RIETI Report October 2003

Toward Sustainable Agriculture <RIETI Featured Fellow> YAMASHITA Kazuhito

This month's featured article

Toward Sustainable Agriculture <RIETI Featured Fellow> YAMASHITA Kazuhito

YAMASHITA KazuhitoAdjunct Fellow, RIETI

Greetings from RIETI

Those who enroll in the acting department at The Japan Academy of Moving Images, established by the country's acclaimed film director Shohei Imamura in 1986, might be slightly surprised to find that the curriculum sees them spending one week of their first year on a farm learning how to grow rice. Imamura, who has always been renowned for his anti-establishment approach, believes that actors, whose work it is to create characters, should respect and have much to learn from humankind's most essential and ancient act of creation - agriculture. An act which has existed even longer than was previously thought, as this month's discovery by a team of archeologists from the Chungbuk National University in South Korea of 15,000-year-old burnt grains of rice might prove. These relics from the past emphasize the reverence due to the age-old ritual of growing rice, which even today is responsible for feeding over two-thirds of the world's population. However, the somewhat far-fetched idea of the earth's resources running out is increasingly becoming a reality, and doubt is being cast on whether or not present agricultural practices will be able to survive for much longer. RIETI Report had the pleasure of speaking with Senior Fellow Kazuhito Yamashita, learning the history of Japan's policy on agriculture, and hearing about the current issue of maintaining a sustainable one. (DC)

RIETI FELLOWS NOW

YAMASHITA Kazuhito
Mr. Yamashita read Law at the University of Tokyo before joining the Ministry of Agriculture, Forestry and Fisheries (MAFF), where he has served for the past 26 years. Throughout this time Mr. Yamashita has played a number of roles at MAFF as Director of the GATT Affairs Division, Counselor for the Japanese Mission to the E.U., Director of the Rural Development Division, and Deputy Director-General of the International Affairs Department. In addition, he holds master's degrees in Public Administration and Applied Economics from the University of Michigan, and has worked as Director of the Administrative Division for the Food Agency. In September of this year, Mr. Yamashita joined RIETI in the capacity of Senior Fellow.

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Interview

Toward Sustainable Agriculture

RIETI Report: What is the historical background of Japan's agricultural policy and how does it relate to the current situation?

Yamashita: The foundations of Japan's post-war agricultural policy were established during the period of occupation. To reconstruct and rehabilitate the Japanese economy, which had been totally devastated by the war, the reduction of labor costs was thought inevitable for regaining international competitiveness. Decreasing food prices was regarded as the force that could bring down labor costs, and so, the Japanese government adopted a policy of lowering the price of rice under the Food Control Law. The problem was how to increase rice production, in order to supply the Japanese people with enough food during the period of severe food shortage, while lowering the producer's rice price. There were two policies which solved this next to impossible problem. One was the agricultural land reform, promoted by GHQ/SCAP (the occupying forces), which broke down the landlord-tenant system and emancipated farmland that had been monopolized by a small number of landlords. The property rights of farmland created by this reform, which enabled former tenants to no longer pay rent, gave them a strong incentive for higher production in spite of the low price of rice. The other policy was the adoption of the famous Priority Production System, under which resources were focused on coal and steel, and the production of chemical fertilizers increased as a result. Therefore, despite the low price of rice in early post-war Japan, production of rice was markedly increased.

However, the enactment of the Agricultural Basic Law in 1962 became a turning point which changed this post-war agricultural policy. The primary purpose of this law was to expand the scale of farm households and increase productivity, thus strengthening the competitiveness of Japanese rice in the international market. Structural reform was necessary for achieving this goal, however, the actual policy taken was far from structural and the Japanese government attempted to boost the profits of producers by increasing rice prices, not by bringing them down as was initially intended. This was successful as an industrial policy, in the sense that it created an effective demand for industrial products in rural areas and contributed to expanding the whole domestic market. As an agricultural policy, however, it was not necessarily successful. Contrary to its initial purpose of expanding the scale of farm households, this policy of keeping the price of rice high has prevented inefficient farmers from leaving the agricultural industry, and the expansion of scale has never happened. Another outcome from the policy of keeping the price of rice high was the disproportionate concentration of rice production. As per capita income increased, our eating habits were westernized in a very short time. Demand shifted from rice to wheat, meat, dairy products and fruit. The Agricultural Basic Law aimed to change domestic production to meet these new demands. If the Japanese government had sincerely put this law into practice, it should have lowered the price of rice while increasing the price of wheat or milk. The actual policy taken, however, was the complete opposite. The result was that the other farm goods became heavily dependent on import. For instance, Japan relies on imports for about 90% of its supply of wheat, and the U.S. and other exporting countries have taken advantage of this policy failure. The natural consequence is a low ratio of self-sufficiency in our nation's food supply, which having dropped to 40% is one of the lowest levels among developed countries.

RIETI Report: The debate over whether private companies should be allowed to enter the agricultural sector or not is now under way. Do you think the entry of private companies will contribute to the stimulation of the agricultural industry and improve Japan's self-sufficiency ratio?

Yamashita: Personally, I think that the entry of private companies into the agricultural sector would be beneficial to the industry, on the condition that land programs which affect agricultural output are redesigned. The reported major objection to participation by the private sector is that they will resell farmland for profit, thus reducing it. I would argue, however, that farmland has already been extensively reduced as a consequence of farmers reselling their farmland. In only a couple of decades the total area of Japan's agricultural land has been cut by 2 million hectares (5 million acres) as a result of haphazard land development, and its conversion to residential property and industrial sites. What allowed this to happen was Japan's farmland policy throughout the post-war years. In contrast, in Europe, a zoning system that clearly separates land according to purpose or use - residential, industrial, agricultural - has become institutionalized. This proves a very effective way of limiting the reduction of farmland. In Japan, though, the operation of zoning laws has been too flexible and they never functioned well in practice. Personally, I recommend that the Ministry of Agriculture, Forestry and Fisheries encourage other ministries and offices to introduce more rigid zoning rules, and then promote the entry of private companies into the agricultural market.

RIETI Report: From a global point of view, what is the most important agricultural issue?

Yamashita: The fundamental question is whether we can maintain a sustainable agriculture or not. Taking the long view, the global food security problem is much more serious than that of Japan's own. As you know, the global population continues to grow and the scale of farm production is expected to keep up with it. However, the prospects for the future are not very bright, and I am afraid that these long-term problems are not discussed enough at the multilateral fora on agricultural issues.

What differentiates agriculture from other industries is that agriculture uses some non-substitutable factors of production. Sunshine, water, and soil; they are indispensable to agriculture, cannot be substituted with anything else, but, unfortunately, are nonrenewable. The key to global food security lies in securing soil and water, yet it is these two factors which are increasingly coming under threat of disappearance. The situation is critical on what are called the "New Continents," for example, the U.S. and Australia. There are three major problems: soil erosion, salinization and exhaustion of groundwater.

A substantial part of the agricultural land in these countries has been seriously degraded, because cultivation by heavy machinery makes farmland more susceptible to soil erosion. The U.S. government considers this a serious issue, and the Natural Resources Conservation Service (formerly known as the Soil Conservation Service) has been tackling the problem. After more than 70 years of study, agricultural production methods which do not damage soil have already been developed. However, American farmers are unwilling to introduce these methods because it costs much more than conventional practices. Of course, in the long-term though, the cost of letting the soil just erode is much higher than introducing new methods. It takes only eleven years to erode one centimeter of surface soil in the U.S. while it takes two to three hundred years for it to accumulate it.

A conservation problem equally as important as that of soil erosion is the salinization and exhaustion of groundwater. Water permeates the ground and is drawn up to the surface again, carrying ground salts with it. The water then evaporates but the salts remain, covering the ground. Salinization refers to the building-up of salts in the soil, where they eventually reach a level that is toxic to plants. Irrigation accounts for the most common agricultural use of water since it takes 1000 tons of water to produce 1 ton of grain. Irrigated farmland, which constitutes only 17% of the total farmland in the world, makes up approximately 70% of the total - including industrial and household - use of water on Earth. Salinization caused by improper irrigation has come to be rather a serious problem in the U.S. and Australia.

The overuse of groundwater is also becoming increasingly severe in the same areas. The excessive use of groundwater has made the groundwater level in the Great Plain drop by 12 meters. That kind of agriculture is very productive, but it is not sustainable.

RIETI Report: Is there any role that Japan can play in improving the situation?

Yamashita: Japan has a long history of paddy field farming - as long as a few thousand years. Paddy field farming is much more sustainable and effective than dryland farming with crop rotation, which is required to avoid detrimental effects on soil fertility. Only one-third of the world's farmland is located in the East Asian Monsoon area, yet it feeds more than two-thirds of the world's population. This is owing to effective rice production through paddy field farming.

Japan should make efforts to contribute to internalizing the cost of agriculture in the world. Also, I would like to emphasize that Japan, as a pioneer in agriculture, can and should play a positive role in alerting these countries to the critical fact that ensuring sustainability is essential to world food security.

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