Simulation Analysis of Community Farming: Is there any room for growth in Japanese rice farming?

Author Name SAITO Keiji  (The National Institute of Science and Technology Policy (NISTEP)) /OHASHI Hiroshi  (Faculty Fellow, RIETI) /NISHIMURA Kiyohiko  (Bank of Japan)
Creation Date/NO. February 2010 10-J-009
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To what extent could productivity of Japanese rice farming be improved, if farmers were to cooperatively manage their rice production at the rural community level? Using the census data of 1990, 1995, and 2000, this paper estimates production function of individual farmers, and uses the estimates to simulate the productivity of counterfactual community rice farming. Simulation results indicate that production costs would decrease by approximately 60 percent, from 5.04 to 1.91 trillion yen in a total of 42 prefectures. While community farming would improve productivity of rice production through the effect of scale economies, it would not be sufficient to save the majority of Japanese rice farmers from the chronic state of deficit.