RIETI Report March 2006

Adopting Aggressive Full-Fledged Agricultural Reform

Greetings from RIETI

The trend of tenacious daikon (Japanese radishes) sprouting in unlikely places has hit greater Tokyo. In the residential district of Higashikurume city, far from any farming lands, a daikon that began its life under street asphalt has worked its way up through the wooden lid of a ditch and now measures about 4 centimeters in diameter, and displays a top of healthy green leaves. No one has claimed knowledge of how the seed may have been planted and why this daikon chose such an unlikely place to grow. Daikon is a staple of the traditional Japanese diet; most commonly shaped like a giant white carrot, it is known for its subtle spiciness and served grated, pickled, in soups, salads and many dishes. It can grow over 30 centimeters in length. The original heroic daikon emerged through the roadside asphalt in Aioi, Hyogo prefecture in Western Japan last autumn. The dokonjo daikon (daikon with fighting spirit) as it was affectionately named, inspired a dedicated homepage, a 48-page picture book titled Ganbare Dai-chan (Keep Fighting, Little Daikon) and legions of supporters. Sadly, its head was lopped off by a vandal one November night, causing it to whither. Perhaps out of remorse, the top was secretly returned a few nights later. Scientists were hoping to extract seeds or DNA from its remains, presumably to produce similarly hardy offspring. Will Tokyo's gutsy daikon live a stronger and safer life? We will see.

These inspirational daikons have shown fight in demanding conditions, but most of Japan's agricultural products are not internationally competitive. RIETI Senior Fellow YAMASHITA Kazuhito, an expert on agricultural policy reform, has been addressing structural problems of Japan's agricultural protection and advocating the introduction of a strategically-focused direct payment scheme to replace tariff-based agricultural protection. His arguments appear highly significant not only for improving international competitiveness of Japan's agricultural products but also overcoming current difficulties in WTO agricultural negotiations. Dr. Yamashita recently published an article, "Honkaku tekina nosei kaikaku no kansei wo nozomu" (Expectations for Completion of Full-Fledged Agricultural Policy Reform) on the request of the Agriculture, Forestry and Fisheries Research Division, Research Bureau of the House of Representatives. This month RIETI Report shares his ideas on reforming Japanese agricultural policy.

RIETI Featured Fellow

Dr. Yamashita has been Senior Fellow at RIETI since 2003 and his research covers a variety of trade-related issues with a focus on agricultural policy. Prior to joining RIETI, he served on the Ministry of Agriculture, Forestry and Fisheries (MAFF) for 26 years and held several key positions such as Deputy Director-General of the International Affairs Department, Director of the Rural Development Division, Counselor for the Japanese Mission to the EU, and Director of the GATT Affairs Division. Dr. Yamashita has produced numerous publications including WTO to nosei kaikaku (WTO and Agricultural Policy Reform), Food and Agriculture Policy Research Center, 2000; Kokumin to shohisha jushi no nosei kaikaku (Agricultural Policy Reform for Japan and Its Consumers: To Better Steer WTO and FTA Negotiations), Toyo Keizai Inc., 2004; "Nogyo gijutsu kenkyu kaihatsu no keizaigaku" (The Economics of Research and Development in Agricultural Technology), The Shukan Norin June 15, 2005. He holds a Ph.D. in Agriculture from The University of Tokyo, master's degrees in Public Administration and Applied Economics from the University of Michigan, and LL.B. from The University of Tokyo.

For his recent activities at RIETI, click here

Expectations for Completion of Full-Fledged Agricultural Policy Reform

Senior Fellow, RIETI


In moves to strengthen international competitiveness the EU is lowering prices for farm products and introducing a direct payment scheme. For structural reform, it will be necessary to reduce prices and adopt direct payments limited to eligible farms. In order to adopt aggressive agriculture policy there is vital need to carry out structural reform and achieve "robust farming."

This latest round of reforms represents an important first step toward full-fledged reform in Japanese agricultural policy. From the perspective of rehabilitating the country's agriculture through structural reform, however, this plan is incomplete, and it will be important to continue the reform process.

This article was published by the Agriculture, Forestry and Fisheries Research Division, Research Bureau of the House of Representatives in "Scholars' Viewpoints on 'Aratana keiei shotoku antei taisaku to'(New Measures for Stabilizing Farming Household Incomes)" (January 2006).


I served in the Ministry of Agriculture, Forestry and Fisheries (MAFF) for nearly 30 years, but looking back now I must say with regret that the only truly notable progress achieved during that time was the introduction of direct payments to farmers in hilly and mountainous areas and other agricultural districts. In my position at the Research Institute of Economy, Trade and Industry (RIETI) I am now observing the nation's agricultural policy from the sidelines. Although I do not believe that Gresham's law "bad money drives good money out of circulation" can be applied to MAFF, according to the conclusions of a certain research study it would appear that, in Japan: "...many members of the top management of superior companies seem to have spent some time on an offshoot during their careers. Those who have faced hardships while working in peripheral departments or subsidiaries have generally been more successful in carrying out reforms than those who were swept along in the company's mainstream and moved smoothly up the ranks. It is for the very reason that such people had the opportunities to view companies objectively from the outside that they were able to perceive the true essence of corporate operations with clear presence of mind, thereby discovering the irrational points that demand reform" (Hiroaki Niihara). Both former Minister of Agriculture, Forestry and Fisheries Hiroo Wada and former MAFF Vice-Minister Takekazu Ogura, two men instrumental in steering postwar agricultural policy in Japan, experienced imprisonment, demotion and other setbacks earlier in their lives. In this sense, it is my hope that the opinions expressed here, in the aforementioned capacity of observer, will prove of some use in the development of future agricultural policy.

1. The Need for Agricultural Policy Reform

Although Japanese agriculture has been protected over the years by high farm produce prices supported by tariffs, the state of the country's farming has continued to decline. Agriculture as a percentage of GDP has slipped from 9% in 1960 to only 1% at the present, while the level of elderly farmers (age 65 or over) has risen from 10% to 60% during the same period. Full-time farming households have declined from 34.3% to 19.5% of all farming households, in contrast to the increase in "class 2 part-time farmers" from 32.1% to 67.1%. Rice, which was cheaper than the international market levels until 1953, has seen a stark decline in its global competitiveness due to protection under an almost 800% tariff and other measures. Japan's food self-sufficiency rate has plummeted from 79% to 40%.

In order to cope with the tariff reductions demanded in World Trade Organization (WTO) and free trade agreement negotiations, it has proved necessary to lower Japan's domestic farm produce prices. (continued...)

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KANEMOTO Yoshitsugu, Faculty Fellow, RIETI / Professor of Economics, The University of Tokyo
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This month's featured article

Adopting Aggressive Full-Fledged Agricultural Reform

YAMASHITA KazuhitoSenior Fellow, RIETI

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