Direction of Japan's Agricultural Policy Responding to the Recent World Food Situation

Due to a smaller number of exporting countries and a larger number of importing countries in international food trade caused by continuous tariff reduction under the WTO (World Trade Organization) system, the recent grain prices are more responsive to changes in supply-demand balance. Moreover, the sense of insecurity becomes a cause of export restraint and raging grain speculation, thereby increasing grain price volatility. Food importing countries recognized after the recent world food crisis that each country should maintain a certain level of basic food production in its own country. However, since the current WTO rules have several unfair aspects favorable to exporting countries with large-scale farms, it would be difficult for Asian small-scale rice farming to survive under these rules. The rules focus on economic efficiency without considering external economies such as national security and environmental concerns. Furthermore, it is said that a total ban on export subsidies by the end of 2013 was agreed, but the pledge is very unlikely to be fulfilled because many “hidden” export subsidies are left out of this agreement. Therefore, Asian countries should aim jointly to incorporate more comprehensive rules for sustainable growth of Asian agriculture into the worldwide rules. In order to re-vitalize rice farming in Japan, we should allow producers' discretion in cropping and introduce inductively coordinated direct (deficiency) payments to rice by end use (direct consumption, rice powder, animal feed, and biofuel) and alternative crops (wheat and soybeans), based on calculated differences between a standard (or target) production cost and a standard selling price. In addition, direct payments based on agricultural multi-functionality should be expanded especially for small farmers in mountainous areas.