Affairs Bureau will be given an extra division by dividing the present Animal Health and Animal Products Safety Division into an Animal Products Safety Division and an Animal Health Division.

 

The Animal Products Safety Division will be responsible for the safety of livestock and fishery food products and feeds, the Animal Health Division for the health of livestock and for animal and livestock product quarantine.

 

In conjunction with these changes, the Animal Quarantine Service and Plant Protection Stations, which oversee quarantine at the water's edge, are to be strengthened.

 

With a view to integrating the promotion of agricultural extension projects, agricultural education and measures to support women and elderly farmers, the Agricultural Extension Division and the Women and Young Farmers Division of the Management Improvement Bureau will be merged to create an Agricultural Extension and Women Farmers Division.

 

With a view to integrating the promotion of farming village and community measures, including direct subsidies to farmers in hilly and mountainous areas, the Rural Development Bureau's present Planning Department (Keikaku-bu) is to be replaced by a new Planning Department (Kikaku-bu) with a wider brief.

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Moves to Establish Agriculture Funds

 

Moves are afoot to establish investment funds in the agriculture, forestry and fisheries sectors. As early as this summer, the Agriculture, Forestry and Fisheries Finance Corporation (AFFFC) plans to establish an investment company targeting agricultural corporations, which would seek to strengthen their management base, while food product manufacturers are planning to establish a fund that will invest in companies undertaking organic farming. As a result of deregulation, growing numbers of non-agricultural corporations are entering the agriculture sector, and the funds are being established in the hope that the number of promising investment targets will grow.

 

The AFFFC plans to establish its investment company in collaboration with the JA agricultural cooperatives and other bodies. The company will supply funding to agricultural production corporations and other entities planning to increase the scale of their farming operations, by expanding the area of land they cultivate. The projected scale of the company's funds is 1.8 billion yen. The investment company will provide financial support to those buying up land and cultivation facilities from corporations and farmers encumbered with non-performing assets. Another aim is to help farming entities to buy up land of which cultivation has been abandoned as a result of farmers giving up farming, and to foster highly productive farmers.

 

In the private sector, moves are afoot to establish a fund as early as this summer. A number of companies involved in organic farming and hydroponics, crab farming and venison farming are being considered as investment targets and the fund will invest in 10-20 companies.

 

There are also moves to step up investment in newly established venture-type companies. Agribusiness Investment & Consultation, Ltd. (Headquarters: Chiyoda-ku, Tokyo), a company established by a group including the Norinchukin Bank, is to increase its support of companies moving into agriculture for the first time.

 

One factor behind the spate of new funds being established is that the Ministry of Agriculture, Forestry and Fisheries (MAFF) has relaxed regulations on entry into agriculture. MAFF plans to introduce reforms to allow ordinary joint stock companies to use farmland on a lease basis by the end of the year. Food manufacturers and construction companies in rural areas are set to begin cultivating vegetables and other crops.

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Scheme Grouping Subsidized Projects Under 7 Grants Includes "Allocation for Local Proposals"

 

On November 11, 2004 the Ministry of Agriculture, Forestry and Fisheries (MAFF) published the outline of a scheme grouping (non-public works) subsidized projects, of which there have until now been 175, under 7 integrated non-project specific grants. The scheme, to be introduced from FY 2005, groups projects according to purpose, e.g. "ensuring food safety and peace of mind", or "building a strong agricultural sector". To encourage the development of agriculture in a manner that takes advantage of the unique understanding of local governments regarding conditions in their area, MAFF plans to set aside an "allocation for local proposals", under which unique ideas proposed by local governments will be accepted, besides the menu of applications for the grants set out by MAFF. MAFF plans for the "allocation for local proposals" to be up to 20% of the total amount of the total budget for each grant, and is currently discussing final details with the Ministry of Finance. MAFF will present an outline proposal for implementation to prefectural governments by early February 2005.

 

The new system of integrated grants will not tie municipal governments to the kind of minute conditions attendant on subsidized projects. Rather, it will allow them to combine the grants in a flexible manner, to suit their own agricultural development objectives.

 

Furthermore, the "allocation for local proposals" is intended to give municipal governments still greater freedom in their undertakings and will allow the grants to be applied to a wide range of "soft" projects not included in the menu, such as improvements to allow more efficient use of existing facilities, or surveys.

 

Municipal governments applying for grants will be required to submit plans to MAFF specifying their targets, for example, for the fostering of "core" farming entities or improvements in productivity. MAFF will assess the degree of motivation of municipal governments and decide budget allocation by prefecture, taking into account (i) the level of the targets set, (ii) the organization created to ensure that targets will be met, and (iii) the degree of involvement of local residents and farmers. Just as with the Grant for Production Area Development operated as part of the rice policy measures, MAFF plans to adjust the amount of budget allocations according to the results of each initiative.

 

MAFF states that, "For an application to be accepted, it will no longer be enough, for instance, simply to build a new facility, as was the case under the old system of subsidies. It will be important to give an indication of the overall contribution that the project will make to local agricultural development" (Minister's Secretariat, Budget Division), and expects the system of integrated grants to encourage initiatives led by local governments.

 

Budgets for the 7 Integrated Grants

(billion yen)

Grant for Ensuring Food Safety and Peace of Mind (safety of agricultural products, labeling, food awareness education, etc.)	2.7
Grant for the Creation of a Strong Agricultural Sector (technology, fostering "core" farming entities, rationalization of distribution, etc.)	47
Grant for the Creation of a Strong Communities (infrastructure improvement, farming village development, exchange projects, etc.	46.6
Grant for the Creation of Biomass Recycling Systems	14.4
Grant for Forest Development and Improvement	4.4
Grant for the Creation of a Strong Forestry Sector and Lumber Industry	7.8
Grant the Creation of a Strong Fisheries Sector	15.2
Total	138.2

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Forestry Agency to Support Forest Maintenance by Ordinary Enterprises

 

From FY 2005, the Forestry Agency will be supporting forest maintenance activities undertaken by ordinary business enterprises. The Agency will supply information on pioneering examples and methods to enterprises wishing to undertake forest maintenance and will publicize the enterprise's involvement in the work. It also plans to collaborate with enterprises already engaged in forest maintenance on their own initiative with a view to ensuring that their activities do not simply become an exercise in corporate publicity but that each and every one of their employees becomes a supporter of forest maintenance.

 

This support initiative is part of a "Program for the Promotion of Diversity of Forest Utilization and Tree Planting". It aims to promote understanding of the multi-functionality of forests, which, among other benefits, help to absorb greenhouse gases, and to increase awareness of forest maintenance.

 

The initiative is to be managed by prefectural and municipal governments and forest-owners' cooperatives, among other bodies. It will run for five years, from 2005 to 2009. Funding for support activities will be provided under the Forestry Agency Grant for Forest Development and Improvement.

 

The support initiative was introduced because it was felt that volunteers alone would not provide sufficient manpower to promote awareness and understanding of forest maintenance throughout the Japanese people. A spokesman for the Forestry Agency's Forest Environment Division said, "Our hope is that supporting business enterprises in their corporate citizenship activities will increase awareness among their employees."

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One Year On, MAFF Urges Early Reporting of Outbreaks of Avian Influenza

 

On January 12, it will be a year since the start of Japan's first reported outbreak of a highly pathogenic strain of avian influenza (fowl plague) in 79 years. The route by which the disease came to Japan is uncertain, but it is most likely to have been brought over by migrant birds. The Ministry of Agriculture, Forestry and Fisheries (MAFF) warns that, "Even though every possible countermeasure has been taken, the possibility of further outbreaks cannot be discounted," (Vice Minister of Agriculture, Forestry and Fisheries Mamoru Ishihara) and is urging producers to ensure thorough disinfection and to report any outbreaks without delay.

 

The first outbreak occurred in Yamaguchi Prefecture in January 2004, and was followed by outbreaks in Oita and Kyoto Prefectures. The burden on producers grew as poultry farms subject to restrictions on the movement of poultry and poultry products were forced to keep back large quantities of eggs, etc. In Kyoto Prefecture, the infection spread after one poultry farmer failed to report an outbreak and the resulting rumors led to a fall in consumption of chicken meat and eggs. For this reason, MAFF stepped up its measures against the disease, revising the Law for the Control of Infectious Diseases in Animals to provide heavier penalties for those who fail to declare outbreaks of the disease and compensation for producers who comply with the restrictions on the movement of poultry and poultry products, among other measures.

 

To provide against the unlikely event of the disease spreading over a wide area and not being stopped by the searching out and culling of infected birds, MAFF also doubled its vaccine stocks to provide for the vaccination of 3.6 million birds. MAFF is now striving to increase its stocks of vaccine further still, against the unlikely event of a widespread outbreak of a highly pathogenic strain of avian influenza. However, as vaccination alone cannot prevent the disease entirely, MAFF has not approved the preventative use of vaccines that the industry has requested.

 

On the Asian mainland, an outbreak of avian influenza is still in progress in Vietnam, and the end of outbreaks in China and Thailand has yet to be confirmed. A repeat outbreak of the disease, albeit a strain with lower pathogenicity, was reported at a duck farm in Korea in December 2004.

 

Key Points of Enhancement of Measures Against Avian Influenza

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MAFF to Establish Permanent Sales Outlets for Japanese Agricultural Products Overseas

 

To promote exports of Japanese agricultural products, the Ministry of Agriculture, Forestry and Fisheries (MAFF) plans to establish permanent sales outlets that will serve as antenna shops, chiefly in up-market department stores, in China and several other countries. A spokesman for the Export Promotion Office of the International Affairs Department International Trade and Tariff Division explains, "Trade fairs provide publicity for a short period only. We hope to use [outlets] that are open all year round to promote the flavors of Japan as they change with the seasons."

 

In addition to China, Korea, Thailand and other Asian countries, MAFF is to consider the feasibility of establishing similar permanent outlets in Europe and The United States.

 

In FY 2004, MAFF held trade fairs in China and Thailand that served to heighten interest in exports among producers. MAFF has designated FY 2005 as a "Year for the Establishment of Export Business", and is aiming to promote the transition from exports on an experimental basis to viable business. The Ministry has secured an additional budget allocation of 273 million yen in FY 2005 to help create conditions conducive to exports.

 

One issue in connection with exports is the relatively high cost of transportation owing to the small volume of goods exported. MAFF will promote the joint ownership of export containers as a means of reducing costs.

 

In FY 2004, producers and trading companies worked together to create export models for nashi [Asian pears] from Tottori Prefecture and fishery products from Hokkaido Prefecture. In FY 2005 MAFF plans to invite the proposal of concrete export models for other products and put these at the disposal of would-be exporters.

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Korean Demand for Abolition of IQs on Fishery Products may Impact on FTA Talks

 

Following on from Korea's appeal to the World Trade Organization (WTO) that Japan be required to abolish its import quotas (IQ) on nori [dried pressed laver], it has been revealed that Korea made the further demand, during bilateral talks held in Seoul on December 23, 2004, that Japan should abolish its import quota system with regard to all fishery products. Of the developed nations, only Japan still operates a system that restricts the volume of imports of fishery products. Japan has indicated that it intends to resist the Korean demands, maintaining that the IQ system is in conformity with the WTO system. The dispute is likely to hinder the negotiation of the free trade agreement that the two countries are aiming to conclude by the end of FY 2005.

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Japan and Malaysia Reach Broad Agreement on Agriculture, Fisheries in EPA Talks

 

At informal talks on December 24, 2004 with a view to the conclusion of an economic partnership agreement (EPA) including a free trade agreement (FTA) between their two countries, the Japanese and Malaysian governments reached a broad agreement on the treatment of agricultural, forestry and fishery products. The main points of the agreement include the setting of a tariff-free quota of 1,000 tons for bananas, the reduction of the tariff on margarine and further discussion of the treatment of plywood.

 

The talks, held in Malaysia, December 22-24, involved representatives of the Japanese Ministry of Agriculture, Forestry and Fisheries and the Malaysian government ministries and agencies concerned.

 

Pineapples, a tropical product in which Malaysia has a strong interest, are excluded from detariffication as a sensitive product for Japan. The zero tariff import quota for bananas has been set as part of a set of measures to support small farmers in Malaysia. The Japanese government judged this quota to be appropriate because Malaysia, unlike the Philippines, does not have foreign-owned banana plantations. As regards the problem of illegal logging, against which Japan has urged Malaysia to take action, the two countries plan to issue a political statement to the effect that they will work together to find a solution to the problem.

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MAFF Considers Using Minimum Access Rice in Aid to Areas Hit by Indian Ocean Earthquake and Tsunami

 

On January 4, the government called a meeting of government ministries and agencies concerned with the provision of aid and support of reconstruction in areas hit by the Indian Ocean earthquake and tsunami, at the Prime Minister's Official Residence. The Ministry of Agriculture, Forestry and Fisheries (MAFF) proposed a number of measures including the secondment of experts to assist in the reconstruction of farming and fishing villages and the procurement of rice and other foodstuffs for food aid.

 

On January 5, MAFF established a liaison committee on the Indian Ocean earthquake and tsunami and convened its first meeting. The committee resolved to make all possible haste in requesting the help of business enterprises and the private sector organizations concerned, and also to investigate the possibility of the government using imported rice as food aid if requested by the affected areas.

 

At a press conference on January 6, Vice-Minister for Agriculture, Forestry and Fisheries Mamoru Ishihara confirmed that "minimum access rice" might be used as food aid to the affected areas if aid was required for an extended period. The announcement followed the publication of estimates by international organizations that the affected areas were likely to suffer food shortages for the next six months.

 

MAFF is considering the use of MA rice for food aid purposes because domestically produced rice makes up only a small proportion of government rice stocks. However, the agreement of the exporting countries would have to be obtained for the use of MA rice, and for this and other reasons, it would be some time before it could be shipped as aid. For this reason, if the period during which aid is required turns out to be short it is unlikely that MA rice will be used. Nevertheless, Mr. Ishihara observed that, "According to the World Food Program, the shortage of food is likely to last for about six months," and indicated that MAFF would be consulting the other ministries concerned on the possible use of MA rice.

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Japanese Fruit Highly Rated at Tasting Session in Beijing

 

The Japan External Trade Organization (JETRO) has published the results of a survey carried out at a tasting of Japanese fruit, held as part of its Japanese Agricultural Products Seminar in Beijing, China, in October 2004. Many of the respondents accorded the persimmons, nashi [Asian pear] and grapes, in that order, the top rating of "delicious". As a high proportion of respondents said they purchased Japanese fruit for home consumption on account of its "sweetness", the possibility of targeting fruit exports at this consumer group would seem to merit investigation.

 

The guests at the tasting session included Chinese government officials and fruit buyers. Five types of fruit were tasted: mandarin oranges, apples, nashi, grapes and persimmons.

 

The fruit that received the top rating of "delicious" from the highest ratios of respondents were persimmons (47% of respondents), followed by nashi (45%) and grapes (35%). The persimmons were rated highest overall, receiving the two top ratings of "delicious" or "very good" from the 82% of respondents, for their "taste, sweetness and texture".

 

All the other four fruit also received one of the top two ratings from more than half of the respondents, the scores being 81% for the apples, 78% for the grapes, 73% for the nashi, and 54% for the grapes.

 

In addition to "freshness and juiciness" and "sweetness", the nashi attracted attention on account of their "size". The grapes were appreciated for their "sweetness", "texture" and "aroma". Some respondents also ventured the opinion that they "suited Chinese consumer preferences". Partly because Japanese apples of the "Fuji" and other varieties are already available in China, the ratio of respondents rating the apples as "delicious" was lower, at 21%, but their overall rating was high with 60% of respondents rating them as "very good". The mandarin oranges achieved scores very similar to those produced in China.

 

When asked to state their purpose in buying Japanese fruit, 58% of respondents cited  "home consumption", more than the 40% who cited "to give as a gift", suggesting that there has been an increase in home consumption. Most of those citing "home consumption" were in their 40s and 50s.

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"Plant Factory" to be Set Up in Former Bank Vault

 

From February, the basement of a building in the middle of Tokyo's Otemachi business district, formerly used as a vault by a major bank, will re-enter service as a "rice and vegetable factory". High-tech facilities including computer-controlled artificial lighting and temperature control systems will be used to grow tomatoes, lettuce, and other vegetables without agricultural chemicals. An employment agency is setting up the "factory" with a view to giving young people who have yet to find employment and older workers who have been made redundant the opportunity to gain experience of farming. The central Tokyo location was chosen for its convenience of access. Depending on the results of the first harvest this spring and the number of applicants, the agency says it may set up larger vegetable factories in other central Tokyo buildings and begin production on a commercial scale.

 

The factory is a joint venture between Kanto Employment Creation Organization, Inc. (KECO), an employment agency set up jointly by some 30 companies including Sony Coporation, Canon Inc. and Pasona Inc. (the major temporary staff agency). The two companies introduce experienced technicians made redundant from major corporations to small business enterprises. Judging that agriculture has the potential to absorb excess labor in the future, they have decided to set up a factory producing vegetables with high added value as an experiment in helping people to find employment in the sector.

 

Vegetables will be grown at the factory using only light-emitting diodes (LED) and other artificial light sources. This is apparently the first "fully controlled" plant factory to be set up in a building in central Tokyo.

 

The factory will produce flowers and herbs as well as a range of fruit and vegetables including tomatoes, crisp head and butter head lettuces, and strawberries, in a space measuring approximately 1,000 square meters. The operators also plan to create terraced fields and grow rice. The factory will be computer-controlled and the need for agricultural chemicals will be avoided by spraying the plants with nutrient solution and piping in carbon dioxide. The chief method of cultivation will be hydroponics, which uses very little earth.

 

Initially, the cultivation work will be handled by people seeking employment in agriculture, including a number of young people who were formerly casual part-time workers. All have undergone practical training in agricultural work at a training center for would-be agricultural workers operated by KECO in Ogata-mura, Akita Prefecture. Around 100 former salaried workers of middle to high age and former casual part-time workers have undergone training at the center since 2003. At present, outdoor training activities have to be suspended during the winter, but in future the trainees will be able to continue studying cultivation techniques at the vegetable factory.

 

The factory will also be open from 10 a.m. to around 9 p.m., to allow people on their way home from work to gain first-hand experience of high-tech agriculture. Those who wish to seek employment in agriculture will be invited to apply to join the full training program.

 

Keyword: Plant Factory

An indoor factory-type facility where conditions such as humidity, light, carbon dioxide concentration, supply of nutrient solution, etc. are artificially controlled, making it possible to grow vegetables, etc. all year round, regardless of the season. This approach makes it possible to grow large quantities in a limited space and meet market demands with efficiency. There are two major types of plant factory — the "fully controlled" type, which use artificial light sources alone, and the type that also use natural light.

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Scientists Find Mulberry Leaves Have Deodorant Effect

 

Tests have revealed that mulberry leaves have a deodorant effect. When added to livestock feeds and pet foods, the leaves reduce the offensive smell of excreta and could be used by humans if made into a drinkable preparation. The scientists who made the discovery are now working to identify the substance responsible for the odor-suppressing effect.

 

The discovery was made by Norihisa Kitahara, Head of the Ecological Grassland Management Laboratory at the National Agriculture and Bio-Oriented Research Organization (NARO) National Institute of Livestock and Grassland Science (NILGS), and Senior Researcher Seiji Nakao. It has been known for some time that mulberry leaves help prevent high blood pressure and cholesterol, but this is the first time that a deodorant effect has been confirmed.

 

The researchers began their experiments in 2004, having heard that grooms in racing stables found that when mulberry leaves were added to racehorses' fodder, the smell of their dung was reduced and mucking out was far less unpleasant. The smell of the dung of five cows given mulberry leaves and five cows that had eaten grass alone was compared, immediately after defecation. The smell of the dung from the cows that had eaten mulberry leaves was far weaker than that of the dung from cows fed on grass alone.

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"Production Information Disclosed JAS" to Apply to Rice and Vegetables

 

A system that will give consumers access to the "production history" of rice and vegetables — area of origin, what agricultural chemicals and fertilizers were used in their production, etc. — comes into full-scale operation this spring. The system allows producers of agricultural products that meet the necessary conditions to display the "Production Information Disclosed JAS" (Japan Agricultural Standard) mark on their packaging. The introduction of the system is to be given formal approval by the General Meeting of the Research Committee for the Japanese Standard of Agricultural and Forestry Products in February.

 

Unlike beef, whose production and distribution history must be traceable by law, the adoption of this standard is optional for producers, but the Ministry of Agriculture, Forestry and Fisheries (MAFF) Food Safety and Consumer Affairs Bureau expects the system to catch on among farmers, observing that consumer demand for safety and peace of mind with regard to food is high.

 

The "Production Information Disclosed JAS" standard was drawn up in 2003 with the aim of promoting accurate communication of the production history of foods to the consumer. From this spring, the system becomes applicable to almost all fresh agricultural products, including rice, vegetables, fruit, miscellaneous cereals, and beans and pulses.

 

The information disclosed will include the names and number of applications of agricultural chemicals and fertilizers used, as well as the producer's name, production area and date harvested. It will also be possible to append a note to show by what proportion the standard amount of agricultural chemicals used in the production area was reduced when growing the product.

 

Consumers will be able to look up production information on the Internet and other media, using codes displayed in-store or on product labels.

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