Chapter 15. Japan

Support to agriculture

Japan has gradually reduced its support to agriculture but the change has been moderate. Support to producers (PSE) remains high and averaged 47% of gross farm receipts in 2016-18. This is down from the 63% thirty years ago (1986-88) but is still 2.5 times higher than the OECD average. Market price support (MPS) remains the main element of producer support, and is mainly sustained by border measures in particular for rice, pork and milk. The share of potentially most distorting form of support (MPS, support based on output and variable input use - without any input constraints) has declined, but it still accounts for 86% of PSE. The share of direct payments decreased in 2018 due largely to the end of rice farm income support. Budgetary support to producers is mostly focusing on area and income based payments.

The total support estimate to agriculture (TSE) represents 1% of Japan’s GDP in 2016-18. PSE represents 82% of TSE, while 18% went to the support for general services provided to agriculture (GSSE). The majority of the GSSE expenditure (86%) finances the development and maintenance of agricultural infrastructure, while 11% is used to finance the agricultural knowledge and innovation system.

Main policy changes

The administratively allocated rice production quotas, in place since 1969, were abolished in 2018. This policy change is expected to raise competitiveness of the Japanese rice farm sector by enabling farmers to plan their production unrestricted by quota allocation. The government replaced this quota system with providing market information such as rice price, supply, demand, and stocks.

A revenue insurance programme was introduced in January 2019. The programme insures total farm revenue, both taking into account the market volatility and yield fluctuations. The participation to the programme is voluntary. The compulsory participation for rice, wheat, or barley producers under the crop insurance programme was eliminated.

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) entered into force in December 2018 between Japan and five other Asia-Pacific countries (Australia, Canada, Mexico, New Zealand, and Singapore) followed by Viet Nam in January 2019. CPTPP countries represent 13% of the world GDP when fully implemented by the rest of the member countries (Brunei, Chile, Malaysia, and Peru) (World Bank, 2019[1]). Under the CPTPP, Japanese border measures for agricultural products, including tariffs, safeguards and tariff-rate quotas, are eliminated or reduced.

After more than five years of negotiations, Japan and the European Union signed the Economic Partnership Agreement (Japan-EU EPA) in July 2018, which entered into force in February 2019. Japan and the European Union account for 27% of GDP in the world (World Bank, 2019[1]). Japan eliminates tariffs on the European Union’s main agricultural products exported to Japan such as wine, pasta, sugar, confectionary and chocolates. The European Union removed most of its agricultural tariffs at the entry into force of the agreement except a few products such as ice cream and cocoa powder. Tariffs for rice are not subject to reduction or elimination on both sides.

Assessment and recommendations

  • Japan has implemented some agricultural policy reform since the early 2000s, but support to producers remains more than twice the OECD average, and continues to be dominated by market price support (MPS), which gives distorting incentives to agricultural producers.

  • Implementation of the CPTPP and the Japan-EU EPA should provide further incentives for the Japanese agricultural sector to move towards a more market-oriented sector. The reduction of border measures on agricultural products may also contribute to structural change and further productivity growth of the sector. However, the exclusion from trade barrier reductions of some key products such as on rice limits the benefits to be reaped. A gradual reduction of trade barriers across all commodities would allow to maximise the benefits for consumers through lower prices and for farmers through increased flexibility in production decisions.

  • Despite a declining share of rice in the value of production, rice policy continues to be a central aspect of agricultural policy in Japan with rice-related policies accounting for close to 40% of Japan’s support to producers, even though Japan has gradually reduced its direct control of the rice market over the last 25 years. Japan’s termination of the administratively allocated rice production quotas in 2018 has been an important step to provide more incentives to farmers to respond the market signals and potentially lower rice prices.

  • The continued support provided to crop diversification is likely to help reduce abandonment of paddy fields. However, it also incentivises farmers to switch from rice to other crops, thus reducing farmers’ incentives to take advantage of the rice quota abolition.

  • The importance of the newly implemented revenue insurance programme is likely to rise if the number and scale of natural disasters related to climate change increases further. The new insurance programme is also a step to expand the choice of risk management tools for farmers. However, subsidised insurance systems risk crowding out other market-based and, in particular, on-farm risk management.

  • There is significant room to improve the environmental performance of agriculture. Japan has one of the highest nutrient surpluses among OECD countries indicating the potentially high risk of environmental pressures on soil, water and air. Agricultural policy programmes should provide consistent incentives to adopt sustainable production practices. An integrated agri-environmental policy framework with quantitative targets in which all farmers commit to improving their environmental performance should be developed.

  • The revision of the Immigration Control Act opens a new possibility for agriculture and food sectors to address the severe labour shortages and ageing of the population that they have been facing for the past decades. Agricultural labour policy can also focus more on education and skill sets demanded by farmers (entrepreneurial and digital skills, agri-environmental knowledge) to enhance the sector productivity.

Figure 15.1. Japan: Development of support to agriculture
Figure 15.1. Japan: Development of support to agriculture

Note: * Share of potentially most distorting transfers in cumulated gross producer transfers.

Source: OECD (2019[2]), “Producer and Consumer Support Estimates”, OECD Agriculture statistics (database), https://doi.org/10.1787/agr-pcse-data-en.

 StatLink https://doi.org/10.1787/888933937871

Support to producers (%PSE) has declined gradually over the long term. During 2016-18, farm support represented around 47% of gross farm receipts, but remains high compared to the OECD average. The share of potentially most distorting support has decreased only moderately and accounts for 86% of the PSE (Figure 15.1). MPS continues to be the main element of that support. The level of PSE has somewhat decreased in 2018 due to a decrease in the gap between domestic and border prices and reduction of budgetary payments, in particular for rice (Figure 15.2). Support based on individual commodities (SCT) varies greatly by commodity. SCTs above 50% of commodity gross farm receipts are provided for barley, rice, sugar, milk, pork, cabbage and grapes (Figure 15.3). Prices received by producers are on average 78% above world market prices. Expenditures for GSSE were equivalent to 18% of agricultural value added in 2016-18 and were mainly used on the development and maintenance of infrastructure such as irrigation facilities. TSE was 1% of GDP in 2016-18, reduced by more than half since 1986-88.

Figure 15.2. Japan: Drivers of the change in PSE, 2017 to 2018
Figure 15.2. Japan: Drivers of the change in PSE, 2017 to 2018

Source: OECD (2019[2]), “Producer and Consumer Support Estimates”, OECD Agriculture statistics (database), https://doi.org/10.1787/agr-pcse-data-en.

 StatLink https://doi.org/10.1787/888933937890

Figure 15.3. Japan: Transfer to specific commodities (SCT), 2016-18
Figure 15.3. Japan: Transfer to specific commodities (SCT), 2016-18

Source: OECD (2019[2]), “Producer and Consumer Support Estimates”, OECD Agriculture statistics (database), https://doi.org/10.1787/agr-pcse-data-en.

 StatLink https://doi.org/10.1787/888933937909

Table 15.1. Japan: Estimates of support to agriculture
Table 15.1. Japan: Estimates of support to agriculture

Contextual information

Japan is the world’s third largest economy after the United States and the People’s Republic of China (hereafter “China”) with relatively small land area and high population density. Agriculture constitutes a small share in the economy (1.1% of GDP and 3.4% of employment). The agricultural production had an overall downward trend but has been gradually increasing over the past three years. In value terms, the value of livestock in total farm production is 35.1%, followed by vegetables (26.4%), rice (18.7%), and fruits (9.1%) (MAFF, 2018[3]).

Due largely to the country’s mountainous topography, the total agricultural area only represents 12% of total land. About half of agricultural land is rice paddy fields. The agricultural area decreased by more than 10% over the past two decades due to farmland abandonment and conversion to non-farm uses (e.g. residential or commercial uses). The average farm size increased from 1.4 hectares to 2.2 hectares between 1990 and 2015 but remains much smaller than that in other OECD countries. However, concentration of land use to large farms accelerated in the last decade. The share of farms operating more than 10 hectares increased from 34% to 48% between 2005 and 2015. Farms with more than JPY 30 million (USD 0.25 million) of sales accounted for 53% of total output in 2015. The average age of farmers is 66.8 years (MAFF, 2018[4]). The number of commercial farm households and agricultural workers decreased by more than 50% since 1990. With labour leaving the agricultural sector, production levels were sustained by a relatively high rate of total factor productivity growth.

Table 15.2. Japan: Contextual indicators

 

Japan

International comparison

 

1995*

2017*

1995*

2017*

Economic context

 

 

Share in total of all countries

GDP (billion USD in PPPs)

2 936

5 333

10.0%

5.2%

Population (million)

125

127

3.3%

2.6%

Land area (thousand km2)

365

365

0.5%

0.5%

Agricultural area (AA) (thousand ha)

5 038

4 471

0.2%

0.1%

 

 

 

All countries1

Population density (inhabitants/km2)

336

340

48

60

GDP per capita (USD in PPPs)

23 404

43 299

7 642

21 231

Trade as % of GDP

7

14

9.9

14.7

Agriculture in the economy

 

 

All countries1

Agriculture in GDP (%)

1.7

1.2

3.3

3.5

Agriculture share in employment (%)

5.7

3.1

-

-

Agro-food exports (% of total exports)

0.4

0.6

8.1

7.5

Agro-food imports (% of total imports)

12.3

8.5

7.4

6.6

Characteristics of the agricultural sector

 

 

All countries1

Crop in total agricultural production (%)

 76

65 

-

-

Livestock in total agricultural production (%)

 24

35 

-

-

Share of arable land in AA (%)

92

94

33

34

Note: *or closest available year. 1. Average of all countries covered in this report. EU treated as one.

Source: OECD statistical databases; UN Comtrade; World Bank, WDI and national data.

The food self-sufficiency rate was 38% in 2017 on a calorie basis, meaning that more than 60% of Japanese calorie intake depended on imports. Japan is the world’s fourth-largest importer of agro-food products (JPY 6.4 trillion) (USD 57 billion) after the United States, China, and Germany. The United States is the biggest source of imports at 23%, followed by China at 11%, Australia at 7% and Thailand at 6% (UN Comtrade, 2018[5]). The most imported agro-food goods are tobacco, pork, beef, maize, and fresh and dried fruit. The share of agricultural exports in total exports, on the other hand, constitutes only 0.66% (Table 15.2). Most Japanese agricultural exports are directed at final consumers rather than to an intermediate industry use. Processed food products such as alcohol, green tea, snacks, sauces and seasonings account for the majority of Japan’s agro-food exports. Among the unprocessed products, apples and beef are the most exported products.

Figure 15.4. Japan: Main economic indicators, 1995 to 2018
Figure 15.4. Japan: Main economic indicators, 1995 to 2018

Sources: OECD statistical databases; World Bank, WDI and ILO estimates and projections.

 StatLink https://doi.org/10.1787/888933937928

Figure 15.5. Japan: Agro-food trade
Figure 15.5. Japan: Agro-food trade

Note: Numbers may not add up to 100 due to rounding.

Source: UN Comtrade Database

 StatLink https://doi.org/10.1787/888933937947

Agriculture’s share in total energy use was 1.2% in 2016, which is below the OECD average. Greenhouse gas (GHG) emissions from agricultural were 2.6 % of the total emissions — the lowest among OECD countries. The main source of agricultural GHG emissions is methane from rice cultivation (42%) followed by methane from livestock enteric fermentation (22%) and Nitrous Oxide from fertiliser application (16%) (MOE; GIO, 2018[6]). Japan’s nitrogen and phosphorus balance are one of the highest in OECD. Nitrogen balance in 2013-15 was 177.7kg/hectare, with a high degree of fertiliser use and livestock production, combined with a low share of pastureland (Shindo, 2012[7]). Phosphorus balances have been very high as well, linked to soil-type related fertilisation needs identified in the past (FAO, 2015[8]).The volume of agricultural water use remains stable for the past few decades. Japanese agriculture uses 68% of water of which 94% was directed for paddy field irrigation.

Figure 15.6. Japan: Composition of agricultural output growth, 2006-15
Figure 15.6. Japan: Composition of agricultural output growth, 2006-15

Note: Primary factors comprise labour, land, livestock and machinery.

Source: USDA Economic Research Service Agricultural Productivity database.

 StatLink https://doi.org/10.1787/888933937966

Table 15.3. Japan: Productivity and environmental indicators

 

Japan

International comparison

 

1991-2000

2006-2015

1991-2000

2006-2015

 

 

 

World

TFP annual growth rate (%)

1.6%

2.3%

1.6%

1.5%

 

 

OECD average

Environmental indicators

1995*

2017*

1995*

2017*

Nitrogen balance, kg/ha

166.4

177.8

33.2

30.0

Phosphorus balance, kg/ha

69.9

62.1

3.7

2.3

Agriculture share of total energy use (%)

1.3

1.2

1.9

2.0

Agriculture share of GHG emissions (%)

2.7

2.6

8.5

8.9

Share of irrigated land in AA (%)

54.5

54.4

-

-

Share of agriculture in water abstractions (%)

65.9

67.6

45.4

42.5

Water stress indicator

21.5

19.3

9.7

9.7

Note: * or closest available year.

Source: USDA Economic Research Service, Agricultural Productivity database; OECD statistical databases; FAO database and national data.

Description of policy developments

Main policy instruments

Japan maintains a system of high border protection and domestic price support for many of its agricultural products. Tariff-rate quota (TRQ) systems with high out-of-quota tariffs are applied to major commodities such as rice, wheat, barley and dairy products. Administered prices are implemented to calves, together with an import tariff. For rice, a TRQ of 682 200 tonnes (milled) is applied. The maximum mark-up for rice imports is set at JPY 292 (USD 2.6) per kg and the out-of-quota tariff-rate of rice is JPY 341 (USD 3.0) per kg. Rice import is conducted through state trading fulfilling Japan’s minimum-access commitment under WTO Agreement on Agriculture.

Japanese tariffs on agricultural products are higher than those on non-agricultural products. On average, they amounted to 13.3% in 2017, compared to 2.5% for non-agricultural products. Agricultural tariffs vary considerably among products with over 36% duty free and 2% above 100% (ad valorem equivalent); 11.6% of agricultural tariff lines are non-ad valorem (WTO, 2018[9]).

For paddy-field farming, a crop diversification payment, which is conditional on conserving a favourable environment for paddy fields, is paid to farmers who switch their use of paddy fields from table rice production to other crops (e.g. wheat, soybean). The income support payment for upland crops (wheat, barley, soybean, sugar beet, starch potato, buckwheat and rapeseed) are provided through area- and output-based payments. The area payments are based on current planting, while the output-based payments are based on the volume of sales. Subsidy rates for both payments vary by quality and variety.

The revenue insurance programme launched in 2019 provides a safety net for farmers. The programme compensates the loss of farm revenue stemming from both market and natural causalities, relative to a benchmark based on the previous five years’ revenues. Commodity insurance is available for a range of products (rice, wheat, barley, livestock commodities, fruit, field crops, silkworms). This voluntary programme mainly covers yield losses due to natural disaster but some products are also insured against deterioration of crop quality and production equipment. Government support covers around 50% of the insurance premium, and farmers can now freely choose any risk management programme. However, the revenue insurance programme cannot be combined with other risk management programmes such as crop insurance, the Farm Income Stabilization Programme, or commodity-specific price stabilisation programmes.

The income support payment for upland crops (both area- and output-based payments) and the income based payment are available for so called “business farmers” (Ninaite), defined as a farm management unit which is, or aims to be, an efficient and stable farm. There are three types of business farmers: certified farmers and certified new farmers are those whose farm management plans are approved by the authorities; and community-based farm co-operatives who are groups of farm households which conduct farm management collectively. To attract younger generations, Japan provides a subsidy to new young farmers during a training period (maximum of two years) and the initial operation period (maximum of five years). Up to JPY 1.5 million (USD 13 582) is paid annually to eligible trainees or farmers.

The farmland banks (Public Corporations for Farmland Consolidation to Core Farmers through Renting and Subleasing) have been established since 2014, aiming at farmland consolidation. These banks improve farmland conditions and infrastructure if necessary, and then lease the consolidated farmland to business farmers. Subsidies are provided to land owners who lease their lands to the farmland banks.

Public investment has long been implemented to improve rural infrastructure, such as farmland (e.g. land re-adjustment), agricultural roads, and irrigation and drainage facilities. A direct payment for environmentally-friendly agriculture is provided to those who adopt farming practices that contribute to preventing global warming or conserving biodiversity in conjunction with reducing the application of chemical fertilisers and chemical pesticides by more than half of conventional farming in the region. In 2018, the requirement for this payment was revised: complying with Good Agricultural Practice (GAP) is now an additional requirement for receiving it, so that farmers now need to participate in training and submit an activity report to assess the implementation of GAP. Direct payments are provided to farmers in hilly and mountainous areas with the aim to avert the abandonment of agricultural land and to contribute to environmental protection and landscape preservation.

In ratifying the Paris Agreement on Climate Change, Japan has committed through its Nationally Determined Contribution to reducing its emissions on an economy-wide basis to 26% below 2013 levels by 2030. The government plans to decrease GHG emissions from the agricultural sector in several ways: fuel consumption is to be reduced by promoting energy-saving equipment; paddy field water is to be managed in a way to reduce methane emission; the fertiliser use efficiency is to be improved; and carbon sequestration in farmland is to be enhanced. On climate change adaptation, the government has established the adaptation plan including a road map until 2025 to look at how to prepare and build resilience to the effects of climate change.

Japan has seventeen Economic Partnership Agreements (EPAs) in force (Singapore, Mexico, Malaysia, Chile, Thailand, Indonesia, Brunei Darussalam, Association of Southeast Asian Nations (ASEAN) , Philippines, Switzerland, Viet Nam, India, Peru, Australia, Mongolia, CPTPP, and the European Union). Japan is currently engaged in several other EPA negotiations including bilateral negotiations with Colombia and Turkey, and plurilateral negotiations including the Japan-China-Korea FTA, the Regional Comprehensive Economic Partnership (RCEP).

Domestic policy developments in 2018-19

The administratively allocated rice production quotas, in place since 1969, were abolished in 2018. The programme controlled the supply of rice by allocating a production quota to rice farmers, which would support the price of rice. The termination aimed to raise competitiveness of the Japanese rice farm sector by enabling farmers to plan their production unrestricted by quota allocation. The government replaced the system with providing market information such as rice price, supply, demand, and stocks.

The government maintains support that incentivises crop diversification. Subsidies are paid to farmers who shift from table rice production to other crops (wheat, soybeans, and rice for livestock and processing) using their paddy fields. For instance, the production of livestock feed rice can receive a maximum of JPY 105 000 (USD 950) per 10 ares. The government aims to increase the production of livestock feed rice to 1.1 million tonnes by 2025 – ten times more than 2015, and plans to provide JPY 330 billion (USD 3 billion) in 2019.

A new payment scheme for processing milk under the Revised Act on Livestock Industry Management Stabilization was implemented in April 2018. Due to price disadvantages for fresh milk used for processing, payments were previously made to farmers who ship fresh milk to designated dairy organizations, but the scheme now also allows any dairy farmers producing fresh milk for processing to receive the compensatory payment. The payment rate was set at JPY 8 310 (USD 75) per tonne, and it will be allocated for 3.4 million tonnes in total. Dairy farmers and fresh milk collectors receiving the payment are required to submit their “annual marketing plans” to the government.

The revenue insurance programme, a new comprehensive risk management tool for farmers, was introduced in January 2019. The programme compensates the decrease of farm revenue by both market volatility and yield fluctuation. The revenue is calculated at farm level rather than regional level or by commodity as in the past programme. In particular, the benchmark revenue is calculated based on the average of the last five years for each farmer. If the revenue during the insured period falls below 90% of its benchmark, the farmers can be compensated up to 90% of the revenue loss relative to the benchmark. The participation to the programme is voluntary and all agricultural commodities are covered with the exceptions of beef cattle, veal calves, hogs, and eggs, which are covered by separate income loss support systems. The compulsory participation for rice, wheat, or barley under the crop insurance programme was eliminated in favour of a voluntary participation. The government covers 50% of the insurance premium and 75% of the reserve fund.

Related to the income loss support systems for beef and hog, the floor level of price stabilisation bands was terminated in December 2018. Instead, from the date of entry into force of the CPTPP, income loss compensation ratio under the legislated Beef Cattle Fattening Business Stabilization Program and the Hog Growing Business Stabilization Programme was raised from 80% of the gap between average production cost and average gross revenue to 90%. The government contribution ratio of the Hog Growing Business Stabilization Programme was increased from 50% to 75%.

The 2018 Growth Strategy aims at 80% of national farmland to be used by business farmers by 2023, but the share remains 55.2% at the end of FY2017. The government conducted reviews and plans to simplify the lending and renting scheme for business farmers in order to accelerate the accumulation and consolidation of farmland. In 2018, the government revised the Agricultural Management Framework Reinforcement Act. Approximately 20% of farmland in Japan is unregistered, and their current owners are unknown— preventing the consolidation of farmlands. The revised Act allows for farmland jointly owned, but where one or several of these owners are unknown, to be rented to Farmland Banks1 without unanimous agreement by those unidentified co-owners.

The Agricultural Land Act (ALA) regulates use of farmland. Previously, if farmers cover their farmland with concrete even for agricultural purposes, the land lost its farmland status that carries preferential tax treatment. The government revised the ALA in May 2018 to allow farmers to maintain the status of farmland with the use of concrete on the farmland, facilitating the installation of new agricultural technologies on their production sites (robots, machines, hydroponic culture).

The 2018 National Growth Strategy aims at most business farmers in Japan utilising digital data by 2025. The Agricultural Data Collaboration Platform Council (WAGRI) was fully launched in April 2019. It is a platform for agricultural data collaboration to co-ordinate, share and supply agricultural data among users and providers in different fields. As various agricultural data services have been emerging, the government, with the participation of stakeholders, created the Guideline on Data Contract in Agriculture in 2018 for agriculture related data contracts. The guideline contains several templates of data contract and legal commentary in order to build confidence of producers in activities operated by different players on the digital space.

Japan revised the Act on Urban Farmland Lease Facilitation in 2018 to encourage urban farmland owners to either continue farming their land or lease it to those who would. Regular farmland leases are renewed automatically unless the owner tells the lessee otherwise. This discouraged landowners to rent out their farmland as they feared endless lease cycles. The revised Act excluded the application of the rule to urban farmland. The revision also allowed those who inherit urban farmland to defer paying inheritance tax until the farmland is sold or converted for non-agricultural use.

The government’s engagement to agricultural export promotion continues to be an important policy agenda. In 2018, the value of agricultural product exports from Japan increased to a record high of JPY 566 billion (USD 5.1 billion) – twice that of 2012. In 2018, the government created the Global Farmers/Fishermen/Foresters/Food Manufacturers Project (GFP). The project provides export consultations for registered producers seeking export business opportunities, and services to match producers with export traders. The GFP is formulated in line with the government’s target to increase agricultural related exports to JPY 1 trillion (USD 9 billion) by 2019.2

A series of large-scale natural disasters hit Japan in 2018, which caused major damages to the agricultural forestry and fisheries sector (notably, heavy rains, flooding, landslides, earthquakes and typhoons). The damages in the agricultural, forestry and fisheries sectors from these disasters are reported at JPY 568 billion (USD 5.1 billion). The government earmarked supplementary budgets of JPY 159 billion (USD 1.4billion) for the restoration of these sectors, mostly used for recovery of farmland and degraded mountains as well as agricultural facilities.

Japan’s parliament passed the Revised Immigration Control Act in December 2018 with the aim to ease serious labour shortages. The revised Act established a new status for foreign workers in fourteen sectors (including agriculture, food manufacturing, and food service) to stay up to five years on condition that they pass an occupational and Japanese proficiency exam. The exams are waived for those who have competed a technical intern-training programme, allowing a stay of up to ten years. Under this new status, the government expects to accept 345 510 foreign workers in these sectors during 2019-24.

Trade policy developments in 2018-19

Japan’s tariff-rate-quotas continued to be under-filled in FY2018 for some products, including butter and butter oil, prepared whey for infant formula, and skimmed milk powder for school lunches. Japan issued special safe guard measures in FY2018 for some products, including buttermilk and inulin. In FY2018, Japan decided to import up to 13 000 tonnes of butter under state trading in order to meet domestic demand.

In March 2018, Japan and ten other Asia-Pacific countries signed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). The agreement entered into force in December 2018 among the first six countries to ratify the agreement – Japan, Australia, Canada, Mexico, New Zealand, and Singapore, and for Viet Nam in January 2019. Japan maintains its tariff for rice but established a country-specific tariff-rate quota for Australian rice with a 6 000 tonnes quota increasing to 8 400 metric tonnes after 12 years. This is equivalent to 0.1% of the total rice consumption in Japan. Tariffs on beef are to be reduced from 38.5% to 9% in the 16th year. The tariff reduction is accompanied by a volume-based safeguard. On pork, Japan maintains a scheme that includes a gate price of JPY 524 (USD 5)/kg and safeguards but reduces the maximum specific duty from JPY 482 (USD 4)/kg to JPY 50 (USD 0.5)/kg in the 10th year. The 4.3% ad valorem duty for high value cuts will be phased out over 10 years. Japan is to eliminate tariffs on certain types of cheeses in the 16th year. Other dairy products such as butter and skim milk powder were allocated new quotas but maintain current tariffs.

The Japan-EU Economic Partnership Agreement (EPA) entered into force on 1 February 2019. Japan is the fourth most important destination for the European Union’s agricultural exports (Eurostat, 2018[10]). Japan eliminated its 15% tariffs on wine and tariffs for pasta, sugar confectionary and chocolates are set to be phased out in the 11th year. Import tariffs of 29.8% on hard cheese are to be gradually eliminated over a 15-year period. A TRQ for soft cheese, with a volume set at 20 000 tonnes at the coming into force of the agreement is to increase to 31 000 tonnes in the 16th year, while the in-quota tariffs are to be phased out over the same period. Rules related to beef and pork are similar to those under the CPTPP. However, tariff rates for rice remain unchanged by both parties. The Japan-EU EPA also set specific rules for recognition and protection of agricultural goods and liquor from a particular geographical origin (Geographical Indication; GI). The EPA protects 56 GIs from Japan (48 agricultural goods and 8 liquor).

The government revised the Comprehensive TPP Related Policy Framework in 2017 to cushion the impacts from the CPTPP and the Japan-EU EPA. Agriculture is one of the main targeted sectors in the framework. Specifically, the framework sets an agenda for increasing exports of Japanese agricultural, forestry and fishery products and accelerating agricultural structural reforms to counter anticipated market competition by foreign products. A measure to support cheese production was added in 2017 as a response to the Japan-EU EPA. Based on the framework, Japan financed JPY 318.8 billion (USD 2.9 billion) in FY2018 and cumulative of JPY 1.3 trillion (USD 11.8 billion) between FY2015-18 for agriculture, forestry and fishery structural reform programmes. Also outlined in the framework, the government implements countermeasures for five sensitive products, including rice, wheat, livestock (beef and pork), dairy products, and sugar to stabilise the productions.

References

[10] Eurostat (2018), Agriculture, forestry and fishery statistics — 2018 edition, https://doi.org/10.2785/340432.

[8] FAO (2015), World Reference Base for Soil Resources 2014, update 2015 International soil classificationn system for naming soils and creating legends for soil maps. World Soil Resources Reports No. 106, http://www.fao.org/3/i3794en/I3794en.pdf.

[4] MAFF (2018), Export and Import of Agriculture, Forestry and Fishery Products, http://www.maff.go.jp/j/tokei/kouhyou/kokusai/attach/pdf/houkoku_gaikyou-15.pdf.

[3] MAFF (2018), Statistics on Agricultural Income 2017, http://www.maff.go.jp/j/tokei/kouhyou/nougyou_sansyutu/index.html.

[6] MOE; GIO (2018), National Greenhouse Gas Inventory Report of Japan, http://www-gio.nies.go.jp/aboutghg/nir/2018/NIR-JPN-2018-v4.1_web.pdf.

[2] OECD (2019), “Producer and Consumer Support Estimates”, OECD Agriculture statistics (database), https://doi.org/10.1787/agr-pcse-data-en.

[7] Shindo, J. (2012), “Changes in the nitrogen balance in agricultural land in Japan and 12 other Asian Countries based on a nitrogen-flow model”, Nutrient Cycling in Agroecosystems, Vol. 94/1, pp. 47-61, https://doi.org/10.1007/s10705-012-9525-x.

[5] UN Comtrade (2018), United Nations Commodity Trade Statistics, http://comtrade.un.org.

[1] World Bank (2019), World Development Indicators database, https://databank.worldbank.org/data/download/GDP.pdf.

[9] WTO (2018), World Tariff Profiles 2018, https://www.wto.org/english/res_e/booksp_e/tariff_profiles18_e.pdf.

Notes

← 1. Farmland Banks are the intermediators of the government in farmland transactions.

← 2. The goal includes the value of food and agriculture, forestry and fishery products. The total value of exports for these products in 2018 was JPY 907 billion (USD 8.2 billion).

End of the section – Back to iLibrary publication page