Japan's Interventionist State: The Role of the MAFF (Nissan Institute Routledgecurzon Japanaese Studies)

Japan’s Interventionist State

Japan’s Interventionist State is a major study of one of Japan’s key bureaucratic institutions – the Ministry of Agriculture, Forestry and Fisheries (MAFF). It highlights the MAFF’s significance as an independent player in Japan’s agricultural support and protection regime and explains why the MAFF seeks to preserve its role as the principal agent of government intervention in the farm sector. Supporting this central explanatory argument is a new theory of state intervention based on bureaucratic self-interest. The book argues that an important and undertheorised cause of MAFF resistance to market-oriented reform is its vested interest in supplying intervention and in sustaining an entrenched architecture of intervention in agriculture. Aurelia George Mulgan is Associate Professor of Politics at the University of New South Wales, Australian Defence Force Academy. She has published widely on Japanese politics, political economy and international relations and is the author of The Politics of Agriculture in Japan (Routledge, 2000), and Japan’s Failed Revolution: Koizumi and the Politics of Economic Reform (Asia Pacific Press, 2002).

Nissan Institute/RoutledgeCurzon Japanese Studies Series Editorial Board J. A. A. Stockwin Formerly Nissan Professor of Modern Japanese Studies and Former Director, Nissan Institute of Japanese Studies, University of Oxford, Emeritus Fellow, St Antony’s College

Teigo Yoshida Formerly Professor of the University of Tokyo

Frank Langdon Professor, Institute of International Relations, University of British Columbia

Alan Rix Executive Dean, Faculty of Arts, The University of Queensland

Junji Banno Formerly Professor of the University of Tokyo, now Professor, Chiba University

Leonard Schoppa Associate Professor, Department of Government and Foreign Affairs, and Director of the East Asia Center, University of Virginia Other titles in the series: The Myth of Japanese Uniqueness Peter Dale

Industrial Relations in Japan The peripheral workforce Norma Chalmers

The Emperor’s Adviser Saionji Kinmochi and pre-war Japanese politics Lesley Connors

Banking Policy in Japan American efforts at reform during the occupation William M. Tsutsui

A History of Japanese Economic Thought Tessa Morris-Suzuki

Educational Reform in Japan Leonard Schoppa

The Establishment of the Japanese Constitutional System Junji Banno, translated by J. A. A. Stockwin

How the Japanese Learn to Work Second edition Ronald P. Dore and Mari Sako

Japanese Economic Development Theory and practice: second edition Penelope Francks Japan and Protection The growth of protectionist sentiment and the Japanese response Syed Javed Maswood The Soil, by Nagatsuka Takashi A portrait of rural life in Meiji Japan Translated and with an introduction by Ann Waswo Biotechnology in Japan Malcolm Brock Britain’s Educational Reform A comparison with Japan Michael Howarth Language and the Modern State The reform of written Japanese Nanette Twine Industrial Harmony in Modern Japan The intervention of a tradition W. Dean Kinzley

Technology and Industrial Development in Pre-war Japan Mitsubishi Nagasaki shipyard, 1884–1934 Yukiko Fukasaku Japan’s Early Parliaments, 1890–1905 Structure, issues and trends Andrew Fraser, R. H. P. Mason and Philip Mitchell Japan’s Foreign Aid Challenge Policy reform and aid leadership Alan Rix Emperor Hirohito and Showa Japan A political biography Stephen S. Large Japan: Beyond the End of History David Williams Ceremony and Ritual in Japan Religious practices in an industrialized society Edited by Jan van Bremen and D. P. Martinez

Japanese Science Fiction A view of a changing society Robert Matthew

Understanding Japanese Society Second edition Joy Hendry

The Japanese Numbers Game The use and understanding of numbers in modern Japan Thomas Crump

The Fantastic in Modern Japanese Literature The subversion of modernity Susan J. Napier

Ideology and Practice in Modern Japan Edited by Roger Goodman and Kirsten Refsing

Militarization and Demilitarization in Contemporary Japan Glenn D. Hook

Growing a Japanese Science City Communication in scientific research James W. Dearing Architecture and Authority in Japan William H. Coaldrake Women’s Gidayu and the Japanese Theatre Tradition A. Kimi Coaldrake Democracy in Post-war Japan Maruyama Masao and the search for autonomy Rikki Kersten Treacherous Women of Imperial Japan Patriarchal fictions, patricidal fantasies Hélène Bowen Raddeker Japanese–German Business Relations Competition and rivalry in the inter-war period Akira Kudo Japan, Race and Equality The racial equality proposal of 1919 Naoko Shimazu Japan, Internationalism and the UN Ronald P. Dore Life in a Japanese Women’s College Learning to be ladylike Brian J. McVeigh

On the Margins of Japanese Society Volunteers and the welfare of the urban underclass Carolyn S. Stevens The Dynamics of Japan’s Relations with Africa South Africa, Tanzania and Nigeria Kweku Ampiah The Right to Life in Japan Noel Williams The Nature of the Japanese State Rationality and rituality Brian J. McVeigh Society and the State in Inter-war Japan Edited by Elise K. Tipton Japanese–Soviet/Russian Relations since 1945 A difficult peace Kimie Hara Interpreting History in Sino-Japanese Relations A case study in political decision making Caroline Rose Endo Shusaku A literature of reconciliation Mark B. Williams Green Politics in Japan Lam Peng-Er The Japanese High School Silence and resistance Shoko Yoneyama

Engineers in Japan and Britain Education, training and employment Kevin McCormick

Modern Japan A social and political history Elise K. Tipton

The Politics of Agriculture in Japan Aurelia George Mulgan

Men and Masculinities in Contemporary Japan Dislocating the Salaryman Doxa Edited by James E. Roberson and Nobue Suzuki

Opposition Politics in Japan Strategies under a one-party dominant regime Stephen Johnson The Changing Face of Japanese Retail Working in a chain store Louella Matsunaga Japan and East Asian Regionalism Edited by S. Javed Maswood Globalizing Japan Ethnography of the Japanese presence in America, Asia and Europe Edited by Harumi Befu and Sylvie Guichard-Anguis Japan at Play The ludic and logic of power Edited by Joy Hendry and Massimo Raveri

The Voluntary and Non-Profit Sector in Japan The challenge of change Edited by Stephen P. Osborne Japan’s Security Relations with China From balancing to bandwagoning Reinhard Drifte Understanding Japanese Society Third edition Joy Hendry Japanese Electoral Politics Creating a new party system Edited by Steven R. Reed The Japanese–Soviet Neutrality Pact A diplomatic history, 1941–1945 Boris Slavinsky translated by Geoffrey Jukes

The Making of Urban Japan Cities and planning from Edo to the twenty first century André Sorensen

Academic Nationalism in China and Japan Framed by concepts of nature, culture and the universal Margaret Sleeboom

Public Policy and Economic Competition in Japan Change and continuity in antimonopoly policy, 1973–1995 Michael L. Beeman

The Race to Commercialize Biotechnology Molecules, markets and the state in the United States and Japan Steve W. Collins

Institutions, Incentives and Electoral Participation in Japan Cross-level and cross-national perspectives Yusaku Horiuchi

Japan’s Interventionist State The role of the MAFF Aurelia George Mulgan

Japan’s Interventionist State The role of the MAFF

Aurelia George Mulgan

First published 2005 by RoutledgeCurzon 2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN Simultaneously published in the USA and Canada by RoutledgeCurzon 270 Madison Ave, New York, NY 10016 This edition published in the Taylor & Francis e-Library, 2005. “To purchase your own copy of this or any of Taylor & Francis or Routledge’s collection of thousands of eBooks please go to www.eBookstore.tandf.co.uk.” RoutledgeCurzon is an imprint of the Taylor & Francis Group © 2005 Aurelia George Mulgan All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging in Publication Data A catalog record for this book has been requested ISBN 0-203-32664-4 Master e-book ISBN

ISBN 0–415–34651–7 (Print Edition)

To Basil

Contents

List of illustrations Preface 1

Introduction

xiii xiv 1

The specific argument about the MAFF 2 The general theory of state intervention 5 Outline of the book 6 PART I

The interventionist state model 2

Modes and means of government intervention

9 11

A typology of government intervention 11 The architecture of government intervention 13 3

Theorising government intervention and bureaucratic self-interest

27

The collective benefits of intervention 27 Distinguishing collective and personal benefits 31 ‘Iron triangles’ of vested interest in intervention 34 Implications for bureaucratic policy choice 35 PART II

The MAFF and agricultural intervention

45

4

47

The MAFF The MAFF’s organisational structure, mission and administrative purview 47

xii Contents 5

Modes and means of agricultural intervention

64

A typology of agricultural intervention 64 The architecture of agricultural intervention 71 Conclusion 104 6

Agricultural intervention and bureaucratic self-interest

105

The benefits of intervention for the MAFF and its officials 105 The private interest of MAFF officials in intervention 123 PART III

The pursuit of MAFF interests in intervention

127

7

129

Maintaining the foundations of MAFF intervention Maintaining a viable but dependent farm sector 130 Creating and defending gaikaku dantai and their functions 140 Safeguarding the benefits of state trading import systems 146 Expanding the web of vested interests in intervention 150 The New Basic Law and MAFF reorganisation 156 Redesigning Food Agency functions 158 BSE and MAFF restructuring 159 Upholding the MAFF’s subsidy powers 163 Expanding the MAFF’s interventionist domain 164

8

The three pillars of MAFF agricultural policy

168

Rice market intervention 168 Expenditure on budgetary subsidies 176 Maintaining import barriers 205 9

Conclusion

212

Appendix: Agriculture and agriculture-related organisations and their Japanese titles Notes English language bibliography Japanese language bibliogrpahy Index

216 221 270 276 283

Illustrations

Figures 4.1 4.2 5.1 6.1 7.1

MAFF reorganisation ( January 2001) MAFF internal structure Budget breakdown Comparison of central ministries MAFF reorganisation ( July 2003)

49 50 82 107 162

Tables 4.1 4.2 5.1 5.2 6.1 8.1 8.2 8.3

MAFF Establishment Law MAFF organisational ordinance MAFF’s laws 2003 MAFF’s budget–subsidy% Food Control budget Agricultural budget Subsidy categories 1998 Budget programmes 2000

55 60 74 84 114 180 194 198

Preface

This book represents another stage in a quest for understanding why Japan supports and protects its agricultural sector. Explaining such a complex and multifaceted phenomenon cannot be accomplished in one volume alone, hence the series on which I have embarked. The present volume, the second after The Politics of Agriculture in Japan (2000), focuses on Japan’s Ministry of Agriculture, Forestry and Fisheries ( MAFF). It needs to be read with its companion volume, Japan’s Agricultural Policy Regime, which rounds out the story of Japan’s agricultural bureaucracy and policy. Admittedly, Japan’s MAFF, in attaching itself to the vast superstructure of agricultural support and protection which it helped to create, is no different from many other agricultural bureaucracies around the world. Observers who are familiar with the Common Agricultural Policy (CAP) in Europe, for example, cynically suggest that the main beneficiaries of this programme are those who administer it, rather than the farmers. My brief, however, is not to make comparisons with other systems but to tell a very Japanese story. In each book, my aim is always to provide a specialist, political science account of Japanese agricultural support and protection while, at the same time, relating my work to some of the larger theoretical questions with which scholars of Japanese politics and political economy wrestle. As always I owe a great debt of gratitude to those with whom I spend much time discussing and exchanging views on the economy and politics of Japanese agriculture and agricultural policy. For this volume, two individuals stand out: Professor Honma Masayoshi of Tokyo University and Professor Godo Yoshihisa of Meiji Gakuin University, both dedicated scholars of Japanese agricultural economics. I would also like to express my admiration for Tamai Tetsuya – for his professionalism and his open-mindedness – and my thanks for so much of his time spent answering my questions about this or that aspect of Japanese agricultural policy: a difficult, challenging and sometimes even impenetrable subject. One person amongst many university colleagues has provided unerring support for and continuing interest in my work: Arthur Stockwin, who recently retired from the Nissan Institute of Modern Japanese Studies, Oxford University. For 30 years he has offered a unique combination of guidance and friendship. The road from here will be so much lonelier.

Preface

xv

I would also like to thank two anonymous reviewers who displayed such a keen grasp of the contents of the book and where it stands in the wider scheme of things, and who submitted such good advice – both general and specific. If they happen to read the finished volume, I hope they see how much it has benefited from their suggestions. My thanks to the University of New South Wales, ADFA for continuing research and library support and also to the Australian National University and Ben Kerkvliet of the Department of Political and Social Change. During the early stages of research I benefited greatly from the assistance of Akemi Inoue and Keiko Yamada Foster. Finally – to those two vital souls on the home front – Richard and Basil – who, each in their own way, has made an immeasurable contribution to this book and to the entire series – my unswerving gratitude and devotion. I dedicate this book to my beloved Basil, who has been at my side throughout much of this long journey, but who sadly, cannot be there at the end.

1

Introduction

[ B]ureaucratic entrenchment of vested interests . . . impedes change.1

Agriculture in Japan is a state-directed enterprise. The farm sector is extensively guided, controlled, promoted and assisted by the government using multiple and diverse modes of intervention. By any standard of measurement, Japan’s agricultural sector remains one of the best protected in the world. In 2003, the OECD identified Japan as among the highest agricultural support countries with prices received by farmers in 2002 on average more than 100 per cent higher than those at the border.2 At the same time, Japan’s percentage producer support estimate (% PSE)3 of 59 per cent in 2000–02 was down only two percentage points on 1986–88 and was twice the OECD average.4 Over this period, Japan had made ‘no progress . . . in reducing the overall level of support or reducing the most distorting forms of support’.5 As the OECD report concluded, Japanese agriculture ‘is characterised by high support levels and limited market orientation’.6 In fact, ‘Japan’s subsidies to its farmers are greater than the entire contribution made by agriculture to the nation’s economy’.7 My purpose over the course of several books is to provide an interest-based explanation for the reasons why the Japanese government continues to support and protect the agricultural sector. Each book furnishes some of the building blocks of that explanation, drawing on the prima facie assumption that underpins all political science, namely, that individuals and organisations seek to advance their interests through the political process. My earlier volume8 was concerned with the ‘structure on the demand side of the political market’9 for agricultural support and protection. It detailed the rice-roots political, electoral and organisational forces at work, with the major focus on the all-embracing farmers’ group (Nokyo) and the electoral significance of farmers and their organisations for the ruling Liberal Democratic Party (LDP). The book presented a detailed account of what kinds of benefits agricultural assistance and protection bestow on farm producers, how they mobilise politically to promote and preserve these benefits and why politicians are motivated to respond to their demands. These basic political factors remain integral to any explanation of Japanese agricultural support and

2

Introduction

protection and are those most frequently cited in general political science and popular commentary on Japan’s agricultural sector. As this volume will show, however, the ‘politics of agriculture’, narrowly defined, is only a part of the story. In this book, I examine the bureaucratic dimension of Japanese agricultural support and protection. The central focus of the book is Japan’s farm bureaucracy: the Ministry of Agriculture, Forestry and Fisheries, or MAFF (Norinsuisansho, or Nosuisho).10 The following sections elaborate a specific argument about the significance of the MAFF as a player in Japan’s agricultural support and protection regime and a more general theory of state intervention in the Japanese economy and society.

The specific argument about the MAFF The core argument about the MAFF and agricultural policy advanced in this book consists of the following propositions: ●

● ●

●

agricultural assistance and protection represent a system of state intervention in the farm sector the MAFF is the central controlling and administering body of this intervention intervention serves both the collective interests of the MAFF as a bureaucratic institution and the personal, private interests of MAFF officials as individual bureaucrats given the nature of these benefits, the MAFF seeks to maximise intervention, and this goal is the primary determinant of MAFF policy choice.

The implications of this argument for explaining Japanese agricultural support and protection are as follows: ●

●

●

agricultural support and protection in Japan are not only politically demand-driven but also bureaucratically supply-driven irrespective of demand unlike politicians whose interests are shaped almost entirely by political demand and associated electoral calculations, the agricultural bureaucracy is a self-generating and self-perpetuating supplier of intervention in the farm sector the interests of the MAFF in maximising intervention should be perceived as a separate and distinct causal factor contributing to the preservation of Japan’s agricultural policy regime.

The approach I adopt in this book is, therefore, still an interest-based one, but the explanation is recast in terms of the MAFF’s vested interest in agricultural intervention, thus supplementing and extending the causal account in my earlier volume. The importance of bureaucratic self-interest in accounting for the enduring nature of agricultural support and protection in developed democracies has been almost entirely omitted from standard political science analyses of agricultural

Introduction

3

policy.11 The common assumption of these works is that interest group behaviour and the political preferences of politicians (in particular their electoral incentives) ‘explain why . . . farm programs have proved resistant to change and so difficult to remove’.12 Similarly, the relevance of bureaucratic self-interest to clarifying why developed economies with low comparative advantage in agriculture continue to support and protect their farm sectors has been ignored by economists in their political market explanations for the rise of agricultural protectionist regimes in East Asia.13 Although they acknowledge that the politically self-interested behaviour of politicians is a crucial determinant of agricultural protection, they fail to accord any weight to bureaucratic self-interest as another significant supply-side determinant. According to the thesis advanced in this book, continuing high levels of support and protection for agriculture in Japan are only partly explained by the political clout of the farm sector and the electoral calculus of the ruling LDP. The agricultural bureaucracy must be factored into the equation. Explaining why agricultural support and protection have endured over the decades needs to take account of the autonomous interests and preferences of the agricultural bureaucracy. These interests and preferences are shaped by the MAFF’s intervention-maximising goal that is pursued independently of the ‘objective’ state of the agricultural economy and the ‘subjective’ demand for policy benefits from farmers. The MAFF’s policy preferences are determined by ministry interests (shoeki ) irrespective of whether or not Japanese farmers, their organisations and political allies in the Diet lobby are pushing for government assistance. Arguably, this is one of the main reasons why contraction of the agricultural sector14 and shrinking farm numbers15 have not resulted in commensurate declines in Japanese agricultural support and protection.16 In the policymaking process, the MAFF must, therefore, be treated as a political actor in its own right with interests that are distinguishable from those of other key participants such as Nokyo and LDP farm politicians. It is not a neutral actor; it is a self-interested actor, and it uses the political process to protect and promote its own interests. While the MAFF may share common ground with LDP agricultural representatives, farm organisations and producers on many issues of agricultural policy, ministry interests relate specifically to the institutional advantages it draws from the agricultural support and protection regime as well as to the gains from intervention reaped by individual MAFF bureaucrats. Furthermore, the MAFF puts its bureaucratic self-interest first in policymaking, and concentrates its energies as far as possible on seeing that its own interests and preferences are served by policy outcomes. The MAFF will not as a rule choose to act against its own ministry interests for the sake of the wider national interest. Nor will it choose to act for the good of agriculture or the farmers if such a policy choice entails a curtailment of intervention. Of course, alternative explanations for MAFF motivations are theoretically possible and indeed are not ruled out a priori, such as a concern for farmers, or the agricultural sector as a whole, or the national good or public interest etc. In some cases, such motivations will be aligned with MAFF intervention-maximising. The MAFF is proud of the fact, for

4

Introduction

example, that one of its special features is its close ties to the grass roots or farmers (genba).17 However, the evidence offered in this book will demonstrate that the MAFF’s intervention-maximising motivation generally prevails as the primary determinant of its policy choices. On those occasions when it is possible to identify alternative policy options to which other motivations would lead, the intervention-maximising option is preferred. The perception that the MAFF exists primarily for its own benefit and not for the benefit of farmers and Japanese agriculture is encapsulated in a question asked recently in a popular Japanese weekly: ‘For whom does the MAFF exist?’ (ittai dare ga tame no kancho ka?).18 Others have questioned how useful MAFF administration actually is for agriculture, forestry and fisheries industries.19 The MAFF’s predisposition to maximise intervention for self-interested purposes helps to shape policy output in all areas under MAFF administration. This is not to say that the MAFF necessarily dictates agricultural policy outcomes or that agricultural policy is merely a reflection of MAFF policy preferences. For that reason, this book does not seek to explain Japanese agricultural policy per se. Nor is its primary brief to offer an account of the state of Japanese agriculture or the nature of its structure etc. The focus of the book is the MAFF and its motivations, and more importantly, how these motivations shape the ministry’s policy positions, and thus how they contribute to the perpetuation of Japanese agricultural support and protection. Undoubtedly MAFF’s intervention-maximising goals are a key determinant of policy outcomes, but they are not the sole determinant. With that proviso in mind, a brief summary of the MAFF’s role and influence in the agricultural policymaking process is in order.20 I hold that, first, the agriculture ministry pursues its own autonomous interests in the policymaking process and, second, that these interests find their way into policy measures in varying degrees. This is because the MAFF exercises substantial and pivotal influence in this process.21 Almost all agricultural policies originate in the MAFF; the ministry dominates the stages of policy development and formulation as well as drafting all agricultural laws and the agricultural budget. By convention, the MAFF also ‘decides’ agricultural policy as one half of a dual structure of ‘government-LDP’ (seifu-Jiminto) policymaking. It represents ‘the government’ in ‘government-LDP’ decisionmaking on agricultural policy. Moreover, in some areas such as trade policy negotiation and all matters pertaining to the exercise of its interventionist power, the MAFF is the preponderant entity. Like all interventionist ministries,22 the MAFF exerts policymaking power as an integral aspect of its interventionist functions. In fact, a lot of Japanese agricultural policy is MAFF intervention. The LDP’s role in agricultural policymaking is targeted and selective: it only intervenes (kainyu) in agricultural policies where it sees its interests most directly affected. These issues usually relate to farm incomes. Such intervention takes the form of politically inspired adjustments to MAFF proposals in the light of electoral and other political imperatives.23 To summarise: while MAFF objectives and priorities do not necessarily predominate, all agricultural policies will bear their imprint to a certain extent.

Introduction

5

The general theory of state intervention The agriculture-specific argument of the book is situated within an overall theory of state intervention in the Japanese economy and society. The descriptive and theoretical propositions made with respect to the MAFF, it is argued, apply more generally across the governmental system, forming an ‘Interventionist State Model’. The book claims that in seeking to maximise intervention, MAFF bureaucrats are by no means unique within the Japanese state apparatus. In fact they exemplify common features found across the entire Japanese bureaucracy. Officials within other major ministries such as the Ministry of Land, Infrastructure and Transport, or MLIT (Kokudo Kotsusho), the Ministry of Health, Labour and Welfare, or MHLW (Kosei Rodosho) and the Ministry of Economy, Trade and Industry, METI (Keizai Sangyosho) are also focussed on maintaining and enhancing intervention in their respective sectors. The principal ways in which the Japanese government intervenes in the economy and society are direct market intervention, regulatory intervention24 and allocatory intervention. The main mechanisms of intervention form an ‘architecture’ consisting of the bureaucratic administrators of intervention, the formallegal foundations of intervention, the financial structures providing support for allocatory intervention, the ancillary infrastructure of intervention, and other more informal bureaucratic mechanisms and practices that facilitate intervention such as administrative guidance and the retirement of ministry officials into private companies and public sector organisations (amakudari ). The benefits of government intervention for its main agents – the bureaucrats in domestic, sectoral ministries – are both collective and individual. For the ministry, intervention provides a basic rationale for its existence and functioning, it influences the scope of ministry functioning and therefore affects the numbers of official personnel and overall ministry size, it yields market power in the economy, it governs the amount of the ministry budget, it is a source of power and authority over jurisdictional constituencies, it engenders regulatory authority over ministry clients, it underpins the discretionary power of bureaucrats to allocate subsidies, loans, public works contracts and other kinds of financial assistance policies that are a source of bureaucratic influence, leverage and patronage, it underwrites the authority and autonomy of bureaucrats as policymakers, it dictates the scale of ministries’ organisational empires, and finally, it helps to rank ministries in the bureaucratic hierarchy of ministries and agencies. Benefits for individual bureaucrats include jobs and employment, retirement employment in industry, public organisations and politics, and free entertainment and other personal benefits, including extra-legal emoluments such as financial bribes. The theory posits that, given the spin-offs from intervention both for bureaucratic institutions collectively and individual bureaucrats personally, ministries and their officials seek to maximise intervention. Given a range of policy options, bureaucrats will choose the one that maximises intervention and associated benefits for the ministry and its officials. Bureaucratic policy choice is thus explained by intervention maximising.

6

Introduction

Although sharing the basic insight of the rational choice approach – that individual actors seek to advance their own interests – the book eschews a formal rational choice approach. Nor is it claimed that the theory explains all bureaucratic policy without exception. The theory asserts only that in the great majority of cases, bureaucratic behaviour is most readily explained by the assumption of their self-interest in maximising intervention.

Outline of the book Part I entitled ‘The Interventionist State Model’ consists of two chapters. Chapter 2 on ‘Modes and Means of Government Intervention’ delineates the typology of intervention as well as describing the main instruments and supporting structures through which this intervention takes place. Intervention in the agricultural sector is not unique or sui generis but in fact exemplifies standard modes of intervention in the Japanese economy as well as a common, cross-sectoral architecture of intervention in which bureaucratic ministries play a key role. Chapter 3 on ‘Theorising Government Intervention and Bureaucratic SelfInterest’ continues the more general model of state intervention. It elaborates the collective and individual benefits of intervention for bureaucrats in the central ministries and how these incentives shape bureaucratic policy choice. Part II entitled ‘The MAFF and Agricultural Intervention’ applies the general interventionist state model to the agricultural sector. Chapter 4 on ‘The MAFF’ describes the organisational structure and functions of the MAFF as the entity that acts as the government’s main agent of intervention in the agricultural sector. It discusses all aspects of the ministry as an administrative organ of government: its broadly defined mission in law and the work with which it is legally charged in order to achieve this mission. The chapter outlines the ministry’s organisational structure both prior and subsequent to the administrative reorganisation of January 2001; its main internal divisions, the functional concerns of these divisions and how these concerns involve distinct policies administered by these organisational sub-units. The chapter thus describes the division of labour that prevails amongst the MAFF’s sub-units with respect to their administration of agricultural policy and intervention in the agricultural economy. Chapter 5 on the ‘Modes and Means of Agricultural Intervention’ provides an overview of government’s regulatory and allocatory activities in the agricultural sector as well as its direct participation in agricultural markets with the primary focus on the MAFF’s role. The architecture of this intervention is examined in some detail, with attention drawn to the legal, financial and institutional structures involved as well as more informal practices and behaviours that serve to buttress the system. Chapter 6 on ‘Agricultural Intervention and Bureaucratic Self-Interest’ then describes how intervention benefits the MAFF organisationally and agricultural bureaucrats individually. Part III on ‘The Pursuit of MAFF Interests in Intervention’ comprises two chapters. Chapter 7 on ‘Maintaining the Foundations of MAFF Intervention’ posits the fundamental axioms by which the MAFF endeavours to secure its

Introduction

7

interests in agricultural intervention; by ensuring that the rationale on which agricultural intervention takes place endures, by expanding its interventionist domain and avoiding loss of jurisdictional function, by defending its interventionist powers and its auxiliary empire, by bringing a range of private sector interests into the magic circle of ministry patronage and by maintaining and augmenting the means and instruments of agricultural intervention. Chapter 8 on ‘The Three Pillars of MAFF Agricultural Policy’ examines the three main agricultural policy precepts through which the MAFF has sought to maximise intervention: controlling the rice market, proliferating agricultural budget subsidies and maintaining farm import barriers. These policy principles form the core of the interventionist system over which the MAFF presides.

Part I

The interventionist state model

2

Modes and means of government intervention

This chapter aims to provide a broad picture of the principal modes, agents and structures of government intervention in the Japanese economy and society. Implicit in the analysis is the proposition that the ways and means of government intervention in agriculture are not distinctive to that sector, but in fact exemplify a common, cross-sectoral architecture of intervention that can be discerned wherever the state attempts to control markets, either directly or indirectly.

A typology of government intervention A classificatory schema can be used to distinguish the principal ways in which the Japanese government intervenes in domestic economic and social sectors. It consists of three main types: ● ● ●

direct market intervention regulatory intervention allocatory intervention.

Direct market intervention entails government participation in markets through the bureaucratic ministries. It usually involves state trading of some sort (the purchase and sale of goods), or conducting businesses (such as managing state-owned forests), or providing services such as banking, insurance, postal delivery and so on. In some cases, the government may enjoy a monopoly of certain markets; in other cases, it may share markets with other entities, including quasi-public bodies and private sector enterprises. Whatever the arrangement, the result is that the state exercises varying degrees of control over the operation of the markets in question. Regulatory intervention involves indirect government control and management of economic and social activities. In fact, direct participation in markets by government ministries is almost always just one facet of a much wider and more complex system of regulatory intervention in which the operations of ministries as market actors are supplemented by a host of controls and rules over other participants in the same market, including private sector actors.

12

The interventionist state model

Regulation has no strict legal definition in Japan, but is understood in a quasi-legal sense to mean ‘an activity by which the government directly and authoritatively restricts the people’s (or businesses’) rights or puts duties on them’.1 In the context of reports emanating from the government’s administrative reform ( gyosei kaikaku) councils in the late 1980s, regulation was ‘defined, in general terms, as intervention of national or local government to [sic.] the activities of private enterprises or the people in order to realize specific policy objectives’.2 Economic regulations can be distinguished from social regulations. Economic regulations entail government intervention in markets through the imposition of controls over market actors. In this case, the government makes and administers rules that control the behaviour of market players. These players may be either private sector producers, companies and individuals, or quasi-public entities. Economic regulations involve regulating the qualification and/or number of entrants, the type and/or volume of capital investments and the volume and/or the price of goods and services, when the free market mechanism is deemed to jeopardise the stable supply and prices of certain goods and services.3 Economic regulations may also be designed to ‘foster or protect a certain industry or business’.4 Policy measures include those standard to regulatory regimes everywhere such as import restrictions and price controls (often euphemistically called ‘price stabilisation’ or ‘price stability’). Particularly prevalent in Japan, is the use of officially authorised or sanctioned legal (and illegal) production, price and export cartels, and the imposition of restrictions on market entry through, for example, systems of administratively designated (shitei ) market players, or controls on market participation and activity through registration (toroku), licensing (menkyo), permission (kyoka), consent (shodaku), approval (ninka) and designation (shitei) systems administered by the bureaucracy.5 Social regulations are different from economic regulations: they are designed to safeguard people’s lives. They are omnipresent in fields such as public health, environmental protection, disaster prevention and so on. They prohibit certain acts, restrict certain business activities and secure the safety of facilities and the quality of goods and services by inspection and test procedures, as well as restricting actors by imposing qualification systems.6 Even social regulations, however, can indirectly have the effect of economic regulations in restricting competition.7 Allocatory intervention involves the provision of direct and indirect government financial support and assistance ( josei) to various targeted recipients. It comes in the form of direct grants (the payment of subsidies) or low-interest loans, tax deductions and preferential tax treatment, commissions and other kinds of allocative measures.8 Indirect financial assistance consists of government contracts if these provide an indirect subsidy for businesses (such as procurement and public works contracts) and administrative intervention to maintain producer prices, whether through devices such as price or production cartels, or other kinds of arrangements including price stabilisation schemes, all of which essentially rely on volume control.

Modes and means of government intervention 13 Allocatory intervention constitutes the distributive dimension of interventionist systems. In some cases it may be the handmaiden of regulatory intervention or its intended by-product. In the case of price stabilisation schemes, for example, regulation of markets ensures particular types of price outcomes for producers. Alternatively, the distributive dimension can be a natural complement to the regulatory dimension insofar as the compliance of regulated actors with interventionist strictures is facilitated and secured by allocating distributive benefits. All Japanese ministries that administer domestic sectors possess regulatory as well as compensatory (i.e. distributive) dimensions of authority, although the proportions may differ according to ministry.9 In the case of the MAFF, for example, the balance favours the allocatory rather than regulatory side.

The architecture of government intervention The architecture of intervention comprises the building blocks of interventionist regimes: the means, structures and bases of intervention. It answers the question: what does the government (i.e. the central government) use to intervene? In the Japanese case, the architecture of intervention consists of the main bureaucratic ministries, the formal-legal foundations of intervention, the financial structures providing support for allocatory intervention, the ancillary infrastructure of intervention and other more informal bureaucratic mechanisms and practices that facilitate intervention.

The central administrators of intervention The central government’s bureaucratic ministries are the bodies that preside over, direct, control and administer systems of intervention. In this sense, they are the government’s main agents or ‘suppliers’ of intervention. The Japanese administrative system is divided up into bureaucratic domains that correspond to the interventionist jurisdictions of individual ministries. As Takeuchi comments with respect to economic ministries, the ‘various bureaucratic organs stake out claims to particular industries (markets) and control how the economic game is played in their own “territory” ’.10 Little horizontal coordination occurs amongst the ministries that preside over a system widely known as vertically integrated administration (tatewari gyosei ).11 The bureaucratic reorganisation of January 2001 redrew the boundaries of some of these administrative territories by a process of restructuring and amalgamation. Despite the bureaucratic reshuffling, the principles of administrative territory and interventionist jurisdiction continued to apply, particularly as the main elements of the old ministries remained discrete units within the new administrative entities in cases of amalgamations, and in other cases like METI, despite some internal reorganisation, the old ministry basically remained under a new title. As for the MAFF, it kept both its title and jurisdictional boundaries, undergoing only some internal restructuring.

14

The interventionist state model

The ministries subdivide into individual bureaus (kyoku) and may also comprise agencies (cho) in some cases. The agencies and bureaus correspond to broad industry sectors (such as the Food, Forestry and Fisheries agencies of the MAFF or previously its Agricultural Production Bureau, Livestock Industry Bureau and Food and Marketing Bureau), as well as to discrete policy sectors such as the MAFF’s former Economic Affairs Bureau, or its current Rural Development Bureau. The bureaus are the main structural divisions of the main ministries, with some acting as genkyoku, that is, with ‘comprehensive regulatory and industrial policy responsibilities for a specific clientele (e.g. an industry)’.12 As Aoki observes, the role of such bureaus is to ‘implement regulation over their jurisdictional spheres’.13 Sato traces this arrangement ‘back to the wartime mobilization system under which each government administrative agency established a close cooperative relationship with the sector of industry it was in charge of ’.14 The bureaus subdivide into departments (bu) and/or divisions (ka) while, in some cases, the divisions further subdivide into offices (shitsu). Policy or industry sectors are thus broken down into more specific areas of administrative purview. Each bureau or division etc. with specific industry clientele has primary responsibility for nurturing and protecting the needs of that industry. The central ministries also have regional and local branches that undertake various administrative tasks, particularly if ministerial jurisdiction extends over a decentralised industry such as agriculture. The legal framework of intervention The basis of all state intervention in the economic and social affairs is public law.15 As Inoguchi and Iwai emphasise, most policies in Japan are manifested in the form of legislation.16 All types of government intervention – whether direct market participation, indirect control of economic and social activities through regulatory intervention, or distribution of direct and indirect financial assistance to various targeted recipients – is encompassed within the scope of legislation. Laws are the ultimate source of state authority enabling ministries to exert control over particular economic and social sectors. Laws also empower administrative officials to exercise various kinds of bureaucratic authority in the course of administering interventionist systems.17 The establishment law of each ministry provides the legal footing for ministry structures and powers.18 It governs the organisation of each ministry and agency, ‘enumerating their duties and defining their spheres of jurisdiction’.19 Additionally, each ministry has a set of laws (ho and horitsu) that is its primary task to administer, implement and enforce. The focus, content and purpose of these laws are wide ranging and are inclusive of interventionist modes and structures. In short, laws and parts of laws outline interventionist systems. They describe the various regulatory and allocatory functions of the bureaucracy and where the ministries can participate directly in markets. Interventionist laws and parts of laws can be grouped into various categories according to their primary goal (in terms of interventionist outcomes), their breadth,

Modes and means of government intervention 15 or alternatively, their specificity. The categories are by no means mutually exclusive. The most important group of laws are so-called ‘basic laws’ (kihonho ) that usually cover an entire sector (such as agriculture) or field of intervention (such as food safety). Basic laws set out the ideal goals and basic interventionist principles that apply to a particular policy field. All other laws in that field must conform to the objectives, goals and principles laid down in the basic law. Such laws function like legal charters or constitutions for all other relevant laws in that field of intervention. Almost as significant but more specific in their application are so-called ‘industry’ or ‘business’ laws. The core function of these ‘industry laws . . . [is to] provide legal justification for bureaucratic intervention’.20 They outline government goals for the development and operation of specific industries and describe the contours of the interventionist system in that particular industry, market or business. Indeed, practically the entire Japanese economy is partitioned according to the application of industry and business laws, each in a cluster that comes within the administrative purview of a particular ministry. Examples of laws with industry-wide application are the ● ● ● ●

● ●

1962 Petroleum Industry Law (Sekiyugyoho ) 1981 Banking Law (Ginkoho ) 1996 Insurance Business Law (Hokengyoho ) 1990 Law for Freight Transportation Business by Motor Vehicles (Kamotsu Jidosha Unso Jigyoho ) 1917 Agricultural Warehousing Industry Law (Nogyo Sokogyoho ) 1932 Silk Reeling Industry Law (Seishigyoho ) and the 1945 Sericultural Industry Law (Sanshigyoho ).

Another group of laws reflects the bureaucracy’s desire to advance certain specific industrial promotion objectives such as the ●

●

●

●

1967 Temporary Measures Law for the Structural Improvement of the Textile Industry (Seni Sangyo Kozo Kaikaku Rinji Sochiho ) 1983 High-Technology Industry Integrated Areas Development Promotion Law (Kodo Gijutsu Kogyo Shuseki Chiiki Kaihatsu Sokushinho ) 1963 Small and Medium Enterprise Modernisation Promotion Law (Chusho Kigyo Kindaika Sokushinho) 1974 Law Concerning the Promotion of Traditional Industrial Art Industries (Dentoteki Kogeihin Sangyo no Shinko ni kansuru Horitsu).

Some laws establish regulatory systems for the operation of particular markets or fields of business. Examples are the ● ● ●

1942 Food Control Law (Shokuryo Kanriho ) 1952 Agricultural Land Law21 1959 Special Measures Law for the Regulation of Retail Commerce (Kouri Shogyo Chosei Tokubetsu Sochiho)

16 ●

●

The interventionist state model 1949 Foreign Exchange and Foreign Trade Control Law (Gaikoku Kawase oyobi Gaikoku Boeki Kanriho) 1952 Export and Import Trading Law (Yushutsunyu Torihikiho).

Another group of laws provides for state funding for particular government policy objectives such as ● ●

● ●

● ●

●

●

coastal preservation (the 1956 Coastal Law) industrial water supply (the 1956 Industrial Water Supply Law, or K ogyo Yosuiho) public housing (the 1951 Public Housing Law, or Koei Jutakuho) housing development (the 1960 Housing District Improvement Law, or Jutaku Chiku Kairyoho) agricultural land development (the 1949 Land Improvement Law) assistance to farmers to modernise agricultural management (the 1961 Agricultural Modernisation Fund Assistance Law) government help for small business (the 1956 Small and Medium Enterprise Modernisation Fund Assistance Law, or Chusho Kig yo Kindaika Shikinto Joseiho) supply of government public works funding to specific regions (the 1972 Law Concerning the Special Case of the State Burden Rate Relating to Public Works for the Development of Backward Regions, or Koshin Chiiki no Kaihatsu ni kansuru Kokyo Jigyo ni kakaru Kuni no Futan Wariai no Tokurei ni kansuru Horitsu).

In fact, as a general observation, financial allocations from the central government are often made under the provisions of statutes that require the central (and local) governments to outlay specific amounts for particular policy purposes. A certain proportion of all subsidy allocations are so-called ‘statutory support’ (horitsu hojo) subsidies, although the proportion varies by ministry.22 Last but not least are laws that provide for the establishment of governmentsponsored organisations that are integral to interventionist regimes in particular industries and sectors. Statutory organisations established under their own organising laws include many of the government’s special public corporations (tokushu hojin). Examples of these laws are the ● ● ● ●

1963 Metal and Mining Industry Corporation Law (Kinzoku Kogyo Jigyodanho ) 1972 Japan Sewage Corporation Law (Nihon Gesuido Jigyodanho ) 1952 Agriculture, Forestry and Fisheries Finance Corporation23 Law 1996 Agriculture and Livestock Industries Corporation (ALIC) Law.

Other types of statutory organisations established under their own laws include producer groups such as the agricultural cooperatives and the commerce and industry associations. Each statutory body undertakes quasi-public functions designated under its own organising law and usually under other laws as well. Some statutory organisations are indirectly created by laws under which they are allocated specific tasks,

Modes and means of government intervention 17 such as the former Livestock Industry Promotion Corporation (LIPC) under the 1961 Law Concerning Price Stabilisation etc. of Livestock Products, or the 1961 Agricultural Credit Guarantee Insurance Law, which established a system of agricultural credit fund associations. While laws provide a solid legal foundation for government intervention, bureaucrats exercise substantial and direct powers of intervention through ‘the discretionary implementation of such legislation’.24 The wording and phraseology of laws may in places be general, even vague, and left open to interpretation by administrators as part of the bureaucratic implementation process, thus indirectly endowing the ministries with considerable informal authority in the administration of interventionist systems. As Takeuchi comments, ‘bureaucrats avoid creating laws and regulations that restrict the operations of the bureaucracy. They prefer using abstract expressions and wording, and avoid attaching detailed rules. As a consequence, administrative institutions are given full authority to control matters as they like.’25 The statutes that bestow wide-ranging interventionist powers on government are augmented by supporting rules appended to specific items of legislation.26 Supporting rules comprise cabinet ordinances (seirei ),27 ministerial ordinances (shorei ),28 ordinances (rei ), enforcement ordinances (shikorei ),29 regulations (kisoku) and enforcement regulations (shiko kisoku) that amplify the details of interventionist systems. Moreover, the ministries themselves are the source of these supplementary rules, even though some may formally require cabinet approval.30 As Koh observes, So far as the quasi-legislative powers of the bureaucracy are concerned, the executive branch, acting either as a group or as individual ministries and agencies, is empowered to issue ordinances . . . having the force of law. In fact, most laws contain provisions delegating ordinance powers to specific bureaucratic agencies. These ordinances outnumber laws by the ratio of nine to one.31 Laws may, therefore, endow administrators with powers to make and apply more specific rules that supplement their interventionist powers based on legislation. Moreover, in writing these supplementary administrative rules, bureaucrats may grant themselves even greater powers of discretionary intervention. Ordinances consolidate the bureaucratic management of interventionist systems by describing in greater detail the procedures that must be followed by market actors, the approvals (shonin) and permits (kyoka) that must be sought from ministries and so on. Where laws and ordinances tend to be specific, detailed and concrete, it is with respect to the responsibilities and requirements imposed on those whom the bureaucrats administer, the tasks delegated to other players in interventionist systems and the various administrative procedures that have to be followed, rather than in circumscribing the powers of administrators. In other words, regulations are specific in their target, but administrative decisions about the application of these regulations in particular instances are often discretionary. As Ito commented

18

The interventionist state model

with respect to the financial sector: ‘Financial regulations in Japan are both detailed and discretionary.’32 Under laws and ordinances, ministry officials are additionally granted discretionary powers over the imposition of regulations such as permits, licenses, authorisations, approvals and so on. Tanaka and Horie label such regulatory authority ‘administrative disposition’,33 meaning the right of public officials to make arbitrary administrative decisions on an ad hoc basis. As they explain, Regulation through an administrative disposition includes (i) permission, authorization and others in response to the application by people and (ii) correction order, report collection and others made unilaterally by the government. There are various legal terms employed such as permission, authorization, licensing, patent, approval, certification, examination, inspection, test, designation, registration, notification, report and so on.34 Characteristically, statements of policy based on laws may also contain vague and ambiguous expressions. As Satake explains, this is because top officials prefer to leave room in their decisions by using ambiguous expressions so that they can flexibly alter the meaning of their policies in response to changes in the surrounding environment.35 Financial structures of intervention The financial apparatus of intervention consists principally of government budgets, both central and local. The three formally distinct segments of the central government budget are the General Account (GA) budget, the Special Accounts (SA) budget and the Government-Affiliated Agencies (GAA) budget. The public finance system is highly centralised and bestows enormous powers on the central government to dispense public monies, particularly in the form of subsidies. This set-up reflects strong lines of continuity with the prewar arrangement of highly centralised ministries, particularly the economic ministries that had hegemonic powers in the area of public finance and whose powers came through the Occupation largely unscathed.36 Although local government budgets (prefectural and municipal) are partially funded by national government grants,37 they can also be a significant source of financial intervention in themselves, particularly in the form of public works.38 Another influential component of the financial apparatus of intervention is the Fiscal Investment and Loan Program, or FILP (Zaisei Toyushi Keikaku, or zaito ), which is the most important off-budgetary source of public funding available to the central government.39 The FILP is sometimes known as the ‘second budget’ because of its size: it has traditionally been about half the size of the central government’s GA budget.40 Funding made available through the FILP does not support direct expenditure by the government, but is loaned as capital to public corporations of various kinds (koko, kodan, ginko, jigyodan, eidan, kiko, kikin, kyokai, senta¯ etc.), or designated corporations (tokushu kaisha) or is diverted to various budgetary special accounts, or to local government.41 In some cases, public corporations

Modes and means of government intervention 19 charged with conducting various enterprises may generate surplus funds from their business operations, which may in some circumstances be rechannelled back into budgetary expenditure. Finance may also be generated by the ministries’ own market operations as well as those of their special public corporations. The allocation of financial assistance, including subsidies, to targeted recipients also falls within the ambit of administrative discretion. Bureaucrats exercise considerable discretionary power in the allocation of subsidies for particular groups and projects (whether they benefit specific localities or organisations etc.) or in the allocation of contracts for particular public works funded by government expenditure. The ancillary apparatus of intervention The central ministries deploy several types of ‘assisting forces’ in their interventionist enterprise. Local government is by far the most important. Prefectural and municipal governments have various delegated functions in interventionist regimes, discharging various regulatory and allocatory functions under laws administered by the ministries, or as part of obligatory cost-sharing arrangements for ministry-sponsored public works projects and spending programmes, or under ‘guidance’ from ministries.42 The role of local government in the distributive dimension of intervention is pivotal.43 Prefectural and municipal governments figure prominently in the supply-side infrastructure of subsidy administration as intermediaries or subsidy works agents (hojo jigyosha).44 Subsidy agents share in the bounty of subsidies as primary recipients and sometimes also as secondary distributors of subsidies on behalf of the central government.45 Local governments absorb specific-purpose grants as subsidy works agents for various ministry-sponsored projects funded by the central government. They receive funds for specific purposes that have been decided as part of the budget allocation process or which are allotted according to law. In some cases, prefectural governments then turn around and act as secondary distributors of these specific-purpose grants to particular recipients, including municipal governments, industry associations, private companies, financial organs, producer organisations and so on. The second category of ‘assisting forces’ are so-called ‘extra-departmental groups’ or ‘ministry-affiliated agencies’ ( gaikaku dantai ) also referred to as ‘related groups’ (kanren dantai ). They are all juridical or legal persons (hojin) of one kind or another and are attached to a specific ministry. Many are set up for particular policy-related purposes and play key roles in the ministry’s ancillary apparatus of intervention by undertaking regulatory and/or allocatory functions as well as participating directly in markets. These quasi-public bodies significantly expand the central government’s domain of intervention. Together with their sponsoring ministries they form an extended institutional network of intervention in each sector. As Huber describes it, these bodies constitute a ‘zone of integrative institutions’46 that is indispensable to Japan’s so-called ‘strategic economy’. At the other extreme, the functional purposes of these groups may only be nominal. They exist for the sole purpose of providing a means whereby retired public servants can continue to draw salaries. They are no more or no less than comfortable retirement homes for

20

The interventionist state model

bureaucrats. In some cases, they may actually conduct no functions at all and are creatures of the tax funds they receive via government subsidies.47 The gaikaku dantai fall into three main organisational types: ● ● ●

special public corporations48 approved, or state-authorised corporations (ninka hojin) public interest corporations (koeki hojin).49

A sponsoring ministry establishes special public corporations. Their number currently stands at 77.50 The significance of the term ‘special’ (tokushu) is that they have a special status ‘as instruments for activities required by the state.’51 Collectively they perform a vast range of services under the broad umbrella of intervention such as banking (savings and loans), insurance, commodity trading, land development, telecommunications, transport and oil exploration as well as other kinds of support functions such as research and development, policy evaluation and consulting. Each is constituted either under its own organising law, or under laws establishing systems of intervention, as noted earlier. As statutory bodies, special public corporations are not permitted to conduct functions outside their relevant laws which set out the public policy objectives for which they have been established, the scope of their business, the nature of their internal organisation and finances, and how they are controlled by the government. In practice, the corporations decide their own business plans ( gyomu hohosho), but these must receive the approval of the relevant minister.52 Funding (both investment and operating capital) for the special public corporations is sourced from government (both national and local) subsidies and from loan capital via the FILP, as already noted. On average more than ¥5 trillion in tax revenues as well as a total of ¥24 trillion from the FILP is annually earmarked for special public corporations.53 Funding is also generated by their own business activities. In some cases, these bodies invest in subsidiaries and in private companies, effectively channelling public funds to their affiliates and into the private sector. In total, 31 special public corporations have some 1,200 subsidiaries (so-called related companies, or kanren gaisha) that carry out projects let by their parent corporations. Some of the special public corporations exercise monopoly or quasi-monopoly powers in markets for particular goods or services. Their dominant market position may be sanctioned by law or emerge simply because public corporations operate with the benefit of operating capital made available at governmentsubsidised rates. In other cases, special public corporations share markets with other quasi-public bodies and private sector enterprises, providing funding at concessional rates for investment in which the private sector is unwilling to operate, or effectively crowding out private sector participants. In addition to the special public corporations, a total of 86 approved corporations54 partly or wholly funded from central government subsidies perform various state-authorised functions. In contrast to the special public corporations, the approved corporations are established through private initiative. They are, however, set up on the basis of legislation and their numbers are limited.55

Modes and means of government intervention 21 The special public corporations and approved corporations are vastly outnumbered by the public interest corporations, somewhat 7,000 of which are attached to the central government ministries and agencies, with the remainder affiliated to prefectural governments.56 The narrow definition of a public interest corporation is an incorporated association (shadan hojin) or incorporated foundation (zaidan hojin) established under Article 34 of the Civil Code. These groups must undertake activities relating to public benefit, they must not pursue private profit and they must receive the approval of the relevant minister (ministry).57 Prior to the setting up of a public interest corporation, the group must apply for ministerial approval, although the minister does not, in principle, approve the group’s business plan. In the application, the group must submit its teikan (code of conduct), which includes an elaboration of its various tasks. Ministerial control is, therefore, indirect. In the process of approving the establishment of the group, the minister can control what the koeki hojin does to some extent. Moreover, each koeki hojin retains its supervising ministry and must report every year to that ministry.58 In addition, ministry staff carry out inspection of the public interest corporation once every two to three years.59 The activities of the public interest corporations include product marketing, land brokerage, real estate sales and lending, publishing, printing, contracting, consulting, providing credit guarantees, transportation, storage and so on. Their income derives from membership fees, government subsidies and grants, monies from the use of property and from performing their various activities and ‘other’ sources. Government subsidies paid to the public interest corporations amounted to ¥2 trillion in fiscal 1999,60 while the government allocated ¥137.3 billion in fees for public projects undertaken by these organisations.61 Some of the public interest corporations benefit from government-sanctioned monopolies in their particular spheres of activity. The final category of juridical persons that are not public interest corporations, but which are still classed as ‘not-for-profit’ corporations, are so-called ‘intermediate corporations’ (chukan hojin). This category consists of labour unions, credit funds, cooperative unions or associations,62 and mutual aid unions.63 These groups are set up under relevant laws and many can be considered to be gaikaku dantai insofar as they are formally listed as ministry ‘related groups’ and undertake various public policy-related functions on behalf of their ministries. As the discussion above suggests, the degree of ministry control over the gaikaku dantai varies according to each group’s legal, organisational and financial status. The special public corporations, approved corporations and public interest/intermediate corporations form three distinct layers of auxiliary cohorts, with the special public corporations representing the innermost layer and operating under the tightest control, and the public interest and intermediate corporations generally functioning under the loosest control (although some intermediate corporations such as the agricultural cooperatives may only perform tasks ascribed to them by law).64 In many cases, the government-affiliated agencies replicate the interventionist functions of the ministries in performing the duties with which they have been charged as an adjunct to the administration. They act as proxies in undertaking tasks such as direct market participation (conducting public enterprises such as

22

The interventionist state model

trading in goods), market regulation (‘designating’ and ‘approving’ particular economic activities, organising and managing cartels, overseeing and supervising particular activities, administering price support schemes etc.) and financial allocation (letting contracts, advancing loans, commissioning subsidised projects and distributing subsidies to particular recipients who qualify etc.). As already noted, the special public corporations may generate profits from their businesses by exacting charges and imposts and by making profits on their business transactions. Not all, however, run at a profit. In fact, most run at a loss requiring large injections of government funds to balance their books. In the main, therefore, the gaikaku dantai as a group are consumers of government subsidies and other forms of financial support in the course of carrying out their semiadministrative duties. Financial dependencies tie these bodies strongly into the interventionist regimes presided over by the central ministries. The need for funds turns them into supplicants and makes them reliant in varying degrees on the exercise of power and discretion by ministry officials. Each gaikaku dantai, like the core ministries, has an administrative constituency to which it relates through membership links, financial links and functional links. Producer organisations, other gaikaku dantai and private companies can be members and therefore liable for membership fees. Likewise, producer organisations, other gaikaku dantai, subsidiary companies or private companies may invest in them (and therefore have membership rights on executive boards), or receive funding from them with the latter taking the form of subsidies or loans for designated policy projects, or of investment capital. Individuals, organisations and companies may also perform contract work for the groups. Finally, the executive, staff and advisory structures of these groups may incorporate representatives of member organisations, other associated organisations and private sector enterprises that are part of their organisational domains. Some gaikaku dantai (in the main, public interest and intermediate corporations) reach down to a private, individual membership consisting of private enterprises or individuals that are the target of the group’s policy-related activities. The key linking mechanism between the government and the grass roots is the membership of these bodies. In the business sector many such groups belong to the general category of industry associations ( gyokai ) with a membership of private companies or their executives. Industry associations are ubiquitous in small and large business, and in the secondary and tertiary sectors, although not all industry associations are gaikaku dantai. For these organisations, the bureaucrats are an important source of information plus a conduit for policy implementation and administration guidance. Gaikaku dantai with a private grass-roots membership intermediate between the private interests of their members and the government. At the same time they assist in the implementation of government policy. Some, like the agricultural cooperatives, are formally integrated into policymaking and administration processes as corporatised interest groups, while others are more accurately classed as ‘institutional interest groups’.65 The public/private roles of these groups are not contradictory; in fact they are usually complementary.66 Indeed, it is the dual

Modes and means of government intervention 23 public/private facets of these groups that have made them so effective as instruments of government policy. They provide a mechanism for the government to direct and influence grass-roots economic activity. Private economic choices become constrained by the exercise of public policy power. Groups may also facilitate access to interventionist benefits and concessions from government. For example, in order to be eligible to bid for particular public works contracts, a company may have to belong to a particular gaikaku dantai that lets out those particular contracts on behalf of the ministry. In many cases, the public interest corporations and intermediate corporations encompassing a grass-roots base of individual producers or companies began as bureaucratically sponsored instruments of state policy. They were set up in order to draw private economic activities into the administrative purview of the state. Others started as privately sponsored groups but later moved to public interest corporation status and became subject to bureaucratic capture. The ministries have frequently offered financial and other incentives to the privately organised groups in order to encourage them to affiliate by acquiring koeki hojin status. Whatever their origins, designation as a public interest corporation is a way of drawing private interest groups into the purview of the state, enlisting them as an arm of the government in the conduct of interventionist administration at the same time as influencing their activities. Corporatisation is a particularly favoured technique of administrators seeking to trade compliance with policy directives for a higher degree of representation of outside interests within government. Corporatisation is effected in order to achieve a convergence of group and ministry preferences. The practice of administrative guidance Bureaucrats’ discretionary authority may be exercised by means of ‘administrative guidance’ ( gyosei shido ). This practice has been defined as an action, within the scope of the functions and responsibilities provided for by an establishment law of each administrative organ, which does not have a compulsory effect such as to restrict the rights of the people or put duties on them but which encourages or induces a certain action or inaction of the private parties with the cooperation of those whom administration is directed to.67 Administrative guidance is a type of informal regulatory power or indirect control exercised by bureaucratic officials, and one of the principal but less formallegal means68 whereby national and local bureaucracies intervene in the nation’s economic and social affairs by guiding the actions of groups and actors that come within the scope of their administrative competence.69 The informal instructions from the bureaucracy that constitute administrative guidance may come either in written or in verbal form. Written notifications or communications (tsutatsu)70 as well as informal, oral ‘invitations’ to constituent groups or actors to cooperate with bureaucratic advice in order to achieve policy

24

The interventionist state model

and other goals fall within the category of administrative guidance.71 As Schaede comments, it is a system of ‘ad hoc rules for particular situations’,72 although some administrative guidance has a flavour less of instruction than of informative advice to recipient parties. As one ministry official explains, it involves ‘notifications that communicate at a more detailed level than laws and ordinances the details and interpretation of all kinds of procedures’.73 In other words, ministry officials explain to outside parties how particular laws and ordinances in laws are to be interpreted in their particular case. In the case of the central government ministries, matters to which administrative guidance applies extend over the entire range of issues relating to their duties and responsibilities. These are matters subject to the laws and ordinances that they administer, but which are not prescribed separately and in detail in these laws and ordinances. In other words, administrative guidance fills the gaps in formallegal controls. It is the ‘shadow empire’ that ‘lurks behind the regulations that are written down and enshrined in law’.74 In practice, administrative guidance is related to laws in three ways: it is based on a specific article of a specific law or ordinance; it is not based on a specific article but is related to that article, because the ministry provides guidance about the interpretation of that article or ordinance (administrative guidance of both these types is usually in written form); it is not based on or related to a specific article, but is based on the general authority to issue administrative guidance arising out of the establishment law of the ministry. This type of administrative guidance is not necessarily in written form.75 However, as a number of observers have pointed out, the authority of ministry officials to issue administrative guidance is not clearly spelled out in law. Indeed, the term appears nowhere in any Japanese statute and is not a legal concept.76 Although the general legal basis of administrative guidance is sometimes considered to be the establishment law of each ministry, such establishment laws contain no language that unequivocally sets out the power to give administrative guidance.77 Nor is there any specification in other laws that ministries can issue guidance in relation to matters under the jurisdiction of those laws.78 Thus, administrative guidance is exercised without any specific statutory authorisation and occurs without Diet scrutiny or approval.79 As Wheeler, Janow and Pepper observe: ‘Administrative guidance . . . refers, in a more informal sense, to suggestions that bureaucrats might make . . . whether or not they have specific legislative authority to make the suggestions.’80 At most, therefore, the legal basis to issue administrative guidance is secured only indirectly by the establishment law and other laws administered by each ministry. Moreover, in many cases, what is believed to be based on a law is in fact based on the personal judgement of individual bureaucrats which emerges in the form of administrative guidance. Most ‘ministries routinely circumvent the legal system and the Diet when they make decisions . . . Such requests have no legal basis, do not require parliamentary approval and have nonetheless been obeyed on many occasions’.81 Most studies of administrative guidance are limited to the relationships between government officials and private businesses operating within their sphere

Modes and means of government intervention 25 of ministerial jurisdiction. However, administrative guidance also extends beyond companies to the entire range of entities operating within the interventionist networks of the ministries, including local government bodies, quasi-public groups, producer organisations and individual producers themselves. The practice of amakudari The custom of amakudari whereby retired officials called ‘old boys’ or OBs, ‘descend from heaven’ into positions in private companies and in public, semipublic and other organisations including gaikaku dantai82 facilitates intervention by ministries in the activities of these companies and groups.83 Through their OBs, the ministries influence organisations and companies in the direction that they want them to go. Indeed, the ministries rely on amakudari to ensure that their extended infrastructure of intervention operates according to the proper legal and administrative requirements and that parts of the private sector can be influenced to serve public purposes.84 Amakudari is, however, a two-way street. It serves the functional interests of both sides within the interventionist framework. Intervention creates the need for firms and groups operating within ministerial jurisdiction to seek competent, experienced, expert and reliable intermediaries who can maintain good channels of communication with and access to serving officials in order to obtain information, concessions and other kinds of intervention-related favours.85 Groups such as industry associations, as well as private companies frequently request the presence of OBs in their executive and managerial ranks because retired officials have the knowledge, expertise and contacts that companies or the member-companies of industry associations need.86 Furthermore, by accepting retired officials, the recipient company or organisation can influence the ministry because the OBs’ ‘voice’ over younger officials is generally strong. On the bureaucratic side, ministries need reliable channels through which various kinds of administrative directives, communications and concessions can flow, and through which officials can supervise and monitor private sector activities87 as well as obtaining information about the activities of private companies to assist them in policy formulation and administrative management. In these contexts, amakudari is a facilitating device.88 Like the corporatisation of gaikaku dantai, it functions, amongst other things, as a compliance mechanism. It assists the convergence of private interests with public policy purposes. Intervention creates the need for retired but trusted servants of the state to continue to serve it in different organisational locales, but in a way that is nevertheless central to the functioning of interventionist systems. Retirement moves bureaucrats from the core of the administrative process to its periphery of administering organisations.89 In the case of the gaikaku dantai, the bureaucratic ministries extend their interventionist reach by colonising the top management of these bodies.90 The auxiliary organs of government generally have a dual management structure: their executives are largely retired officials from the core ministries, while their staff members consist of career administrators of second rank (i.e. to the

26

The interventionist state model

main bureaucracy). Seconded (shukko) officials from the ministries are also appointed at both levels. In some cases, groups are extensions of the bureaucracy and hence their executives are directly involved in conducting regulatory, allocatory and market participation functions on behalf of ministries. In other cases, the public purposes of these organisations are marginal and hence the positions within them have duties that are only nominal. As noted earlier, such bodies are simply retirement homes for ex-bureaucrats funded by the public purse. The more closely the organisation is integrated into government functioning, the more important it is for the entity to be under the management of executives with direct connections to the ministry concerned.91 According to a survey by the Prime Minister’s Office (Sorifu) of the reemployment (over the 10 years from fiscal 1990) of division chiefs and high-ranking bureaucrats from central government offices at gaikaku dantai under the jurisdiction of ministries and agencies to which they belonged, a total of 3,776 assumed executive posts at 1,157 of 6,879 gaikaku dantai, including some 442 who held executive positions at two or more groups.92 Bureaucrats also retire into a diverse range of organisations that are not formally gaikaku dantai, but which nevertheless conduct their activities in fields that impinge on ministry jurisdiction. Such groups include research associations, information centres, industry associations, funds, councils, professional societies and so on. In summary, a system of state intervention in a politically democratic, capitalist society is inherently a system of public-private cooperation.93 It requires a degree of compliance from administered industries and sectors that cannot be achieved simply by administrative fiat alone. Besides being the main agents of government intervention, the central ministry bureaucrats need all the instruments and support structures to facilitate intervention which have been described above: ●

●

●

●

●

laws to underpin interventionist systems which give bureaucrats wide discretionary powers and which provide legal sanction for bureaucratic ministries to intervene in their particular sectors use of financial support structures to facilitate the implementation of government policy objectives creation of an institutional network of ‘assisting forces’ and ministry-sponsored organisations for carrying out delegated interventionist functions deployment of administrative guidance as a means of ‘informal, persuasive, and more indirect methods of gaining industry cooperation and implementing policy’94 recourse to amakudari as a channel for communication and cooperation between the government and the industries and sectors it administers.95

The important general point about this architecture of government intervention is that it is cross-sectoral. Not only is intervention manifested in certain common modes, but it also relies on common structures and practices for its implementation.

3

Theorising government intervention and bureaucratic self-interest

Bureaucratic incentives to intervene in the sectors under their administration derive from the collective and individual gains generated by such intervention. This chapter identifies the collective and individual benefits at stake for the bureaucrats in the central ministries. It also elaborates the spin-offs for private sector and political actors who develop their own vested interests in interventionist systems. Finally, the chapter elaborates how bureaucratic policy choice is filtered through the lens of self-interest. Possible alternative explanations of bureaucratic behaviour are evaluated and the distinction carefully drawn between the approach adopted in this book and standard rational choice analysis.

The collective benefits of intervention Intervention generates a number of significant benefits for government ministries that administer domestic sectors. Most fundamentally it provides a core function and hence a basic rationale for their administrative operations. In the absence of intervention, ministries would be considerably diminished versions of their former selves, with active roles limited to those of oversight and monitoring within their respective administrative domains. For some internal units within ministries, intervention provides the sole organisational rationale. In such cases, intervention is bound up with the survival interests of a particular entity. Given that intervention accounts for a large part of the activities of domestic sectoral ministries, it dictates key ministry attributes such as size of staff complement and magnitude of budgets. These, in turn, are important determinants of the prestige of ministries relative to other ministries. They may complement or offset other factors influencing ministerial prestige such as the national importance of the ministry’s administrative sphere. Intervention also determines the extent of ministries’ regulatory and distributive authority over markets, affiliated agencies, local governments and jurisdictional constituents, including interest groups and private companies. In short, intervention constitutes the exercise of administrative power. It is a functional area where the central bureaucratic organs are paramount in their respective domains. Intervention shapes the individual ministries into independent fiefdoms, supreme over all they survey. The administration of laws and ordinances as well

28

The interventionist state model

as the discretionary implementation of regulations allows bureaucrats to make decisions that direct and guide the activities of others, and to exercise control over officials, individuals, businesses and groups. It places bureaucrats in a superior controlling, guiding and even coercive position in relation to their administered sectors. Bureaucrats make decisions about who can do what, where, in what way and when. Abolishing intervention would remove practically all the instruments of central bureaucratic control over economic and social sectors. Similarly, systems of allocatory intervention involve a wide variety of subsidies and other kinds of financial assistance that are a source of bureaucratic influence, leverage and patronage. As Takeuchi observes, subsidies that cover all policy fields and which account for one-third of the state budget in Japan, play a crucial role in centralising administrative power.1 Ministry officials become the targets of petitions for various kinds of financial subventions.2 They also use subsidies to encourage prospective recipients to fall into line with their policy proposals. Bureaucrats make micro-allocatory decisions about what public works projects get subsidised and where, which company gets a government contract, and how much funding is allocated to a particular local government, quasi-government organisation, industrial association or other group. Intervention is, therefore, a source of ministry power over companies seeking public works contracts, over interest groups (including institutional interest groups) pursuing financial subventions, over local government groups (both political and administrative) seeking projects and funds for their local areas and over Diet politicians wanting distributory favours for their supporters and constituents. In sum, where the exercise of regulatory and distributive authority by ministries is discretionary, bureaucrats become the targets of requests from supplicants for favours of various kinds. In this context, the bureaucrats are superior while the petitioners, including Diet politicians, are subordinate. Intervention thus sets up relationships of power and dependency between central ministry bureaucrats and the various supplicants for ministry patronage. Last but not least, intervention underwrites the authority and autonomy of bureaucrats as policymakers.3 As Muramatsu asserts, the Japanese bureaucracy has been preoccupied with the notion of maximum mobilization and has made special efforts to use its resources as effectively as possible by adopting ministry-centered policies and making the ministries compete fiercely with one another. This competition has produced efficiency and effectiveness in public policy making.4 Indeed, much intervention is, in fact, de facto policymaking. Allocating subsidies, issuing administrative guidance, compiling regulatory and other ordinances appended to legislation, applying these ordinances, determining the organisational attributes of ministry gaikaku dantai, and so on, are all functions that effectively amount to policymaking. The line between policymaking and administration is thus blurred, and much policy is undertaken under administrative leadership ( gyosei shudo ).

Theorising government intervention 29 The benefits generated back to the ministries by intervention are, therefore, manifold. Intervention engenders power and authority over ministry clients and associated politicians, it underwrites the power to allocate subsidies and loans to a range of recipients, it yields market power in the Japanese economy where the ministries conduct public enterprises and it underpins the policymaking independence of the bureaucracy. The centrality of intervention to the total quantum of ministry power cannot be overestimated. Bureaucrats’ discretionary authority, legal authority, spending power, budgetary authority and so on all stem predominantly from intervention. Intervention is the primary determinant of ministries’ operational influence within the Japanese economic, financial, fiscal and political systems.5 From intervention flow many of the ministry attributes or ‘stocks’6 listed above: size of staff complement, breadth of jurisdictional authority, scale of budgets and hence magnitude of allocatory authority and the extent of ministry power over industries and markets within their respective jurisdictional spheres. Intervention is also a source of ministries’ policymaking power and influence over politicians and over their clients and constituencies. As Hartcher puts it, intervention is the ‘core interest and chief source of power’7 for the ministries. It represents the so-called ‘main castle’ of ministry interests.8 It also generates status, prestige and standing in the eyes of the public and wider policy community. Finally, intervention helps to rank ministries in the bureaucratic hierarchy of ministries and agencies. The Japanese bureaucratic system is characterised by hypercompetition for finite resources and domain-maintenance amongst the vertically partitioned ministries. Typically, very high barriers divide ministries and agencies with, in the past, weak supra-ministry coordinating bodies.9 As Sugimoto observes, the vertically partitioned structure of sectionalism intensifies inter-ministerial competition and makes bureaucrats obsessed with their departmental vested interests . . . Ministries compete with each other to maximize their spheres of regulation. Because different ministries try to place their domains of influence under their own jurisdiction, national economic activity is partitioned along ministry lines.10 Ministry attributes derived from intervention represent some of the principal dimensions of competition amongst the different ministries. The attributes that flow from intervention are those that give ministries the edge over their rivals. The bigger a ministry is, the larger its budget, the greater its power over its jurisdictional constituents, the more successfully it will be able to defend its turf against encroachment from other ministries and calls for a derogation of its powers, the more influence it will exert in inter-ministerial bargaining and the greater the claim it will have to government resources. As Muramatsu explains, the various ministries and agencies … compete vigorously with each other for power and resources. An important objective in such competition is jurisdiction. If a ministry has legal jurisdiction, it can propose new policies, and then in pursuit of these policies, it can expand its organizational size and its budget allocation.11

30

The interventionist state model

Very much the same argument can be found in Wright: Competition between ministries to establish jurisdictional authority for new or expanding policy areas, and to supervise and control new agencies, commissions, and quasi-governmental organization [sic.], centred on three issues: influence and control in the policy process, money, and patronage. Any diminution in the scope of a ministry’s jurisdictional authority was a potential threat to its share of the Budget. Conversely, a ministry able to extend its territorial boundaries could argue for an increase in its budget to reflect additional responsibilities.12 Wilks and Wright also refer to the ‘pervasive and widely acknowledged norm – the obsessive defence and expansion of a ministry’s sphere of responsibility. Winning these conflicts of jurisdiction (nawabari arasoi) is . . . the pre-eminent motivation of all Japanese bureaucrats.13 Ministries therefore fight to keep their spheres of administrative authority intact (and if possible to expand them). The ultimate humiliation for a ministry is dismemberment: to lose a significant area of jurisdiction to another ministry or, as is more often the case, to a new and separate body. The Ministry of Finance (MOF) experienced just this sort of public punishment for its mishandling of banking supervision in the 1990s.14 The scope and scale of ministry intervention also influences the size of the institutional network fanning out from the core ministries and thus dictates the scale of their auxiliary empires. It directly determines the numbers of gaikaku dantai that extend ministerial jurisdiction and oversight at the same time as helping to absorb and justify ministerial expenditure. The capacity of this ancillary infrastructure is important for several reasons. First, it expands the interventionist reach of ministries and this, in turn, has a multiplying or ‘spreading’ effect. As Wright points out, The extent and quality of a ministry’s jurisdictional authority over other governmental and quasi-governmental organizations were important . . . [ T ]he regulatory and supervisory activities of a ministry’s satellites, together with the ministry’s own issue of regulations, provided an instrument of influence, leverage and control over clients and special interest groups.15 Second, administrative agencies consume subsidies directly, which therefore affects the size of ministry budgets. These groups also absorb loans from the FILP and therefore vindicate ministerial shares of this programme. Japanese commentators frequently allude to the way in which gaikaku dantai serve ministry interests in maximising allocatory intervention. Takeuchi, for example, observes that the special public corporations are perhaps the most ‘desirable’ recipients on which state subsidies and investment are ‘wasted’,16 although, as already noted in the previous chapter, in some cases the gaikaku dantai generate additional funding for ministries. Third, the infrastructure of ministerial satellites provides ‘a major source of “soft landings” for senior ministerial and agency staff who retired or resigned’.17 As Carpenter observes, ‘Japanese ministries . . . exploit special corporations in order to intensify their administrative power over industries and local governments,

Theorising government intervention 31 and to perpetuate the interests of elite civil servants by facilitating the migration to post-retirement positions in the private sector.’18 By expanding its interventionist jurisdiction, a ministry ‘can . . . expand its access to second jobs for its retiring bureaucrats which is regarded as extremely important both in maintaining the morale of the current high-flyers in the ministries and in luring young promising new graduates to work for the ministries.’19 Thus, the size and span of each ministry’s ancillary infrastructure is an important factor determining the power status and prestige of ministries. Furthermore, the roles that government-affiliated agencies perform in the interventionist infrastructure of government furnish many of the same kind of benefits for them as they do for the core ministries. They determine their organisational rationale and thus their organisational survival, the size of their budgets, their power and prestige and so on. As already pointed out, the gaikaku dantai share in the bounty of subsidies as both direct and indirect recipients. They receive commissions, payments and subsidies for the functions they perform as well as acting as distributing agencies for subsidies to various targeted recipients. In this respect, the gaikaku dantai are quintessentially ‘ “policy beneficiary” organizations concerned with the distribution of government resources’.20 In addition, the gaikaku dantai uniformly enjoy special tax privileges. The special public corporations, for example, enjoy favourable tax treatment, including lower overall tax rates and tax exemptions for income from businesses that do not produce profits.21 In the case of koeki hojin, they serve the public interest by definition. As long they conduct business in the public interest and not for profit, they are exempted from taxation, both company tax and juridical person tax (hojinzei ). Given the benefits generated by intervention for ministries and their organisational offshoots, they naturally develop a vested interest in supplying intervention and in sustaining the architecture of intervention in their particular sector of the economy. Moreover, government-affiliated organisations multiply institutionally embedded interests in interventionist systems. Because they replicate the interventionist functions of the ministries – direct market participation, regulation and allocation – they develop the same kind of vested interest in supplying intervention as the core ministries. They are a secondary spinoff from intervention which widens the spectrum of vested interests in these systems. Indeed, a majority of government-affiliated agencies have little more than an interventionist rationale. They have been criticised for putting pressure on private business and for monopolising government demand as repositories of amakudari officials.22

Distinguishing collective and personal benefits The gains from intervention are not only collective and organisational; they are also individual and personal. Intervention serves the separate, personal interests of individual bureaucrats alongside the collective interests of ministries and their affiliated agencies. The first and most obvious benefit for individuals is employment. Intervention creates bureaucratic and semi-administrative tasks and functions and hence the need for officials to perform them.

32

The interventionist state model

The second personal benefit also relates to employment, but in this case it is the opportunity for lucrative, post-retirement ‘second careers’ (daini no jinsei ) in both the private and public sectors of interventionist jurisdiction. Because amakudari is functional to and necessitated by bureaucratic regulatory and allocatory intervention, the ‘stronger the regulatory discretion a ministry has, the better the post-retirement opportunities officials can find’.23 Likewise, the more contracts for projects the ministry lets and the more subsidies it distributes, the more hangerson in both the semi-public and private sectors it maintains. Hence, officials develop a strong, vested interest in the retention of interventionist controls by their ministries. Each ministry has ‘accumulated over the years a series of associations, foundations, beholden industries and other post-retirement havens’.24 Critics argue that bureaucratic amalgamation with the industries they are supposed to keep watch over leads inevitably to conflict of interest, or indeed, to deferred bribery.25 Moreover, questions have been raised about whether or not it is acceptable for the priority function of publicly subsidised gaikaku dantai to be ‘destinations’ for amakudari bureaucrats.26 Retired officials move between special public corporations and public interest corporations, are guaranteed almost the same salary as they previously earned as ministry officials, and also receive large retirement allowances. While amakudari salaries tend to be very generous, the real financial killing is made when bureaucrats move from one amakudari position to another. At a minimum, amakudari is a means of picking up two retirement allowances (from the original ministry and from the post-retirement organisation or company). Former administrative vice-ministers ( jimu jikan) are regarded as especially privileged given that they are looked after with amakudari positions for life, while ex-bureau directors and above will be taken care of until aged 70.27 A 2000 Prime Minister’s Office survey established that two hundred former bureaucrats received more than ¥30 million each in retirement allowances over the previous decade from public organisations where they had served as executives after leaving or retiring from their posts in central government offices. Indeed, some of them known as ‘migratory’ former bureaucrats who landed jobs at two or more public organisations, received retirement allowances from two or more public corporations.28 Thus, amakudari into public sector bodies for some ex-bureaucrats can be a sequential process, meaning that retired bureaucrats move successively from one gaikaku dantai to another, collecting handsome payouts each time. As Japanese media commentators have observed of gaikaku dantai, these less-than-heavenly bodies are supposed to serve the people of Japan, but what they mostly do is serve the bureaucracy: they expand the field of bureaucratic authority, defend vested interests, and provide security for elderly bureaucrats in the form of cushy, high-paying jobs into which they can ‘descend from heaven’ after retirement . . . [ Most have] lost any sense of their original purpose. They exist only to provide sinecures for retiring bureaucrats and to maintain stable employment for their staff.29

Theorising government intervention 33 Retired bureaucrats may also move from public sector bodies into the private sector. Because of rules which prevent bureaucrats from retiring directly into companies they formerly supervised, ministry OBs may spend the obligatory two-year waiting period in one of the thousands of gaikaku dantai including industry associations, and then ‘move on to three or four private corporations in succession, where he will be paid good wages and receive a fat retirement bonus from each.’ In this way, exbureaucrats are guaranteed some form of employment until they reach the age of 65–70, or even older in some cases. The system thus allows retired bureaucrats to obtain retirement benefits or separation allowances many times over.30 Opportunities for post-retirement careers in politics are also generated because of the personal power base amongst jurisdictional clientele that individual bureaucrats develop as a spin-off from their interventionist (chiefly allocatory) functions. Bureaucrats are able to exploit the local connections they have developed as a result of being in charge of the distribution of particular kinds of subsidies that impact on key groups of voters who have a vested interest in the continued flow of those subsidies and who seek to place a person in power with connections to their industry or region. Intervention thus serves as a platform for bureaucratic careers in national politics. Intervention may also form the basis of direct connections with politicians who seek to influence bureaucrats in the allocation of subsidies. Intervention thus facilitates an entrée into the political world in several different ways. Apart from lucrative and other kinds of rewarding post-retirement positions, interventionist systems furnish serving bureaucrats with direct, personal benefits provided by private or public and quasi-public entities in ‘intervened’ sectors and industries which are dependent on the discretionary decisions (either regulatory or allocatory) of ministry officials. Personal benefits include wining and dining (settai ), golf club memberships, interest-free loans, domestic and overseas travel, monetary and other gifts and so on. Ex-bureaucrats may also enjoy the same benefits. An executive with a leading construction company admitted that his firm spent as much as ¥500 million a year on entertaining bureaucratic OBs because they still continued to wield influence over former underlings serving in their former ministries.31 Some of these personal, private benefits are not lawfully sanctioned. Indeed, intervention can be a source of corruption, with collusive, extra-legal transactions taking place between interventionist officials and representatives of ‘intervened industries’. For example, there may be kickbacks from the industries concerned in exchange for favourable decisions on subsidy and public works contracts. Intervention thus sows the seeds of corruption because the regulated try to gain the favours of regulators, and bureaucrats ‘sell’ their ‘favours’ (regulatory and allocatory) for personal gain. The receipt of these kinds of personal private goods distorts interventionist functions beyond their official public goals. Personal benefits accruing to ministry bureaucrats from intervention, both legal and illegal, underline the fact that economic and social intervention bestows enormous powers on individual officials, who make economic and financial ‘life and death’ decisions for private sector producers and businesses as well as for the vast numbers of quasi-public bodies that are often budget-parasitic. Exercising the power of a particular bureaucratic office is also of benefit to officials of a more intangible

34

The interventionist state model

kind. Such benefits come in the form of social status and prestige for those who work for powerful ministries. However, where bureaucrats use their interventionist powers for purely selfish ends, the exercise of such power becomes corrupt.

‘Iron triangles’ of vested interest in intervention The benefits of intervention are not restricted to the domestic sectoral ministries and the individuals working inside them. Intervention can have positive spin-offs for groups, producers and enterprises in the private sector. The Japanese economy, for example, is segmented into a large number of controlled and managed markets that generate concessions for particular groups of producers, their organisations and private sector enterprises. One of the standard benefits of economic regulation, for example, is that it restricts competition and thus insulates players from the rigours of free market competition. Producers, producer groups and enterprises operating within regulatory systems may benefit from controlled competition by deriving income or reaping profits that would not be available in unfettered markets. The kinds of entry controls administered by bureaucrats create systems of privileged access to certain markets in which participation is dependent on some kind of bureaucratic authorisation, designation or permission, and where only approved activities may be conducted. The effect of such systems is to create governmentcontrolled markets that sanction a limited number of participants, and in some cases, government-sanctioned monopolies. It is ‘a system of socio-economic structures controlled by insiders’.32 No one except duly recognised and officially authorised players may participate, no activities except those duly recognised may be lawfully conducted and commodities are traded at what are effectively ‘administered’ prices. Duly authorised market participants are often rewarded for regulatory compliance with high profits. This directly assists inefficient producers, organisations and companies that would not survive without government protection. Other benefits of intervention for producers, producer groups and enterprises are direct and indirect financial assistance (e.g. commissions, subsidies, low-interest loans and public works contracts) and opportunities to participate in administratively sanctioned price and production cartels that maintain business viability and preserve profits. Once again, government intervention ensures the survival of businesses and producers who might otherwise succumb to their ‘market-determined fates’.33 Further, economic ministries deliberately use the benefits to producers and enterprises that are spin-offs from interventionist systems to construct and retain industry support for regulated markets. The ministries cement the vested interests of their clients in interventionist regimes by providing concessions and creating pockets of market privilege. In this way, the bureaucracy recruits producers and the private sector as accomplices in the politics of intervention-maintenance. Bureaucratic purposes are served by helping to build a broader base of political support for ministry intervention. Intervention thus conjoins the private and public sectors in a system of shared benefits, expanding the circle of vested interest. For politicians in the ruling party, the same concessions and benefits originating in the bureaucracy represent ‘political goods’ or ‘rents’ those politicians can

Theorising government intervention 35 distribute to their supporters.34 Politicians are able to ‘feed off ’ interventionist systems by manipulating and influencing various regulatory and allocatory decisions to their political advantage. In return, they are rewarded with votes, organised campaign support, election workers, official organisational endorsement and political funding from organised interests and support groups. The circle of vested interest expands once again to encompass politicians representing the beneficiaries of intervention. The conjunction of bureaucratic, producer and political interests in intervention is sometimes called an ‘iron triangle’ of vested interest. In the classic formulation, tripartite coalitions of bureaucrats, politicians and industries operate in segmented policy domains bound tightly together by mutual interest in the benefits of intervention. For politicians, the principal advantage is being able to bestow patronage on their supporters; for private industries and producers the benefits principally come in the form of protection from free market competition and thus the maintenance of profits and income. The term ‘iron triangle’ is used because of the strength of the shared interest of the three parties in the benefits of intervention, because their level of interdependence is such that changing one constituent element of the system means changing it all,35 and because the triangle collectively unites to resist any change or reform that might threaten its mutual policy interest. Further, the iron triangles of vested interest help to entrench interventionist regimes politically.

Implications for bureaucratic policy choice Because of the manifest benefits generated by intervention for bureaucrats, both collectively as ministries and individually as administrative officials, they will seek to maximise intervention. This proposition forms the basis of a theory of supplyled intervention based on bureaucratic self-interest. The theory posits that bureaucrats have a vested interest in supplying intervention irrespective of demand. The theory thus advances a number of propositions about how bureaucrats will behave in a policy context. It hypothesises that in shaping policy strategies, in ordering policy priorities, in assuming positions and perspectives on policy issues, in formulating and developing policies, in compiling ministry budgets and in selecting the objectives that will be pursued in the policymaking process, the domestic ministries will seek to maximise intervention. This goal will be the primary and most significant shaper of bureaucratic policy choice. Thus, ministries will be continually motivated to expand their interventionist domains, to design policies that maintain and enhance their interventionist powers and to resist encroachment on their jurisdictional spheres by other claimants including rival ministries. As Friedman observes, the [ bureaucratic] stratum has enormous practical power and a vested interest in stability and in maintaining its relative position. Senior officials view the economic problems through a lens of personal and institutional interests. Bold initiatives radically reshaping Japanese society will not emerge from this sector.36

36

The interventionist state model

More specifically, the ministries will endeavour to maximise their budgetary and subsidy expenditure by devising policies that require large injections of government financial resources into their sectors. They will instinctively pursue bureaucratic aggrandisement, striving to build bigger empires of auxiliary agencies as well as to defend those already in existence by opposing abolition, rationalisation and restructuring of these entities.37 Intervention maximising means that Japanese domestic ministries will be intrinsically anti-competitive, anti-market and anti-reform. They will seek to maximise the quantum of regulations they administer and the extent of their direct participation in markets. The assumption of intervention maximising is thrown into stark relief when bureaucrats come under pressure to wind back interventionist systems and countenance liberalising reform. They will respond to pressures for innovation, reform and adjustment in such a way as to advantage their prior goal of maximising intervention and the institutional and personal benefits generated by it. In the face of fiscal constraints, they will deploy all kinds of sleight-of-hand tactics to defend their budgets. Similarly, in responding to pressures for devolution of bureaucratic power to markets through processes of deregulation, privatisation and administrative reform, ministries will jealously guard their interventionist authority, obstruct reforms that threaten to diminish levels of intervention, act to prevent any loss of interventionist power and function, and limit any transfer of their authority to the market. They will hinder attempts to abolish and privatise their special and approved public corporations, and will sidestep pressures for reform by delegating some of their interventionist powers to their organisational proxies, which will undertake the same task, but at arms length and under extended bureaucratic supervision. The predisposition to maximise intervention means that bureaucrats will be more favourably disposed towards reforms that will reduce benefits to targeted recipients than those that will diminish their own powers and privileges. If compelled to truncate intervention in one sphere, they will design policies that substitute one type of intervention for another in order to avoid any net loss of benefits or, what Vogel calls ‘net loss of control’.38 If under pressure to countenance more radical programme redesign, the ministries will devise ‘reforms to maintain and even to enhance their own power’.39 They may even endeavour to turn adversity to advantage (sakin arashi )40 by using ‘the discovery of problems as a vehicle for bureaucratic aggrandizement’.41 In other words, the ministries will strive to manipulate and manage the process of transformation to their advantage. They will not concede any more than is necessary to accommodate reform pressures and concede only in ways that preserve their own interests. If, on the other hand, clinging to particular policies endangers their more fundamental interventionist goals, they will abandon those policies.42 They will be prepared to relinquish any programmes that are perceived to be endangering their larger interest in intervention.43 Finally, the ministries will be highly motivated to defend programmes that are the most strongly associated with their primary interventionist role and will be more prepared to make concessions on others. They will, therefore, be prepared to trade minor interventionist powers in order to protect their core interests.44

Theorising government intervention 37 Above all, they will resist ‘systemic reforms’, meaning those that dismantle the actual architecture of intervention because of the threat this poses to their role as suppliers of intervention. On an individual level, bureaucrats will endeavour to make decisions that provide them with the best opportunities for personal gain by enhancing their amakudari prospects, by preserving or increasing the numbers of administrative tasks and associated positions for officials, and by generating the greatest quantities of personal private goods from organisations and enterprises that benefit from intervention. Similarly, they will seek to promote and preserve interventionist programmes that offer the greatest potential for the exercise of personal decisionmaking authority and discretionary regulatory power. When under pressure to reform, ministry officials will try to safeguard their amakudari prospects by hanging on to their gaikaku dantai, and will endeavour to justify the continuing existence and staffing of administrative subunits by substituting other tasks for those they relinquish. For those politically ambitious bureaucrats who aspire to political careers after retirement, they will be predisposed towards maintaining interventionist systems and making judgements on policy issues that will optimise their chances for constructing the necessary base of support from which to launch campaigns for political office. For similar reasons, they will be inclined to comply with the wishes of politicians whose assistance and patronage they need to elevate themselves into power.45 Equally, reform programmes will meet stiff resistance from ministry officials anxious to keep their special privileges. Because the ministries’ auxiliary organisations replicate the functions and powers of their sponsoring ministries, their officials will exhibit the same set of attitudes and behaviour with respect to maximising intervention. They will conserve their programmes and their organisational functions and if necessary will pursue functional aggrandisement for the purpose of organisational survival. If one set of roles diminishes in relevance, need and importance, they will endeavour to replace it with others. The depiction of bureaucrats as self-interested intervention-maximisers largely discounts the view that ministry officials are motivated to intervene by other considerations rather than by collective and individual self-interest. In accounting for the high degree of intervention in the Japanese economy, some analysts have argued that Japanese policy elites are ideologically predisposed towards mistrusting unfettered competition and thus reject the Anglo-Saxon, neo-liberal model of free-market competition because they genuinely believe it would produce suboptimal outcomes for the economy and for society.46 As one agricultural policy analyst pointed out: ‘in cases where agricultural products hold an important position in the national economy, [the government] does not entrust agricultural product price formation to the market function’.47 How much this disbelief in the market reflects genuine philosophical conviction or how much it is simply justifying intervention by those who have a vested interest in supplying it is an open question. The theory advanced in this book – that self-interested bureaucrats are intervention-maximisers – assumes that ministry officials are antipathetic towards

38

The interventionist state model

competitive markets because such markets are incompatible with well-entrenched traditions of administrative intervention that generate significant institutional and individual benefits. In short, free markets entail loss of bureaucratic power and privilege. Although the justification for intervention may come in the form of anti-market philosophies, the theory would argue that the real motivation for intervention has much more to do with bureaucratic power-maintenance and the protection of vested interests than with ideological conviction. As Vogel ventures, bureaucrats’ ‘beliefs about the proper scope, goals, and methods of government intervention in the economy . . . [are sourced in their own self-interest rather than in] adherence to broad doctrines’.48 For similar reasons, the theory is opposed to the view that bureaucrats are primarily motivated to work in the national interest or that they have a strong sense of mission (shimeikan) to serve their country.49 Japanese bureaucrats have consistently claimed ‘that politicians represent special interests [and] it is left to the bureaucracy to represent the national interest’.50 Scholars who argue that the role of the bureaucracy in realising the national interest is what distinguishes bureaucrats from politicians, whose role is to realise special interests and to collect public support, have endorsed the same view.51 Fukai, for example, argues that bureaucrats tend ‘to consider their role as that of guardians of the public interest, i.e., to advance the cause of the nation as a whole . . . [and their] view of their mission . . . [is] one of moving society in a desirable and proper direction’.52 By this is meant what Koh calls a ‘sense of service’,53 and what Koitabashi identifies as a ‘sense of mission’.54 The same perspective is implicit in the ‘bureaucracy-dominant’ model of policymaking which is a concomitant of the ‘developmental state’ model and which posits that bureaucratic behavior is not subject to strong constraints from either the party politicians or industry actors. This paradigm describes bureaucratic actors as impervious to political intervention and unresponsive to particularistic pressures and, thus, able to design economic and industrial policies that achieve broader, national-level objectives.55 Aoki takes this view one step further with his depiction of one of the two ‘faces’ of the bureaucracy as that of a ‘semiautonomous rational regulator’.56 For this perspective, he draws on what he describes as the ‘rationality’ view, namely that ‘the bureaucracy is regarded as contributing to the efficiency of the Japanese economy by being an independent rational actor in the political-economic process’.57 By this, he means that the ministries act objectively (i.e. independently of the subjective demands of allied politicians and jurisdictional constituents) with the objective of advancing the industries in their particular sectors.58 The image of the bureaucrats that is common to all these perspectives is that of dispassionate, objective, neutral arbiters of the interests of political actors, including party politicians, Diet politicians and interest group leaders in their endeavour to maximise the national interest against special claimants. In this model, bureaucrats serve to mediate special interests, filter and reinterpret them

Theorising government intervention 39 against a national interest frame of reference. This is certainly how many of their policies are explained and justified.59 However, the underlying question is, as former Director-General of the Economic Planning Agency, Sakaiya Taichi puts it, whether Japan’s bureaucrats – as organizational members and as individuals – have the moral fortitude to transcend the interests of individual ministries and bureaus and consider the welfare of the nation as a whole . . . Most people would agree that, on the whole, mandarins are more ethical than politicians when it comes to personal economic gain. There is adequate cause to suspect, however, that an excessive emphasis on the interests of their own particular ministry or agency has caused them to lose sight of what is good for the nation.60 Sakaiya agrees that bureaucrats ‘focus only on the good of the ministry, not the good of the nation, and contemplate only further expansion, never a scaling back’.61 In Fukushima’s view, ‘their mission is to preserve their ministry’s interests, which usually means unyielding adherence to the status quo’.62 As Matsubara ventures: ‘It is incumbent on [bureaucrats] . . . to prove that they are in fact acting in accordance with the dictates of a public interest distinct from the interests of their particular ministry.’63 In the same vein, I would contend that first, the image of Japanese bureaucrats as national-interest maximisers is often based on their own idealised perceptions of their role rather than on their actual policy choices and behaviour.64 Second, bureaucrats are very skilled at aligning policies with their own interests and then justifying them in national interest terms.65 Third, bureaucratic policy choice on national interest grounds for the most part reflects politically strategic behaviour on the part of ministries rather than genuinely held belief.66 Fourth, the bureaucracy should not be perceived as a kind of impartial referee of the interests of the ruling party and interest groups. At the institutional level, bureaucrats will not be inclined voluntarily to think beyond the collective interest of their ministries, or at the individual level beyond their own self-interest. As Sakaiya argues, Every ministry and bureau is so concerned about defending its turf that it is impossible to deregulate or reorder priorities . . . And . . . in seeking larger budgets and greater authority bureaucrats have their eyes on plush private-sector posts to move into after retiring from the government.67 This means that bureaucrats will be willing to sacrifice both the public interest and the interests of their jurisdictional clients if it means maximising the gains from intervention. As Hartcher concurs, each ministry primarily represents ministerial self-interest: it ‘acts not out of national interest but out of unenlightened self-interest’.68 Self-interested intervention maximising means that bureaucrats will consistently strive to put their own subjectively determined policy goals ahead of the interests of their client industries and the national interest.69

40

The interventionist state model

One cannot rule out entirely other possible motivations for bureaucratic policy choice, including national interest considerations, ideological convictions and objective notions of how the health and well-being of particular industries can best be served. Ministries may collectively, and officials individually, be sometimes guided by principles, values, belief systems and doctrines other than those of institutional advantage and individual self-interest. For example, individual officials may genuinely believe in the general value of intervention for non-bureaucratic interests or groups in the community. Some MAFF bureaucrats are sincere in believing that assisting and protecting agriculture is in the public interest because it guarantees the survival of a sector that provides all kinds of positive externalities such as food security and environmental protection, or because it provides employment, particularly in rural areas, or because it is a form of social security for the aged, or because it stabilises rural communities and so on. They may support Yaguchi’s argument, for example, which holds that government intervention in the agricultural sector is for the purpose of ‘easing the disadvantage and instability inherent in agriculture and avoiding crisis in order to achieve social and economic stability’.70 MAFF officials have been described as ‘observed with a fixed belief that what the ministry has done has been for the public benefit . . . [They] have yet to emerge from the notion that “the people are ignorant and policy worked out by government officials is absolutely correct” ’.71 However, I contend that these motivations, though occasionally genuine, do not provide the dominant explanation of bureaucratic behaviour. Moreover, while individual officials may have concerns that go beyond their self-interest in the benefits of intervention, the ministry in coming to a collective decision on particular policies will seek consistently to defend its collective institutional interest in intervention. My approach can be distinguished from classical rational choice theory of bureaucratic behaviour both methodologically and empirically. First, as noted above, I do not claim that self-interested intervention maximising is the sole motivation of bureaucratic behaviour and therefore the sole determinant of bureaucratic policy choice. In this respect, I do not accept the institutional reductionism of the rational choice approach. Self-interest is simply the prevailing motivation of ministries and ministry officials and the major driver of bureaucratic policy choice. Unlike the rational choice approach, the theory admits to alternative assumptions about the motivations of Japanese bureaucrats. In my view, intervention maximising explains a lot, although it is not necessarily borne out in all cases. Thus, my approach does not assume that bureaucrats always identify their selfinterest with a single, specific policy goal – in this case maximising intervention. Though this goal explains most policy choices made by particular ministries, there will be occasions when ministries will prefer other goals. I would argue that the principal motivation that cuts cross ministries’ intervention maximising stance is genuine concern for their public reputation. There will be times when a ministry will choose to act against its own interventionist interest because it values its public standing and cannot maximise intervention without compromising it. In some cases, such choices may be interpreted as strategic concessions aimed at furthering interventionist goals.72 However, in other cases preserving the public standing

Theorising government intervention 41 of the ministry is a goal preferred for its own sake. Such non-interventionist choices may themselves be based on collective and individual self-interest, though of course, again, the possibility of genuine, non-self-interested conviction cannot be ruled out as a contributing motivation. Second, in rational choice accounts of bureaucratic motivation, the individual interests of bureaucrats are paramount and provide the sole explanation for the collective action of bureaucracies. My analysis, on the other hand, places equal if not greater importance on the collective institutional interests of ministries that are the primary focus of this work. Ministry interests are not seen as derived from the separate interests of individual bureaucrats. Rather, the ministries have collective interests, and individual bureaucrats genuinely identify their own interests with these collective interests as well as deriving separate, additional benefits from intervention. Thus, ministries will be collective interest-maximisers, while bureaucrats will also be collective interest-maximisers as well as being individual interestmaximisers. While maximising the collective interest ensures that individual interests are also advanced (in some cases, collective gains will be reflected in individual payoffs), I would argue that bureaucrats gain personally not only by being able to obtain side-benefits from their public functions but also by identifying with the aggrandisement of their own ministries as a separate goal in its own right. When ministry officials come to make an individual policy choice, they are not always thinking just about: ‘What is in it for me personally?’ ‘How can this benefit me?’ They are also thinking about how their decision will benefit their particular division/department/bureau/ministry as a whole. As noted earlier, Aoki argues that bureaucrats seek to maximise the political stocks of their ministries as a means to an end, namely to realise personal gains from their bureaucratic positions (chiefly career opportunities, both bureaucratic and post-bureaucratic). In short, the pursuit of ministry interests is reduced to the individual perspective of bureaucrats pursuing their self-interests. As Aoki explains, a common and primary concern . . . is the maintenance and growth of the political influence of their ministry. Fulfilment of their ambitions, idealistic and personal, is not possible without the political viability of the ministry. A strong ministry will enhance their lifetime economic and political opportunities. The more politically powerful the ministry and the more instrumental the roles these bureaucrats have played in it, the better their chances in postretirement positions in the private sector and in the influential network of communications connecting the bureaucracy and the private sector. However, the political viability of a ministry cannot be maintained without sustained reproduction of the political resources available for policy implementation. Thus . . . the lifetime career opportunities, during as well as after bureaucratic service, for bureaucrats may be said to be related to maximization of the political stock of the ministry in which they work.73 I posit, however, that intervention-maximising (as opposed to political-stockmaximising) should be perceived as a collective goal in its own right and not just as

42

The interventionist state model

a means of advancing the personal goals of individual bureaucrats.74 Intervention maximising is the overriding collective objective towards which the personnel employed in the ministries work, rather than simply an expression of their individual self-interests in the aggregate. The spin-offs from intervention including lucrative post-retirement jobs in private enterprise and in the gaikaku dantai, as well as greater personal prestige, power and status, personal benefits etc. may be important individual self-interests, but they are only part of the story. Like all rational choice explanations, the major limitation of Aoki’s view is that it mistakes a part for the whole. The personal goals of bureaucrats do not sufficiently explain why ministries have a vested interest in supplying intervention and in sustaining an entrenched architecture of intervention. Collective goals cannot be reduced simply to personal goals. Japanese officials do not interventionmaximise only for their own personal gain; they pursue such a goal as a collective goal. They may be selfish, but they are institutionally selfish rather than simply personally selfish. Bureaucrats maximise intervention out of a sense of collective pride, collective achievement and collective loyalty. This is underscored by the strong sense of personal loyalty to and identification with their ministries (and more particularly the ministry bureaus in which they work) felt by officials. Adherence to the collective goals of the ministry is cemented by the fierce devotion officials feel towards it. Loyalty to the ministry reflects the appeal of solidarity or the ‘so-called purposes incentive’.75 Officials are enculturated into the pursuit of collective ministry goals very early on in their bureaucratic careers in that ministry.76 It is part of their education into the ministry ethos or ideology. Indeed, much is actively done within ministries to engender higher levels of loyalty and identification.77 Such activities are designed to encourage officials to subordinate their own individual interests to the collective interest, in effect to become agents of the collective institutional interest.78 Accepting the collective goal argument means that contrary to the rational choice perspective, bureaucrats do not perceive that maximising intervention is just a means to an end (i.e. their own personal gain) but as an end to be pursued for the sake of the ministry. Maximising intervention is not simply for some separate personal gratification, whether tangible or intangible. A primary factor in explaining bureaucrats’ intervention-maximising behaviour is, therefore, the motivation to work for the collective good of their ministries. Thus, bureaucrats pursue organisational as well as individual goals. Practically speaking, they both collectively and individually have a lust for power, status and privilege as well as for the other side-benefits of intervention. Moreover, collective self-interest is identified not only with the ministries as a whole but also with sub-groups within them. The competition for interventionist power and resources that takes place on an inter-ministerial basis also occurs on an intra-ministerial basis. This is because vertical partitioning along jurisdictional lines occurs not only between the ministries but also within the ministries, with individual bureaus, departments and divisions concerned with particular industries and administrative domains, and pursuing their self-interest (collectively as administrative units, and individually as officials within them) in the same way

Theorising government intervention 43 that the ministries do themselves. The MOF, for example, was traditionally viewed as ‘no ministry, only bureaus’ because of the difficulty in reaching consensus among its bureaus.79 Although the MAFF has generally been regarded as more unified than the MOF, the primary focus of loyalty of ministry officials is often to their immediate division/department/bureau and hence, at a collective institutional level, it is often the bureaus or units within them rather than the entire ministry that act as intervention-maximisers. In particular, competition for financial resources is very strong amongst ministry bureaus, which are the primary functional units for budget compilation. Each bureau tries to maximise the quantity of subsidies it obtains to support its policy initiatives. Even at the subgroup level, however, officials act in a collective capacity for collective goals. Hence they seek to maximise intervention in the particular area in which they work, which represents the collective dimension at the micro-level. Finally, with respect to the incentives motivating individual officials, my approach offers a more plausible account than that found in rational choice works on bureaucracy. Niskanen, for example, notoriously fails in his unrealistic description of bureaucrats as budget-maximisers.80 Similarly, Dunleavy’s interpretation of bureaucrats as bureau-shapers (seeking better working conditions, e.g.) is selectively based on Westminster institutions in the United Kingdom.81 Although Japan is nominally a Westminster system,82 Japanese bureaucrats operate in a significantly different organisational milieu and, as I argue, are primarily intervention-maximisers rather than bureau-shapers. Given that ministries seek to maximise intervention in any given political and policy environment, not only do they bring important and independent interests of their own to the policymaking process but they also endeavour to see that these interests are served in policy outcomes. The bureaucracy is not simply an empty vessel or a policy vacuum to be filled by other policy actors. In the Japanese policymaking process, the ministries are a source of independent policymaking authority and play a key role in that process.83 Ministries have their own firm views on policy and are not afraid to admit to a ministry view. Even the minister speaks for the ministry. In fact, he, or she, is their primary spokesperson and is expected to be loyal to the ministry’s position. There is a saying amongst MAFF officials, for example, that ‘No matter who becomes minister, the things that we do won’t change’.84 In some circumstances, the prime minister may also articulate the ministry’s position in the relevant sections of prime ministerial policy speeches. This argument runs counter to several well-known views about the role of the bureaucracy in the modern state. In the traditional political science (Weberian) conception, the bureaucracy’s expected role is that of an agent of the executive, a ‘neutral’ and apolitical administrator that acts at the behest of the government of the day.85 In Japan’s case, as a Westminster system, the bureaucracy’s role is formally to implement policies and legislation decided formally by the cabinet and enacted by the Diet.86 Oddly enough, this is what the principal–agent theorists also argue,87 although for different reasons. In their view, the bureaucracy does not act for itself; it merely implements the decisions of the ruling party(ies). It is the latter’s ‘agent’. It has no autonomous interests; it is a dependent actor.

44

The interventionist state model

At the other end of the spectrum is the proposition that the bureaucracy is merely an advocate and representative of the special interests of its clientele in policymaking contexts, such as in budgetary and legislative negotiations. In this perspective, the MAFF is an agent for its agricultural clients – the farmers, farm organisations and so on.88 After all, the MAFF has a large, clientele base that is highly mobilised in national politics and, therefore, it might find the influence of this lobby hard to resist. One such study, for example, portrays the MAFF and other ministries as mere ciphers for sectional interests in their own spheres.89 Mitsukawa’s historical perspective on the role of the prewar agricultural bureaucracy is also representative of this perspective: MAF bureaucrats believed that they were on the side of the farmers and were respected by farmers in local agricultural areas. Indeed, many agricultural bureaucrats assumed that they represented the interests of farmers.90 In the more general literature, parallels can be found in the theory of ‘agency capture’. Katz, for example, reiterates that ministries are often ‘captive’ of the industries within their ministerial jurisdictions.91 Likewise the principal–agent approach asserts that ‘the bureaucracy is regarded as maintaining a kind of principal–agency relationship with constituent interests’.92 Aoki’s conception of the pluralist agent face of the Japanese bureaucracy also lines up with this perspective. He argues that one of the two faces of the Japanese bureaucracy is that of a pluralist agent for specific interests in the economy.93 In the pluralist-agent role, each ministry participates ‘in policymaking on behalf of . . . its traditional clientele’.94 Pempel and Muramatsu explain this as the basis of the bureaucracy’s cooptation of client groups which has long been a major source of power to any agency, public or private . . . On one level . . . they ‘serve’ various constituent groups, and to the extent that they do so, these groups are willing to accede to bureaucratic authority. But at the same time, government agencies also utilize these very same groups to advance their own policy and organizational ends.95 As they see it, this is part of the give and take in the relationships between government and groups. No longer can the bureaucracy enforce compliance; it has to be traded off with concessions to groups of various kinds. This book argues that bureaucrats are not captive of the industries they are guiding; nor are they mere agents of the executive. They define their policy preferences independently in line with their own interests and, I would argue, these interests are for the most part defined by their intervention-maximising imperative. However, from a methodological perspective, intervention maximising by bureaucrats cannot be inferred simply from levels of intervention or from policy outcomes (although such data can be useful to underscore theoretical argument). Intervention maximising can only be inferred from bureaucrats’ revealed preferences, that is, the pressures they exert in favour of particular options, and the choices they make when faced with a range of policy alternatives. Such inferences require independent evidence of the options open to bureaucrats and the choices they make between them.

Part II

The MAFF and agricultural intervention

4

The MAFF

This chapter provides a description of the MAFF’s internal organisational structure and functions. The first section discusses the relevant aspects of the MAFF as an administrative organ of the government: its broadly defined mission in law and the official works with which it is legally charged in order to achieve its mission. As part of the analysis, the main internal organisational components of the MAFF both before and after the administrative restructuring of January 2001 are set out. Included is a more detailed overview of the division of labour that has prevailed in the post-restructuring period amongst the MAFF’s main organisational sub-units with respect to their administration of agriculture and agriculturerelated industries.

The MAFF’s organisational structure, mission and administrative purview MAFF bureaus, regional organisations and agencies All of the different facets of the MAFF’s role as administrator and as the central controlling body of government intervention in the agricultural sector are encompassed within the MAFF’s main ministry bureaus – its main internal subdivisions – and its external bureaus ( gaikyoku) called agencies. The bureaus and their respective departments and divisions are the working parts of the MAFF main ministry with respect to administering national policy and intervening in agriculture and agriculture-related sectors. Each has a clearly delineated jurisdictional sphere and functions in a highly discrete fashion, exercising largely independent powers within its respective arena of ministerial jurisdiction. Indeed, the bureaus embody the same kind of compartmentalised, vertical administrative structure as do the ministries themselves. The only constraint against rampant sectionalism within the ministry is the Minister’s Secretariat (Daijin Kanbo) which is officially tasked with acting as a planning and general coordinating body for the entire ministry.1 Until the bureaucratic reorganisation of January 2001, the MAFF had one secretariat, five bureaus and three agencies (Food, Forestry and Fisheries).2 The Minister’s Secretariat included a Cooperatives Inspection Department (Kyodo Kumiai Kensabu)3 as well as one office (shitsu) and eight divisions. The five bureaus

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The MAFF and agricultural intervention

administering various agricultural and agriculture-related sectors were the Economic Affairs Bureau (Keizai Kyoku), the Agricultural Structure Improvement Bureau (Kozo Kaizen Kyoku), the Agricultural Production Bureau (Nosan Engei Kyoku), the Livestock Industry Bureau (Chikusan Kyoku), and the Food and Marketing Bureau (Shokuhin Ryutsu Kyoku).4 They sub-divided into a further 78 departments and divisions. The Economic Affairs Bureau was responsible for Japan’s agricultural trade policy in its International Affairs Department (Kokusaibu), for agricultural finance in its Finance Division (Kinyuka) and for Nokyo in its Agricultural Cooperatives Division (Nogyo Kyodo Kumiaika).5 The Agricultural Structure Improvement Bureau had three departments – for agricultural policy (Noseibu), planning (Keikakubu) and construction (Kensetsubu) – and various divisions within each were devoted to administering different aspects of agricultural and rural public works as well as issues relating to expansion in the scale of farm management. The Agricultural Production Bureau had divisions dealing with production matters relating to specific crops such as fruit and flowers, upland field agriculture6 and silkworm cultivation. The Livestock Industry Bureau had divisions concerned with various aspects of the livestock industry including feed distribution, milk and dairy products and livestock management. The Food and Marketing Bureau had a number of different divisions, including those for (wholesale) markets, vegetable distribution, sugar and consumer life. The MAFF had seven regional agricultural administration bureaus (chiho nosei kyoku)7 with local coverage of all of Japan and each with branch offices (chiho nosei jimusho, jigyosho), including those for land improvement, agricultural disaster prevention and upland field development. The regional agricultural administration bureaus also had branch offices for statistics and information gathering.8 The main function of the regional bureaus was to advance the take-up of MAFF policies by the grass roots and to act as a mediator between the central administration and regional districts.9 The Food Agency10 outside the main ministry corresponded to the rice industry and non-rice grain industries. It sub-divided into two main departments (administration and marketing) which split into various divisions. For example, the Orderly Marketing Department (Keikaku Ryutsubu) had separate divisions for planning, operation and marketing, trade operations and processed food. Similarly, the Administrative Affairs Department (Somubu) had divisions for administrative affairs, planning, inspection, budget and accounting. The Food Agency also had 47 food offices (shokuryo jimusho) – one in each prefecture – and several hundred branch offices (shisho) under them. With the administrative reforms of January 2001 the MAFF was quite extensively reorganised internally,11 with its bureaus, departments and divisions restructured and renamed as shown in Figure 4.1. The changes required the enactment of an amendment to the 1949 MAFF Establishment Law in July 1999 to accompany the passage of the Food, Agriculture and Rural Areas Basic Law (New Basic Law)

The MAFF 49 Old structure • •

New structure •

Minister’s Secretariat Cooperatives Inspection Dept Economic Affairs Bureau

Statistics and Information Dept Cooperatives Inspection Dept

Statistics and Information Dept International Affairs Dept •

Minister’s Secretariat

•

General Food Policy Bureau International Affairs Dept

Agricultural Structure Improvement Bureau •

Public Works Non-Public Works

Agricultural Production Bureau Livestock Industry Dept

•

Agricultural Production Bureau

•

Livestock Industry Bureau

•

Food and Marketing Bureau

•

Management Improvement Bureau

•

Rural Development Bureau Planning Dept Infrastructure Dept (Ministry of Land, Infrastructure and Transport/Depopulation Measures)

(No Change)

(No Change) •

Food Agency

•

Food Agency

•

Forestry Agency

•

Forestry Agency

•

Fisheries Agency

•

Fisheries Agency

Regional Agricultural Administration Bureaus 1 Office 6 Depts

6 Depts consisting of: • Administration Dept • Planning and Coordination Dept • Production and Management Dept • Rural Management Dept • Rural Infrastructure Dept • Statistics and Information Dept

Figure 4.1 MAFF internal reorganisation of January 2001. Source: Adapted from Kawakita and Onoue, Norinsuisansho, pp. 14 –15.

which strongly influenced the internal restructuring process.12 As a result of the reforms, the previous structure of one secretariat, five bureaus, three agencies and 124 departments and divisions, and one office was streamlined into four bureaus, three agencies and 98 departments and divisions.13 The new structure of the MAFF took effect on 6 January 2001 when the revised Establishment Law was enforced. Figure 4.2 provides an overview of the new MAFF internal structure resulting from the restructuring of 2001. In addition to the Minister’s Secretariat, four new bureaus came into being: the General Food Policy Bureau (Sogo Shokuryo Kyoku),

Consumer Life Div Standards and Labelling Div Commerce and Marketing Div Food Industry Planning Div Food Industry Development Div

Personnel Div

Document Div

Budget Div

Accounting Div

Welfare Div

Technical Cooperation Div

International Cooperation Div

International Trade Policy Coordination Div

International Economic Affairs Div

International Planning Div

International Affairs Dept

Source: Kawakita and Onoue, Noorinsuisansho. pp. 12–13.

Figure 4.2 New MAFF internal structure (2001).

Inspection Div

Coordination Div

Cooperatives Inspection Dept

Distribution and Consumption Statistics Div

Production Statistics Div

Management Statistics Div

Structural Statistics Div

Statistics Coordination Div

Statistics and Information Dept

Information Systems Div

Commodity Trading Inspection and Management Official

Food Policy Div

Regional Liaison Div

Administration Div

Planning and Evaluation Div

General Food Policy Bureau

Administration Div

Minister’s Secretariat

Horse Race Supervision Div

Animal Health Div

Feed Div

Meat and Egg Div

Milk and Dairy Products Div

Livestock Industry Technology Div

Livestock Industry Policy Planning Div

Livestock Industry Dept

Plant Protection Div

Production Materials Div

Seeds and Seedlings Div

Speciality Products Promotion Div

Fruit and Flower Div

Vegetable Div.

Agricultural Production Promotion Div

Administration Div

Agricultural Production Bureau

Processed Food Div

Consumption Improvement Div

Distribution Div

Planning Div

Orderly Management Dept

Management Div

International Affairs Div

Planning Div

Administration Div

Administrative Affairs Dept

Food Agency

Insurance Inspections Management Officer

Disaster Prevention Div

Rural Infrastructure Div

Agricultural Land Infrastructure Div

Irrigation Infrastructure Div

Design Div

Infrastructure Dept

Works Planning Div

Insurance Div

Resource Div

Finance Div

Land Improvement Planning Div

Planning Dept

Regional Promotion Div

Rural Policy Div

Administration Div

Rural Development Bureau

Cooperatives Organisations Div

Women and Farm Employment Div

Agricultural Extension Div

Agriculture Structural Improvement Div

Management Policy Div

Administration Div

Management Improvement Bureau

The MAFF 51 the Agricultural Production Bureau (Seisan Kyoku), the Management Improvement Bureau (Keiei Kyoku) and the Rural Development Bureau (Noson Shinko Kyoku). The Minister’s Secretariat retained its Cooperatives Inspection Department in the reorganisation process, but acquired the Statistics and Information Department (Tokei Johobu) from the Economic Affairs Bureau (see Figure 4.1). The General Food Policy Bureau represents as amalgamation of the former Food and Marketing Bureau with the International Affairs Department of the old Economic Affairs Bureau (see Figure 4.1).14 New divisions for Food Policy (Shokuryo Seisakuka), Food Industry Planning (Shokuhin Sangyo Kikakuka) and Food Industry Promotion (Shokuhin Sangyo Shinkoka) have taken charge of policies relating to food supply and consumption, and the food industry (see Figure 4.2). Other divisions cover policies relating to consumers, standards and labelling, commerce and marketing and commodity exchanges. The International Affairs Department within the bureau has primary competency for agricultural trade negotiations. The International Economic Affairs Division (Kokusai Keizaika) deals with the World Trade Organisation (WTO), the International Policy Planning Division (Kokusai Kikakuka) with the Asia Pacific Economic Cooperation (APEC) forum, and the International Trade Policy Coordination Division (Kokusai Choseika) with matters relating to trade promotion, tariff problems and bilateral trade matters, including Free Trade Agreements (FTAs). The Agricultural Production Bureau represents the equivalent of the former Agricultural Production Bureau except that it incorporated the old Livestock Industry Bureau in the form of a Livestock Industry Department (Chikusanbu). The new bureau assumed responsibility for matters relating to the production, distribution and consumption of all agricultural products (except those under the administration of the Food Agency)15 and was partitioned into divisions concerned with specific commodities such as vegetables, fruit and flowers, speciality products and so on. The bureau also acquired a new division for production materials concerned with all kinds of farm inputs including fertiliser, agricultural machinery and chemicals etc. The new Livestock Industry Department took on the administration of different segments of the livestock industry (milk and dairy products, meat and eggs, feed etc.) as well as horse racing (see Figure 4.2). The Management Improvement Bureau is a compound of the former Economic Affairs Bureau minus its International Affairs Department, and the former Agricultural Structure Improvement Bureau minus agricultural and rural public works. The latter moved to the new Rural Development Bureau (see Figure 4.1). The Management Improvement Bureau absorbed the Structural Improvement Division (Kozo Kaizenka) of the old Agricultural Structure Improvement Bureau in addition to the Insurance Division (Hokenka), Finance Division (Kinyu Choseika) and Agricultural Cooperatives Division of the old Economic Affairs Bureau (see Figure 4.2). The new bureau assumed responsibility for all aspects of agricultural structure – land, labour and management (family farms, group farms, size of farms etc.) – as well as the supervision of agricultural cooperatives and other cooperative organisations of farmers (but not cooperative inspections which remained the job of the Minister’s Secretariat). The Management Improvement

52

The MAFF and agricultural intervention

Bureau and the Agricultural Production Bureau, because they are concerned with farm management and agricultural production, are regarded as the two main ‘engines’ of the MAFF.16 The Rural Development Bureau, as already noted, took charge of agricultural and rural public works that were previously under the Agricultural Structure Improvement Bureau. The Rural Development Bureau also appropriated the National Land Agency’s Regional Development Bureau as its new Regional Promotion Division (Chiiki Shinkoka) as shown in Figure 4.2. A separate Hilly and Mountainous Areas Promotion Office assumed responsibility for direct payments to farmers in disadvantaged regions. Separate departments were also established for planning (Kikakubu) and infrastructure (Seibibu), which took responsibility for design and construction for public works sites. Within the Infrastructure Department, separate divisions were created for irrigation and drainage, agricultural land infrastructure and rural infrastructure. The number of MAFF regional agricultural administration bureaus remained the same (seven), but some of their internal departments and sections were retitled. One office and six departments (for administration, planning and coordination, production and management, rural management, rural infrastructure and statistics and information) made up each bureau as shown in Figure 4.1. Like the main ministry, the Food, Forestry and Fisheries agencies all preserved their titles, original identities and policy jurisdictions. The Food Agency remained in charge of the stabilisation of rice, wheat and barley demand, supply and price as well as rice, wheat and barley imports and exports. However, the agency, like the main ministry itself, was internally restructured. It retained its two departments – the Administrative Affairs Department and Orderly Marketing Department – but there was some rationalisation of divisions with each. Moreover, the agency acquired additional responsibilities insofar as the Planning Division (Kikakuka) of the former Agricultural Production Bureau which was in charge of rice production adjustment ( gentan) was transferred to a new Production Adjustment Promotion Office ( Jigyo Sogo Choseishitsu) of the Planning Division of the Administrative Affairs Department. The department also acquired a newly created International Affairs Division (Kokusaika) equipped for WTO agricultural negotiations.17 It was argued that because the Food Agency operated like a trading company, it needed an international division.18 Prior to the reorganisation, the Food Agency had an international section which was part of the Planning Section of its Orderly Marketing Department. This was now upgraded to an international division. The international section had previously been involved in trade negotiations because rice issues were so important to Japan’s trade posture. Indeed, rice issues were mainly dealt with by the Food Agency, internationally as well as domestically.19 However, although its functioning overlapped with that of the International Affairs Department, it only dealt with staple food issues. Furthermore, on rice, the International Affairs Department made sure it respected the views of the Food Agency and so ensured that the latter’s ‘intention’ was not neglected.20 The Food Agency kept its regional branch office structure intact (prefectural food offices and their branch offices). Many staff of these offices remained

The MAFF 53 employed in inspecting rice and other grains,21 and conducting price surveys of rice and other agricultural commodities under the purview of the agency. MAFF officialdom Within the MAFF main ministry as well as its extended organisation, the staffing structure remained vertically divided between mainstream elite or career bureaucrats ( jimu kanryo, or jimukan) who are graduates in administration ( gyosei ), law, economics or agricultural economics and who work as generalist policy administrators within the MAFF, and officers with engineering and other technical credentials ( gijutsu kanryo, or gikan) who deploy their specialist technical skills in the service of MAFF administration. The role of the gikan is to play technical support to the generalist policy administrators. The gikan are graduates in agricultural science, agricultural and horticultural chemistry, agricultural engineering, and livestock, forestry and fishery sciences. They are engineers, auditors, scientists (including agricultural scientists), accountants and so on. The career track that an official follows in the MAFF is set by the type of higher civil service exam (i.e. the discipline) that he or she sits. Positions within the ministry are designated either for gikan or for jimukan. The gikan cluster in certain areas of the ministry such as agricultural and rural public works because these projects are essentially engineering works. They determine the feasibility and other technical aspects of the proposed projects such as assessment and design of construction. The jimukan, on the other hand, are involved in decisionmaking about the project, taking into consideration the social and economic factors involved, or obtaining the necessary resources (including budget and manpower). Gikan can also play a role in the area of decisionmaking as well, even though policy formulation is mainly the task of the jimukan. Because bureaucratic entrance exams do not evaluate decisionmaking skills, the gikan can develop abilities in this area as they gain experience in the various MAFF divisions. Thus, although formally speaking various positions in the MAFF are designated for jimukan or gikan, in practice, there is little difference in the tasks of these officials.22 Official duties of the ministry in law The MAFF’s mission as an administering organ of the government was laid down in the revised MAFF Establishment Law implemented in January 2001. Article 3 describes the duties of the ministry to secure the stable supply of food, to develop agricultural, forestry and fisheries industries, to improve the welfare of the people engaged in farming, forestry and fisheries, to promote the development of agricultural, forestry and fishery villages and mountainous areas, to demonstrate the multifunctionality of agriculture, to increase forest production capacity, to protect and cultivate forestry, and to preserve and control fishery resources appropriately.23

54

The MAFF and agricultural intervention

A total of 59 clauses in Article 4 of the new law enumerate the official work for which the MAFF main ministry and the Food Agency24 (not including the Forestry and Fisheries Agencies)25 are responsible in order to accomplish the duties described in Article 3. These clauses are listed in Table 4.1. The revised MAFF Establishment Law leaves no doubt that the administrative purview of the MAFF remains extremely broad. It outlines a comprehensive interventionist system covering all aspects of agriculture and related industries as well as farmers’ lives and those of rural dwellers more generally. The list extends to matters relating to ● ● ●

● ●

●

● ● ●

●

● ● ● ● ●

production infrastructure agricultural land including land use and ownership the supply, distribution and consumption of food including the operation of wholesale markets the food industry including food processing, labelling and quality control agribusiness including the production of farm inputs such as agricultural machinery, fertiliser, chemicals and feed the cooperative organisations of primary industry workers and the pension funds of the employees of agricultural groups the trade in agricultural products centring on food imports agricultural finance and farm insurance including disaster compensation matters relating to agricultural structure (namely farm household size, group farming, agricultural labour, land ownership and leasing, and the productivity of agricultural management) the farm household economy including agricultural prices, farm incomes and farmers’ pensions rural–urban exchange veterinary treatment and horse racing regional agriculture including farming in hilly and mountainous areas the welfare of rural dwellers including the provision of social infrastructure agricultural training and education etc.

Article 4, Clauses 1 and 4–12 of the revised MAFF Establishment Law describe the official work of the General Food Policy Bureau (see Table 4.1). The ostensible focus of its concerns is clearly not farmers, but consumers. It took charge of policies to ensure stable supplies of food as well as the protection of consumer interests in areas of its responsibility. Its other main concerns extend to the food industry (including distribution and processing) and agricultural trade, particularly bilateral and multilateral trade agreements, tariffs and adjusting agricultural imports and exports. Clauses 13–24 list the responsibilities of the new Agricultural Production Bureau (see Table 4.1). All aspects of the production, trade and consumption of agricultural and livestock products (except staple foods such as rice) come under its jurisdiction. It also assumed administrative responsibilities for production input industries (fertiliser, machinery, feedstuffs etc.), and all aspects of plant and animal diseases. Its concern with livestock animals also extends to the horse racing industry.26

Protecting the interests of general consumers relating to duties for which the ministry is responsible The standards for labelling the quality of agricultural and forestry products and the Japan Agriculture and Forestry Standard The adjustment, improvement and promotion of production, distribution and consumption of food and beverages (excluding alcohol and items that have agricultural products that are staple foods as their main ingredients) and oil The development of wholesale markets and the supervision of central wholesale markets The supervision of commodity investment and trading in commodity markets under ministry responsibility The development, improvement and adjustment of the food industry and other related works under ministry responsibility Ensuring the effective use of resources in the food industry and other related works under ministry responsibility Administrative work relating to the import and export of commodities, and tariffs, and international agreements in areas of ministry responsibility International cooperation relating to duties for which the ministry is responsible

The promotion, improvement and adjustment of the production, trade and consumption of agricultural and livestock products (including silk) The rationalisation of the system of harvesting agricultural crops The registration of agriculture, forestry and fishery plant varieties The improvement, multiplication and trade in livestock (including poultry and honey bees) The improvement of the soil of agricultural land and preventing and removing pollution The maintenance of pasture land Pest control, livestock health, and plant and animal quarantine Veterinarians and veterinary treatment The production and distribution of fertiliser, agricultural machinery, agricultural chemicals, feedstuffs andother special products for agricultural industries including the silk and forestry industries (excluding products controlled by the Ministry of Economy, Trade and Industry) – hereafter called ‘special products for agricultural industries’ – and the encouragement, improvement and adjustment of the consumption of ‘special products for agricultural industries’

4 5 6

13

14 15 16 17 18 19 20 21

12

(Table 4.1 continued )

Policies to ensure stable supplies of food The comprehensive development of national land and national land investigation relating to agriculture, forestry and fisheries The development of agricultural cooperatives, forestry cooperatives and fishery cooperatives and other cooperative organisations of those employed in farming, forestry and fisheries

1 2 3

7 8 9 10 11

Works

Clause

Table 4.1 The official duties of the MAFF/Food Agency under Article 4 of the MAFF Establishment Law of 1999 (implemented January 2001)

41

40

39

38

36 37

35

34

29 30 31 32 33

25 26 27 28

The planning, drafting and promotion of comprehensive policies relating to the advancement of agricultural and fishing villages and mountainous areas, defined in Clause 1 of Article 35 of the 1999 Food, Agriculture and Rural Areas Basic Law The planning, drafting and promoting of comprehensive policies for the heavy snowfall belt, defined in Clause 1 of Article 2 of the 1962 Law Concerning Special Measures for the Heavy Snowfall Belt and protection against damage by snow Guidance and subsidies for drawing up and implementing agricultural promotion region infrastructure plans and other agriculture, mountainous and fishing village comprehensive promotion plans Support for mitigating the disadvantages of agricultural production conditions in mountainous regions

The improvement and stability of agricultural management The securing of persons who should carry on agriculture Agricultural labour The diffusion and exchange of knowledge about improving and developing agricultural technology and the livelihood of persons engaged in agriculture, forestry and fisheries, and matters concerning subsidies for loans from the Agricultural Improvement Fund The agricultural land system The transference of agricultural land rights and other agricultural land-related adjustment The improvement of agricultural structure Farmers’ pensions Agricultural disaster compensation, forest insurance, fishing boat damage compensation, fishing boat crew wage insurance and fishing casualty compensation The planning, drafting and subsidisation of financial measures for agricultural, forestry and fishing industries, the food industry and other related works under ministry responsibility Supervising the business of the Agriculture, Forestry and Fisheries Finance Corporation, the Central Bank for Agriculture and Forestry, the agricultural credit fund associations, the fisheries credit fund associations, the Agriculture, Forestry and Fisheries Credit Fund, and the agricultural and fisheries cooperatives’ deposit insurance organisations The mutual aid pension system of the agriculture, forestry and fisheries groups’ staff members The establishment and business of the agricultural housing associations

Ensuring of the safety of fertiliser, agricultural chemicals (except those controlled by the Ministry of Environment), feedstuffs, feed additives, veterinary medicines, medical supplies and treatment implements The advancement of agricultural mechanisation Supervising and assisting central and regional horse racing

22

23 24

Works

Clause

Table 4.1 Continued

The production, collection, consumption and supply–demand adjustment of staple foods The collection of levies on imports of staple foods and other import adjustment The development, improvement and adjustment of works relating to distribution and processing of staple foods Deciding the purchase and wholesale prices of staple foods and stabilising the price of staple foods The promotion, improvement and adjustment of the production, distribution and consumption of food and beverages using staple foods as the main ingredient (excluding alcohol) Purchasing, storing and wholesaling of imported feed and agricultural products etc. defined in Clause 1 of Article 2 of the 1953 Agricultural Products Price Stabilisation Law (fresh, dried sweet potato strips, sweet potato starch, potato starch and soybeans) The inspection of agricultural products according to regulations in the 1951 Agricultural Products Inspection Law Undertake training relating to the works for which the ministry is responsible in educational and training facilities laid down by ministerial ordinance In addition to the items listed in the previous clauses, other duties belonging to the Ministry of Agriculture, Forestry and Fisheries based on laws (including orders based on laws)

51 52 53 54 55

Note The clauses in the above table are grouped according to the main internal sub-units of the MAFF.

Source: ‘Norinsuisansho Setchiho’, pp. 8–9.

89

57 87

56

50

47 48 49

Securing land, water and other resources for agricultural use The conversion of agricultural land The agricultural water supply Guidance and assistance for exchanging, splitting and merging parcels of land Land improvement works (the necessary works to support and advance irrigation and drainage, block adjustment, reclamation, agricultural land and its preservation, or the necessary facilities for its utilisation, or disaster restoration of agricultural facilities, and the utilisation of other land for agriculture) The maintenance, utilisation, preservation and other management of coasts relating to the preservation of agricultural land Assisting and supervising works relating to the prevention of landslides relating to land preservation and the collapse of slag heaps Exchanges between agricultural, mountainous and fishing villages and urban areas such as experience of agriculture, forestry and fisheries by staying in agricultural, mountainous or fishing villages and other regional exchanges The promotion of hobby farm development

42 43 44 45 46

58

The MAFF and agricultural intervention

Clauses 3 and 25–37 enumerate the duties of the Management Improvement Bureau (see Table 4.1). Its administrative purview includes all issues relating to farm management, structure and productivity including land, labour, technology, investment and insurance. Its concerns also extend to all kinds of farmers’ cooperative organisations including those providing loans and insurance to farmers. Clauses 2 and 38–50 outline the business of the new Rural Development Bureau (see Table 4.1). The provisions encompass the primary resources used for farming (land and water) and all aspects of agricultural and rural public works, including land improvement, agricultural land preservation and seacoast protection. Article 25 of the revised MAFF Establishment Law defines the general responsibilities of the Food Agency as ‘ensuring the stable supply of food and beverages made from staple food as their main ingredient, and stabilising the price and demand-supply of staple food’.27 Staple foods are rice, wheat and barley (including naked barley) and other foods so designated under ministerial ordinance which may include processed and prepared foods made from rice, wheat and barley.28 More specifically, Article 4, Clauses 4, 5, 9–12, 34, 51–57, 87 and 89 of the revised MAFF Establishment Law detail the duties of the Food Agency (see Table 4.1). These clauses cover the production, distribution, pricing, storage, importation, inspection and consumption of staple foods and foods and beverages made from staple foods. Certain aspects of other agricultural commodities such as feedstuffs and potato starch also come within the Food Agency’s sphere of business. Article 18, Clauses 1–3 of the revised MAFF Establishment Law define the official work of the MAFF’s regional agricultural administration bureaus. They are identical to those listed for the MAFF main ministry, except that the regional bureaus do not have the full complement of duties for which the MAFF main ministry is responsible. They perform the duties listed in Article 4, Clauses 3–10, 13, 14, 16–18, 19 (only matters concerning pest control and livestock health), 20 (only matters concerning veterinary treatment), 21, 23, 25–28, 30, 31, 34 (only matters concerning subsidies), 35 (only matters concerning the supervision of the work conducted by the agricultural credit fund associations), 40–50 and 89 of the MAFF Establishment Law (see Table 4.1). The duties of the regional administration bureaus also include collecting statistics about agriculture, forestry and fishing and related persons; collecting, gathering and analysing materials and other information relating to the jurisdiction of the MAFF; and providing the necessary instructions to Food Agency offices in conducting inspection and examination of food production and improvement, and adjustmenting of the food distribution system.29 In addition, the revised MAFF Establishment Law details the functions of the regional agricultural administration bureaus’ statistics and information offices and their branch offices. The Food Agency’s branch offices, according to the revised MAFF Establishment Law, are responsible for a whole or a part of the duties of the Food Agency. The MAFF Minister may also allocate them additional responsibilities in relation to adjusting the production and distribution of food, inspecting agricultural and forestry products, and administering subsidies based on the 1961 Provisional Measures Law for a Deficiency Payment for Soybeans.30

The MAFF 59 The MAFF’s organisational ordinance The revised MAFF Establishment Law outlines only in very general terms the official work with which the various components of the ministry are charged. The clauses of the law are filled out in greater detail in the organisational ordinance (soshikirei ) appended to the law. The articles and clauses of this ordinance not only elaborate the administrative duties of the Minister’s Secretariat and the individual bureaus, but each of the departments and divisions within them, as well as the departments and divisions of the Food Agency. Table 4.2 summarises the main interventionist duties and concerns of the MAFF secretariat and bureaus as listed in the organisational ordinance. The data clearly indicate the prominent characteristics of the interventionist regime over which the MAFF presides. First, the government intervenes in all aspects of farming. In practice, Japanese farmers can do little without government interference. This general observation applies as much to farmers’ lives as to their production activities. Every single square metre of agricultural land is subject to government regulation or subsidy of some kind including land ownership restrictions and production infrastructure assistance. Similarly, every single agricultural commodity is subject to government action to promote, improve and adjust its production, distribution and consumption. In the case of rice, government intervention through the Food Agency has been all-encompassing. Its production has been planned and adjusted through a production adjustment system with the demand–supply situation closely monitored and manipulated. Indeed, for rice and other agricultural commodities, the entire production-to-consumption cycle has traditionally been subject to MAFF intervention. The same applies to practically all aspects of farm commodity imports. Second, agricultural support and protection in Japan focuses not only on assisting and protecting a domestic sector at a comparative disadvantage vis-à-vis other domestic industries and uncompetitive in world markets, but also involves the active promotion of that industry. Agricultural support and protection are, therefore, more correctly described as agricultural promotion and protection. In fact, the agricultural support and protection are just another industry promotion policy. No matter that this policy represents a complete reversal of standard industrial policy goals, which are to foster growth in sunrise industries and to rationalise sunset industries. Agricultural promotion and protection amount to the fostering of a sunset industry. In reality, the MAFF is not simply providing temporary assistance for the structural adjustment of agriculture, but active support for its long-term survival even though it is in a permanently (i.e. structurally) uncompetitive state. The import of MAFF interventionism is, therefore, not to provide aid for the structural adjustment of industry, but aid to prevent the structural adjustment of that industry by cushioning the forces of structural adjustment. Third, the industries under the ministry’s purview extend well beyond agriculture to the food and beverage industries (including processing and distribution), farm input industries agricultural and rural construction industries and regional industries of all kinds including tourism and local commerce. What the MAFF

Policy coordination; Diet liaison; public relations; policy evaluation; personnel matters; examining drafts of laws and ordinances; information dissemination; MAFF budget compilation; statistical and research analysis; inspection of agricultural cooperatives. Securing of stable supplies of food; protecting the interests of general consumers; standards for labelling the quality of agricultural and forestry products and the Japan Agriculture and Forestry Standard ( JAS); promoting, improving and adjusting the production, distribution and consumption of food and beverages (excluding alcohol and items that have agricultural products that are staple foods as their main raw material) and oil; general pricing policies for goods under ministry responsibility; developing wholesale markets and supervising the central wholesale markets; supervising commodity investment and trading in commodity markets; adjusting, improving and promoting the food industry and other industries under ministry responsibility; implementing the 1966 Extraordinary Measures Law Concerning the Promotion of the Development of Specific Facilities by Utilising the Abilities of Private Enterprise,a the 1992 Law Concerning the Promotion of Tourism, Commerce and Industry in Specific Regions Through Events Utilising Local Traditional Accomplishments etc. and the 1998 Law to Promote the Establishment of New Industries; maintaining the effective use of resources in the food industry and other industries under ministry responsibility; liaison and adjustment of the import and export of goods under ministry responsibility; management of import tariffs and international agreements relating to goods under ministry responsibility; international cooperation relating to ministry activities; matters concerning the business of Japan International Cooperation Agency ( JICA). Promoting, improving and adjusting the production, distribution and consumption of agricultural products (including silk, but excluding products under the responsibility of the Food Agency); the Agriculture and Livestock Industries Corporation; rationalising crop cultivation systems; registering types of agricultural, forestry and fishery plants; improvement, breeding, and trade in livestock; improving the soil of agricultural land and protecting against pollution; the development of pasture land, the quarantine of livestock products, animals and plants; livestock animal hygiene; prevention of harmful insect damage; veterinarians and veterinary medicine; promoting, improving and adjusting the production, distribution and consumption of materials used by the agricultural and livestock industries i.e. fertilisers, agricultural chemicals, agricultural machinery and feedstuffs (excluding goods falling under METI responsibility); ensuring the safety of fertilisers, agricultural chemicals (excluding the chemicals falling under the responsibility of the Ministry of Environment), feedstuffs, feed additives, animal medicines and veterinary equipment; promoting agricultural mechanisation; supervising and assisting central and local horse racing; improving and developing agricultural technology.

Minister’s Secretariat

Agricultural Production Bureau

General Food Policy Bureau

Main duties and concerns

Bureau/Division

Table 4.2 The MAFF (and Food Agency) organisational ordinance (MAFF Establishment Law of 1999 implemented January 2001)

Rural Development Bureau

Management Improvement Bureau

(Table 4.2 continued )

Development of the agricultural cooperatives and other farmers’ cooperative organisations (excluding inspection of cooperatives); improving and stabilising farm management; adjustment of the tax system relating to agricultural, forestry and fishing industries, the food industry, and other industries under ministry responsibility; disaster countermeasures; ensuring persons to carry on farming; the agricultural workforce; dissemination and exchange of knowledge relating to agriculture and the livelihood of those employed in agriculture, forestry and fisheries and assisting the lending of the Agricultural Improvement Fund; liaising and adjusting about matters concerning the promotion of the employment of the aged and women in areas under ministry responsibility; the agricultural land system, and the transfer of agricultural land rights and other agricultural land related adjustment (excluding the transfer of agricultural land to non-agricultural uses); improving agricultural structure; the agricultural committees, prefectural agricultural councils, and the National Chamber of Agriculture; management of the Agricultural Management Base Strengthening Measures Special Account and the Agricultural Disaster Reinsurance Special Account; the Farmers’ Pension Fund; agricultural disaster compensation; the Agricultural, Forestry and Fisheries Insurance Inspection Committee; comprehensive planning and drafting of financial measures for the promotion of agricultural, forestry, fishery and food industries and other industries under ministry responsibility; adjustment of funding for the promotion of agricultural, forestry, fishery and food industries, and other industries under ministry responsibility; assistance for financial measures for the promotion of agricultural, forestry, fishery and food industries, and other industries under ministry responsibility (excluding official work under the responsibility of the Fisheries and Forestry Agencies); supervising the business of the Agriculture, Forestry, and Fisheries Finance Corporation, the Central Bank for Agriculture and Forestry, the agricultural credit fund associations and the agricultural and fisheries cooperatives’ deposit insurance organisations (excluding official work relating to the inspection of the agricultural cooperatives and excluding matters concerning forestry and fisheries and agricultural disaster compensation) and the Agriculture, Forestry and Fisheries Credit Fund; the mutual aid pension system for the staff of agricultural, forestry and fisheries organisations; establishing and managing agricultural housing associations; agricultural warehousing; liaison and adjustment of matters concerning improvement of the welfare of aged persons in agricultural, mountain and fishing villages. Comprehensive development of land connected to agriculture, forestry and fisheries; planning and drafting of comprehensive policies for promoting agricultural, mountain and fishing villages and remote areas and for promoting snow damage prevention in the heavy snow belt; guidance and assistance with respect to drawing up and implementing the Agricultural Promotion Regions Development Plan and comprehensive promotion plans for agricultural, mountain and fishing villages (excluding plans under the responsibility of the Fisheries and Forestry Agencies); improving agricultural employment structure; support for compensating disadvantageous production conditions in remote areas; ensuring

the utilisation of resources for agriculture such as land, water, etc.; agricultural land conversion and agricultural water usage; guidance and assistance for exchanging, splitting and merging parcels of land; land improvement works (the necessary works for irrigation and drainage, block adjustment, reclamation, agricultural land and its preservation, or the necessary facilities for its utilisation, or disaster restoration of agricultural facilities, and maintaining and developing other land for agricultural use); developing, utilising, preserving and other management of coastal areas for the preservation of agriculture; assisting and supervising works relating to the prevention of landslides and slips relating to the preservation of agricultural land; farm stay programmes and other exchanges between urban and rural areas (excluding works under the responsibility of the Forestry and Fisheries Agencies); promoting the development of urban farms and agriculture in cities and their suburbs; managing the Government Land Improvement Works Special Account; management and disposal of state-owned assets and management of goods belonging to the Government Land Improvement Works Special Account. Coordination of official work for which the Food Agency is responsible; public relations; personnel matters; examining drafts of laws and ordinances and other official documents; information dissemination; matters concerning the budget of income and expenses under the Food Control Special Account and settlement of accounts and finances, and auditing of accounts; management and disposal of state-owned assets and management of goods belonging to the Food Control Special Account and other Food Agency responsibilities; planning and drafting of comprehensive policies concerning staple foods and food and beverages that take staple foods as their main ingredient (excluding alcohol); compiling plans for the import and export of staple foods; international cooperation in areas under agency responsibility; deciding the purchase and wholesale prices of staple foods and stabilising the price of staple foods; adjusting the production, collection, consumption and other demand and supply of staple foods; collecting the levies on imports of staple foods; implementing the import and export of staple foods; advancing, improving and adjusting works concerning the distribution and processing of staple foods; promoting, improving and adjusting the production, distribution and consumption of food and beverages that take staple foods as their main ingredient; buying, storing and wholesaling agricultural products etc. defined by Article 2, Clause 1 of the 1953 Agricultural Products Price Stabilisation Law as agricultural products etc. (raw, dried sweet potato strips, sweet potato starch, potato starch and soybeans) and imported feed; inspecting agricultural products defined under the 1951 Agricultural Products Inspection Law.

Main duties and concerns

Note When an ordinance refers to the name of a specific law, ministries other than the MAFF mainly administer that law. The law is mentioned in order to make the MAFF involvement clear.

Source: ‘Norinsuisansho Soshikirei’, in Norinsuisan Roppo, 2003, pp. 14 –33.

Food Agency

Bureau/Division

Table 4.2 Continued

The MAFF

63

does for the production, distribution and consumption of agricultural commodities it also does for the food industry and other industries under its responsibility. That is, it ‘adjusts’, ‘improves’ and ‘promotes’ them (these are the specific terms used in the official language of the law). It also cultivates and develops small and medium enterprises that conduct businesses in areas related to ministry responsibility. This means that the MAFF not only presides over the agricultural sector but extends its administrative responsibilities to all kinds of other businesses associated with the farming industry. The MAFF is almost as much a ministry of agriculture-related and rural business as it is of agriculture. Fourth, the MAFF seeks to incorporate not just farmers and the primary industry workforce, but also consumers (who consume the products of the domestic and foreign farm sectors) and rural dwellers (including the aged and women and those who live in remote communities) under its administrative umbrella. The MAFF seeks to improve the welfare of those who live in farm and mountain villages through various pro-active measures including the provision of social infrastructure. Fifth, the management, business and other activities of a large number of agricultural organisations are of direct concern to the MAFF. The entities specifically mentioned as subject to various kinds of monitoring, supervision and inspection conduct a wide range of functions and include those with farmer-members such as the agricultural cooperatives. The formal-legal picture of the MAFF’s organisation and its functions provided above reveals a broad-ranging interventionist ministry. The following chapters locate the MAFF’s role as the main agent of agricultural intervention within the wider architecture of government intervention in agriculture, the benefits this intervention generates for the MAFF and its officials and how the MAFF has sought to defend this architecture and maximise intervention in a number of different policy contexts.

5

Modes and means of agricultural intervention

This chapter reviews the principal ways in which the government intervenes in the agricultural sector in terms of the typology outlined in Chapter 2. It presents an overview of all the main interventionist policies over which the MAFF presides, as well as appropriate examples of direct market intervention, regulatory intervention and allocatory intervention. It then outlines the architecture of agricultural intervention, detailing the legal, financial, institutional and more informal structures and practices used by the MAFF to intervene in agriculture and in associated industries.

A typology of agricultural intervention Table 4.1 listing the official duties of the MAFF (and its Food Agency) and Table 4.2 describing this work in more detail provide a comprehensive outline of the scope and scale of the interventionist and other administrative functions of the ministry. As this book argues, government intervention in the agricultural economy can be categorised into three major types: direct market intervention, regulatory intervention and allocatory intervention. The relative ‘weightings’ of the three types in MAFF activities differ. MAFF intervention is heavily concentrated in the distributive domain, although a substantial quantum of regulation and direct market participation are also evident. The following sections provide examples of all three modes of intervention by the MAFF. Direct market participation1 The MAFF has undertaken by far the most comprehensive market intervention for staple foods. Over a long period, the Food Agency purchased and sold domestic rice, wheat, barley and naked barley2 under the Food Control Law and from 19953 under the Law for Stabilisation of Supply–Demand and Price of Staple Food (or New Food Law). The Food Agency also purchased and sold imported rice, wheat, barley and naked barley, and after the implementation of the Uruguay Round Agreement on Agriculture (URAA) in 1995, it bought (and sold) foreign rice under minimum access (MA) arrangements, and wheat, barley etc. under obligatory import access quantities.4

Modes and means of agricultural intervention 65 Between 1942 and 1969, the Food Agency exercised a monopoly of rice purchases from farmers, who were legally obliged to deliver all rice they produced to the government.5 After 1969 and the introduction of semi-controlled, voluntarily marketed rice ( jishu ryutsumai),6 farmers were permitted to sell their rice directly to wholesalers, bypassing the government and bringing an end to the Food Agency’s monopoly. However, the Food Agency continued to control all imports of rice until 1999,7 when rice was tariffied and private companies were permitted to enter the trade. In the case of wheat, barley and naked barley, a more indirect form of Food Agency control operated. Farmers had the right to sell to the government, but, unlike rice, they were not legally obliged to deliver all their product to the government.8 The Food Agency purchased these grains from farmers until 2000 when it began to curtail its direct participation in the domestic wheat and barley trades. It was the sole purchaser of foreign imports of wheat and barley etc. until 1995 and the implementation of the URAA. From this time onwards, private traders were permitted to enter the wheat and barley etc. importing business. Regulatory intervention The MAFF supplemented direct participation in the rice market by extensive regulatory intervention. Under the Food Control (FC) system (1942–95), the Food Agency’s buying and selling operations formed the core of a complex and intricate system of rice distribution control. Farmers were permitted to sell their rice to the government only through specified channels, that is, ‘designated’ local rice collectors (shuka gyosha) consisting of agricultural cooperatives or private sector rice traders belonging to the National Federation of Staple Food Collection Cooperative Associations (Zenshuren), a federation of commercial rice collectors. These groups were all classed as ‘primary collectors’. They were only permitted to pass rice on to ‘secondary collectors’ (the prefectural Nokyo economic federations and prefectural organisations of rice traders), and these secondary collectors were obliged to pass the rice on to national collectors’ organisations: the National Federation of Agricultural Cooperative Unions ( JA Zenno) and Zenshuren. The national collectors’ organisations could then only sell the rice in two ways. The first was to the Food Agency at a price formally decided by the Minister of Agriculture, Forestry and Fisheries (hereafter MAFF Minister), known as the ‘producer rice price’ (seisansha beika). Rice sold in this fashion comprised the category of so-called ‘government rice’ (seifumai ) which provided a guaranteed price to farmers. Alternatively, they could sell rice to ‘approved’ wholesalers at a price negotiated between themselves and the national wholesalers’ organisations: the National Federation of Food Industry Cooperative Associations (Zenshokuren) and the National Federation of Rice Trade Cooperative Associations (Zenbeishoren). Rice channelled in this fashion comprised the category of voluntarily marketed rice. Only ‘approved’ wholesalers could obtain rice from rice collectors which was not sold to the government.9 Under this system, all rice collectors thus had to be ‘designated’ by the MAFF Minister, and all rice sellers (i.e. wholesalers and retailers, or hanbai gyosha) had to

66

The MAFF and agricultural intervention

be ‘approved’ by prefectural governors with a quota system on the total number permitted to operate nationwide. This restricted new entries into the market. A myriad of other restrictions also applied. For example, retail stores could buy rice only from specific wholesale dealers in the same prefecture. In sum, the FC system constituted a highly controlled and regulated rice distribution system from farm gate to consumer.10 Under the New Food Law,11 the structure of the distribution network was diversified, the door was opened wider to new participants and the regulations for participants were partially de-controlled. Primary collectors were redesignated as ‘first-type registered shippers’ requiring only registration with the MAFF Minister rather than designation under the previous system. Entry into this market was permitted provided certain qualifications were met12 and the market was thrown open to rice wholesalers and retailers as well as to the traditional collecting organisations. Rice sellers (wholesalers and retailers) were redesignated as ‘second-type registered shippers’, also requiring only registration with the MAFF Minister. Once again, entry into this market was permitted provided certain requirements were met, with the quota system for wholesalers and retailers abolished.13 In addition, a third circulation route for rice was permitted. Rice farmers were granted the right to sell their rice directly to retail outlets such as supermarkets, providing they notified the MAFF of the quantities involved. If, on the other hand, they chose to sell rice to the government for stockpiling or voluntarily marketed rice to wholesalers, they had to use registered shippers. Rice distribution under the New Food Law, therefore, remained quite regulated.14 Regulatory intervention by the MAFF did not stop with rice and the FC system. Table 4.2 elucidates an extremely broad range of regulatory functions performed by the MAFF: ● ● ● ● ● ● ● ● ● ● ●

●

● ● ●

adjusting imports and exports of goods under ministry responsibility restricting entry points for foreign farm goods and supervising their quarantine conducting food inspection services controlling commodity investment and exchange businesses managing wholesale markets directing the livestock animal trade overseeing the labelling of foods restricting the production of rice adjusting the production of vegetables, tangerines, beef and dairy products controlling food, fertiliser and agricultural chemical safety and quality regulating the distribution of seeds and seedlings as well as new plant development controlling agricultural land ownership, transfers and leasing, and cooperative farming directing the movement of industrial facilities to rural areas overseeing rural housing controlling agricultural product branding and quality.

Modes and means of agricultural intervention 67 The MAFF also does a lot of ‘supervising’ and ‘inspecting’ which are both synonyms for regulation. The list of such activities includes the central and local horse racing industries, the storage of agricultural commodities, and the businesses of all cooperative organisations (including their financial activities) and groups undertaking mutual aid in the agricultural sector. Allocatory intervention

Subsidies and loans The MAFF’s allocatory intervention involves the provision of subsidies and loans for various state-sponsored projects and activities. As the late Minato Tetsuro commented, ‘there are many ways of achieving the basic as well as the immediate objectives of agricultural policy, but the “clincher” (kimete) involves finance (zaisei) and loans (kinyu)’.15 Zaisei in this context means fiscal funds outlaid in the form of subsidies from budgetary sources. Kinyu means the provision of loan funds (using government financial resources) for capital investment in agriculture and related sectors called government programme loans (seido kinyu).16 In the actual implementation of agricultural policy goals, a clear distinction exists between fiscal measures centring on subsidies and financial measures centring on government programme loans. At the grass roots, for instance, the terms under which subsidies and loans are provided are quite different.17 However, in practice, most loans are financed by subsidies. In terms of their relative importance, subsidies are a much more significant type of allocatory intervention than loans. A much larger quantity of government funding is channelled to agriculture and related sectors in the form of subsidies compared with loans. Subsidies also have a more direct policy impact than loans.18 They directly support the achievement of policy goals and strengthen the centralisation of the structure of agricultural policy.19 As the official explanation goes, the MAFF disburses subsidies to prefectural and municipal governments, enterprises (kigyo), groups (dantai) and individuals (kojin) etc. in order to promote specific works ( jigyo) or to lead ( yudo) them towards specific objectives.20 Every policy objective has to secure a budget and each comes with a package of subsidies to put it into effect.21 Indeed, Japan’s postwar agricultural policy has been described as a ‘scattering (of subsidies) type’ (baramakigata) aimed at raising the incomes of small farmers.22 As Hayami concurs, ‘Japanese agricultural policy depends heavily on subsidies . . . Heavy reliance on subsidies has been a secular feature of Japanese agricultural policy since the interwar period when the “poverty problem” was predominant.’23 In short, agriculture in Japan is a subsidy-driven industry. Whenever the MAFF wants to promote a particular policy, it will draft a law or an amendment to an existing one, and then secure the necessary subsidies to fund the policy.24 Not surprisingly, the MAFF has been described as ‘an organ for distributing subsidies’ (Norinsho wa hojokin bunpai kikan)25 and a ministry that prioritises subsidies.26 The MAFF’s reputation as a subsidy-distributing ministry is a long-standing one. As Goto and Imamura point out: ‘Even in the prewar period, the Ministry

68

The MAFF and agricultural intervention

of Agriculture was characterized as a “subsidy distribution” ministry.’27 One critic commented that the MAFF, over its 121-year history, had been reduced to nothing more than ‘a pipe for distributing subsidies’ (hojokin haibunkan).28 Subsidies are made available for a wide range of agricultural policy purposes such as ● ● ●

●

● ● ● ● ● ● ● ● ● ● ●

developing agricultural infrastructure providing agricultural investment loans promoting agricultural structural improvement (focusing on scale expansion of farms) encouraging (or discouraging) the production of particular agricultural and horticultural crops encouraging the use of particular marketing channels furnishing agricultural disaster relief constructing rural infrastructure providing agricultural extension services funding farmers’ pensions promoting the livestock industry improving food distribution systems and wholesale market facilities undertaking coastal works promoting agricultural land preservation and management funding agricultural road development financing the restoration of agricultural facilities damaged by natural disasters.29

The list of subsidised activities does not end there. The MAFF agricultural policy handbook refers to an even more diverse range of targets (some of which are quite tangential to agriculture) subject to the ministry’s allocatory intervention. Subsidies are used, for example, to ● ● ● ● ● ● ● ● ● ● ● ●

● ●

support local festivals create shopping chains monitor food prices and quality promote the acquisition of new technology by farmers lower the cost of agricultural inputs encourage the use of vegetable harvesting machinery convert agricultural processing facilities in order to develop new products construct leisure facilities that promote the ‘health function’ of remote areas develop residential land and new residential areas construct, lease and manage shops and offices restore land that has suffered mineral pollution install management training systems for agricultural incorporated entities (nogyo seisan hojin)30 promote ‘Green Tourism’ and regional industries provide educational facilities for new farmers as well as cultural education facilities and facilities for the aged and women in mountain villages

Modes and means of agricultural intervention 69 ● ● ● ●

stimulate mountain village-urban interchanges develop parks and open spaces create ‘beautiful’ villages develop agricultural community walkways and paths, welfare and residential facilities, green space and water space, agricultural gardens and information infrastructure.31

Like subsidies, government programme loans are policy loans (seisaku yushi) insofar as they are linked to particular policy goals, although their impact is not as direct as subsidies. They are provided to farm households for purposes such as modernising management32 and acquiring new farm facilities, to small scale cooperative enterprise organisations (kyogyo soshiki ) aiming to expand the scale of management (a category that now includes agricultural incorporated entities), and to ‘special works bodies’ (tokushu jigyotai) in which farmers and agricultural cooperatives participate.33 In some cases private sector and semi-public enterprises are eligible for loans to undertake agriculture-related projects in fields such as food processing and distribution. Government programme loans for agricultural investment are sourced in three different ways. The first type consists of loans from private funds (Nokyo and other financial organs) for which prefectural governments provide interest subsidies and the central government assists prefectural governments in providing these subsidies. Examples are the Agricultural Modernisation Fund,34 the Disaster Fund35 and the Special Fund to Reduce the Farmers’ Burden.36 The second type consists of direct loans from government funds, meaning the provision of long-term, low- or no-interest loans directly to farmers (and others).37 The Agricultural Improvement Fund,38 the Super Comprehensive Fund System39 and the Agriculture, Forestry and Fisheries Finance Corporation, which is a MAFF special public corporation,40 fund these loans. The finance corporation has separate accounts for infrastructure development, management structural improvement, general facilities, management support and stabilisation, and disasters: ●

●

●

●

In the infrastructure development category, funds are lent for agricultural infrastructure development, that is, land improvement works (tochi kairyo jigyo), such as field development, the installation of irrigation and drainage facilities, and agricultural road development. In the management structure improvement category, loans are granted for acquiring agricultural land for scale expansion of agricultural management in a way that furthers agricultural land-holding rationalisation. In the general facilities category, funds are made available for converting agricultural processing facilities, developing new products and modernising food distribution. In the management support and stabilisation category, loans are used for supporting independent farmers ( jisakuno) and for promoting the reconstruction of agricultural management; and from the disaster account, for assisting with farm etc. restoration after typhoons and other disasters.41

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The MAFF and agricultural intervention

Agriculture, Forestry and Fisheries Finance Corporation funds are furnished either under the direct loan system from the corporation itself, or under the indirect loan system through the Central Bank for Agriculture and Forestry (Norinchukin), agricultural cooperative credit federations, or banks. The third type of government programme loan involves credit backing for farmers, that is, government support to insure and guarantee debts. Funding of this kind aims to smooth the process of loans from sources such as the Agricultural Modernisation Fund through financial backing for organs extending credit to farmers. The agricultural credit guarantee insurance system is an example.42 At the centre of this system are the agricultural credit fund associations established at prefectural level. When farmers borrow funds from the agricultural cooperatives, the agricultural credit fund associations guarantee these loans and the national government provides funding to prefectural governments to back these loans.43 At the next stage, the Agriculture, Forestry and Fisheries Credit Fund undertakes insurance to guarantee the debt to the Agricultural Modernisation Fund that agricultural credit fund associations undertake. Government programme or so-called ‘policy loans’ constituted somewhere between one half to just under two thirds of agricultural production loans in Japan between 1970 and 1995. The fact that even a half of the agricultural loan balance consisted of government programme loans underscores the high rate of policy dependency of agricultural loans.44 The role of government in agricultural investment is regarded as necessary for the development of agriculture. Because of the high risk and the long-term nature of the loans, they have comprised a comparatively high proportion of agricultural financing because farmers cannot help but use them as a form of agricultural support policy in order to revitalise agriculture as production declined.45

Agricultural pricing systems One of the main targets of allocatory intervention has been agricultural product prices. In fact, however, the MAFF (and its gaikaku dantai ) administer a whole range of agricultural pricing systems with differing elements (and combinations) of direct market intervention, allocatory intervention and regulatory intervention.46 Dairy products, pork, beef, imported sugar and raw silk have all been subject to price stabilisation. Limited market access in the form of border measures has been combined variously with the importing, stockholding, purchasing and selling operations of MAFF gaikaku dantai in order to balance supply and demand at targeted price levels or within so-called price stabilisation bands.47 Such systems enable farmers to receive prices well above international prices for these products. Other products have received direct price support in the form of subsidies, although such schemes have, in some cases, been operated by MAFF gaikaku dantai and have been supplemented by import and other supply controls. For example, rice price support under the Food Control Law was engineered not only by means of price subsidies to farmers but also by the Food Agency’s monopoly of

Modes and means of agricultural intervention 71 imports and controls on domestic production levels through the gentan. As a result, the domestic rice price, except for exceptional years, was almost perfectly stabilised every year.48 Rice volume control was still practiced after the implementation of the New Food Law through the imposition of production adjustment, the Food Agency’s stockpiling of both domestically produced and foreign rice, and from April 1999, by the very high tariffs imposed on imported rice.49 In addition to rice, commodities such as wheat, barley and naked barley, cocoons, raw milk for processing, sugar beet and sugar cane, soybeans, rapeseeds, beef calves, potatoes and sweet potatoes for processing have all been subject to price subsidies under various schemes. In some cases, the Food Agency or MAFF gaikaku dantai have directly entered the market, buying and selling these products. The MAFF has also subsidised so-called ‘adjustment storage’ by producers’ associations in order to maintain prices or ‘re-establish’ the prices of some farm commodities. For others such as ‘designated’ vegetables, raw fruit for processing, feeder hogs, pulses, hen eggs and broilers, the MAFF has subsidised stabilisation fund schemes that have underpinned producer prices. Traditionally, 70–80 per cent of Japanese agricultural products have been subject to so-called ‘administered prices’ (gyosei kakaku).50 As Yamaji long ago observed, although the function and effects of price support differ according to product, Japanese agriculture formally gives the strong impression of being under total state control.51 The objective of the government’s price support policies has been to guarantee specific prices to producers in order to protect domestic agriculture. More recently, some markets have switched to MAFF-managed systems (i.e. products have been guided through commodity exchanges that operate under restrictive terms and restricted ranges of trading prices). Another policy ‘innovation’ has been the shift to farm management stabilisation schemes in lieu of commodity price support operations. When prices for particular commodities fall, farmers’ incomes are ‘stabilised’ by means of direct financial supplementation, funded jointly by the MAFF and producers.52

The architecture of agricultural intervention The ‘key control variables’53 used by the MAFF to intervene in agriculture and in associated sectors are laws and ordinances, a financial support apparatus centring on the MAFF budget and a large ancillary institutional infrastructure. The MAFF also uses established bureaucratic practices such as administrative guidance and amakudari to shore up its more formal powers of intervention. The legal foundations of agricultural intervention The main foundation of Japan’s agricultural support and protection regime and the primary basis on which the MAFF’s interventionist power rests, is legal. The MAFF intervenes in agriculture and agriculture-related sectors on the basis of laws and ordinances (ministerial ordinances, enforcement ordinances, regulations

72

The MAFF and agricultural intervention

and so on). These establish the rules and principles on which government intervention in the agricultural and related sectors takes place. The MAFF’s most basic rights of intervention are embedded in its founding legislation, the purpose of which is to establish an organisation to implement the administrative duties and projects within MAFF jurisdiction as well as to set out clearly the scope and competence of MAFF administration.54 Comparing the official work of the MAFF as described in Article 4 of the 1999 Establishment Law with Article 4 of the 1949 Establishment Law shows very little, if any, contraction of function over 50 years. The main difference is that in Article 5 of the new law, the stipulation of the MAFF’s authority to undertake the tasks listed in Article 4 has been abolished. Article 4 in the new law (as in the old law) sets out what the MAFF’s tasks are, while in the old law, Article 5 – which was subtitled ‘the MAFF’s authority’ – stipulated that the MAFF could, under the 76 subsequent clauses (which were all deleted in the new law and many of which overlapped with the clauses in Article 4), undertake the tasks stipulated in Article 4. When the original 1949 law was drafted it was thought necessary that in order to make ministries perform their tasks, they should have the authority to undertake them and that authority should be stipulated in the establishment law. When the current law was being drafted in 1998, this idea no longer held. It was thought sufficient merely to describe the ministry’s tasks in Article 4, with no explicit stipulation of the authority to do them. In other words, it was implicit that the MAFF had the authority to perform them not only under the establishment law but also under many other laws that describe the MAFF’s tasks.55 From a legal perspective, the interventionist regime over which the MAFF presides remains as broad and as deep as ever. The 1999 Law and attached organisational ordinance merely represent a more streamlined and modernised version of the 1949 law and its organisational ordinance. Some clauses in the law have been amalgamated, others have been converted to organisational ordinances and a few others had been made redundant by changes in other laws. If anything, the MAFF Establishment Law and organisational ordinance have been made more general in terminology and thus open to wider discretionary interpretation by the ministry. As described by one MAFF official, this reflects a background of pressure for administrative reform and deregulation. In that kind of atmosphere, the law and ordinance drafters decided as a rule not to use descriptions like ‘guidance’ and ‘supervision’ of (the Agriculture & Livestock Industries Corporation, for example). Instead, they used general terminology such as ‘matters concerning the general management and organisation of Agriculture & Livestock Industries Corporation’. The lack of specificity, however, does not mean a change in the substance of administration. In reality, nothing has changed. It is simply a new way of describing something.56 The MAFF is additionally charged with administering more than 120 laws57 as well as their accompanying ordinances, which implement the official works outlined

Modes and means of agricultural intervention 73 in the Establishment Law and organisational ordinance. The laws and ordinances set out in detail the multitude of institutional structures, administrative procedures and policy instruments by which government intervention in agriculture and related sectors takes place. The laws and ordinances are grouped into categories that correspond to the MAFF bureaus whose job it is to implement them. They are listed according to these categories in Table 5.1.58 Article 1 of each law elaborates the macro-policy objectives for the particular sector or sub-sector of agriculture or agriculture-related industry or agricultural organisation on which the law focuses. The summation of policy objectives in these laws is a comprehensive and detailed interventionist agenda that the MAFF (together with its auxiliary cohorts) is charged with implementing. The basic law (the 1961 Agricultural Basic Law and the 1999 New Basic Law that replaced it) outlines the overarching policy objectives for the entire farming sector, thus justifying government intervention in the broadest possible terms. All other laws must fundamentally align with the policy goals outlined in the basic law. In terms of their more explicit interventionist purpose, the laws set out in detail the multitude of institutional structures, administrative procedures and policy instruments by which government intervention in agriculture and related sectors takes place. Many laws establish the regulations that govern specific agricultural activities. The Land Improvement Law, for example, lays down the qualifications for those wishing to participate in land improvement projects (specified as cultivators or those conducting silkworm or livestock raising with ownership rights to agricultural land). Some laws have a specific industry focus and outline regulatory provisions for the operation of sub-fields like the 1948 Agricultural Chemicals Control Law, the 1950 Fertiliser Control Law and the 1956 Livestock Trading Law. Agricultural laws also describe the kinds of activities that will be financially assisted and supported by the government, and on what terms this assistance will be granted such as the 1954 Law Concerning the Promotion of Dairy Farming and Beef Cattle Production, the 1961 Special Measures Law for Promoting Fruit Farming, the Provisional Measures Law for a Deficiency Payment for Soybeans and the 1965 Provisional Measures Law for Subsidies to Producers of Raw Milk for Processing. The Land Improvement Law specifies the procedures to be followed in applying for government assistance for undertaking land improvement projects. Other laws outline the measures to be undertaken to implement explicit agricultural policy goals such as the 1993 Law to Promote the Strengthening of the Agricultural Management Base, those that provide compensation for natural disasters (the 1947 Agricultural Disaster Compensation Law) and laws to facilitate the provision of loan funds for agricultural investment (the 1956 Agricultural Improvement Fund Assistance Law). Some agricultural laws establish statutory agricultural organisations (corporate bodies, or hojin of various types), which are charged with various quasi-public functions as proxies for the MAFF and which operate under its overall guidance and direction. For example, some of the MAFF’s special public corporations have their own organising law such as ALIC, the Agriculture, Forestry and Fisheries

General food policy 1991 Food Distribution Structure Improvement Promotion Law (Shokuhin Ryutsu Kozo Kaizen Sokushinho) 1971 Wholesale Markets Law (Oroshiuri Shijoho ) 1950 Law Concerning Standardisation and Proper Labelling of Agricultural and Forestry Products (Norin Busshi no Kikakuka oyobi Hinshitsu Hyoji no Tekiseika ni kansuru Horitsu) 1989 Temporary Measures Law for Improving the Management of Industries Processing Speciality Farm Products (Tokutei Nosan Kakogyo Keiei Kaizen Rinji Sochiho) 1947 Food Hygiene Law (Shokuhin Eiseiho ) 1998 Temporary Measures Law to Heighten Control of the Food Manufacturing Process (Shokuhin no Seizo Katei no Kanri no Kodoka ni kansuru Rinji Sochiho) 2000 Law Concerning the Promotion of the Revived Utilisation etc. of Food Cycle Resources (Shokuhin Junkan Shigen no Saisei Riyoto no Sokushin ni kansuru Horitsu) 1991 Law Concerning the Promotion of the Effective Utilisation of Resources (Shigen no Yuko na Riyo no Sokushin ni kansuru Horitsu) 1995 Law Concerning the Promotion etc. of the Recommodification and Part Collection of Container Packaging (Yoki Hoso ni kakaru Bunbetsu Shushu oyobi Saishohinka no Sokushinto ni kansuru Horitsu) 1987 Special Measures Law for Preventing the Mixture of Poisonous Substances with Circulated Foodstuffs (Ryutsu Shokuhin e no Dokubutsu no Konnyuto no Boshito ni kansuru Tokubetsu Sochiho ) 1950 Commodity Exchange Law (Shohin Torihikishoho ) 1982 Law Concerning the Trust of Trading in Futures in Overseas Commodity Markets (Kaigai Shohin Shijo ni okeru Sakimono Torihiki no Jutakuto ni kansuru Horitsu) 1991 Law Concerning Regulations on Commodity Investment Business (Shohin Toshi ni kakaru Jigyo no Kisei ni kansuru Horitsu) 1973 Large-Scale Retail Store Location Law (Daikibo Kouri Tenpo Ritchiho) 1973 Small and Medium Retail Commerce Development Law (Chusho Kouri Shogyo Shinkoho ) 1966 Law Concerning the Infrastructure of Distribution Business City Areas (Ryutsu Gyomu Shigaichi no Seibi ni kansuru Horitsu) 2000 Law Concerning the Integrated Promotion of the Revitalisation of Commerce etc. and the Infrastructure Improvement of City Areas in Core City Areas) (Chushin Shigaichi ni okeru Shigaichi no Seibi Kaizen oyobi Shogyoto no Kasseika no Ittaiteki Suishin ni Kansuru Horitsu)

General provisions 1999 Food, Agriculture and Rural Areas Basic Law (Shokuryo, Nogyo, Noson Kihonho) 1999 Ministry of Agriculture, Forestry and Fisheries Establishment Law (Norinsuisansho Setchiho)

Table 5.1 Laws administered by the MAFF Main Ministry and Food Agency in 2003

Extraordinary Measures Law Concerning the Promotion of the Development of Special Facilities by Utilising the Abilities of Private Enterprise (Minkan Jigyosha no Noryoku no Katsuyo ni yoru Tokubetsu Shisetsu no Seibi no Sokushin ni kansuru Rinji Sochiho) Small and Medium Enterprise Management Innovation Support Law (Chusho Kigyo Keiei Kakushin Shienho) Law Concerning the Adjustment of Business Operations of Large Enterprises for Securing Business Opportunities for Small and Medium Enterprises (Chusho Kigyo no Jigyo Katsudo no Kikai no Kakuho no tame no Daikigyosha no Jigyo Katsudo no Chosei ni kansuru Horitsu) Industrial Vitality Revival Special Measures Law (Sangyo Katsuryoku Saisei Tokubetsu Sochiho) Factory Location Law (Kojo Ritchiho) Manufactured Commodities Responsibility Law (Seizobutsu Sekininho) Japan International Cooperation Agency Law (Kokusai Kyoryoku Jigyodanho)

(Table 5.1 continued )

Agricultural production 1952 Staple Agricultural Crops Seeds Law (Shuyo Nosakubutsu Shushiho) 1984 Fertility Improvement Law (Chiryoku Zoshinho ) 1970 Law Concerning the Prevention etc. of Contamination of the Soil of Agricultural Land (Noyochi no Dojo no Osen Boshito ni kansuru Horitsu) 1999 Law Concerning the Promotion of the Introduction of High Continuity Agricultural Production Methods ( Jizokusei no Takai Nogyo Seisan Hoshiki no Donyu no Sokushin ni kansuru Horitsu) 1950 Fertiliser Control Law (Hiryo Torishimariho ) 1953 Agricultural Mechanisation Promotion Law (Nogyo Kikaika Sokushinho) 1950 Plant Quarantine Law (Shokubutsu Boekiho ) 1948 Agricultural Chemicals Control Law (Noyaku Torishimariho) 1951 Law Concerning the Adjustment etc. of Raw Silk Imports (Kiito no Yunyu ni Kakaru Choseito ni kansuru Horitsu) 1961 Special Measures Law for Promoting Fruit Farming (Kaju Nogyo Shinko Tokubetsu Sochiho) 1947 Seeds and Seedlings Law (Shubyoho ) 1996 Vegetable Production and Shipment Stabilisation Law (Yasai Seisan Shukka Anteiho) 1965 Law Concerning the Price Adjustment of Sugar (Sato no Kakaku Chosei ni kansuru Horitsu) 1964 Sweetening Resources Special Measures Law (Kanmi Shigen Tokubetsu Sochiho) 1953 Agricultural Products Price Stabilisation Law (Nosanbutsu Kakaku Anteiho) 1961 Provisional Measures Law for a Deficiency Payment for Soybeans (Daizu Kofukin Zantei Sochiho) 1954 Law Concerning the Promotion of Dairy Farming and Beef Cattle Production (Rakuno oyobi Nikuyogyu Seisan no Shinko ni kansuru Horitsu) 1961 Law Concerning Price Stabilisation etc. of Livestock Products (Chikusanbutsu no Kakaku Anteito ni kansuru Horitsu)

1999 1959 1994 1974

1999 1977

1966

Agriculture and Livestock Industries Corporation Law (Nochikusangyo Shinko Jigyodanho ) Provisional Measures Law for Subsidies etc. to Producers of Raw Milk for Processing (Kako Genryonyu Seisansha Hokyukinto Zantei Sochiho ) Beef Calf Production Stabilisation etc. Special Measures Law (Nikuyo Koushi Seisan Anteito Tokubetsu Sochiho) Poultry Farming Promotion Law (Yokei Shinkoho) Beekeeping Promotion Law (Yoho Shinkoho) Livestock Improvement and Breeding Law (Kachiku Kairyo Zoshokuho) Livestock Dealers Law (Kachikushoho ) Livestock Trading Law (Kachiku Torihikiho ) Butchering Place Law (Tochikubaho ) Law Concerning the Promotion of the Use and Proper Management of Livestock Animal Excrement (Kachiku Haisetsubutsu no Kanri no Tekiseika oyobi Riyo no Sokushin ni kansuru Horitsu) Feedstuffs Demand and Supply Stabilisation Law (Shiryo Jukyu Anteiho) Law Concerning Safety Assurance and Quality Improvement of Feedstuffs (Shiryo no Anzensei no Kakuho oyobi Hinshitsu no Kaizen ni kansuru Horitsu) Pasture Land Law (Bokujoho ) Cattle Infectious Diseases Prevention Law (Kachiku Densenbyo Yoboho ) Special Countermeasures Law Concerning Bovine Spongiform Encephalopathy (Gyukaimenjonosho Tokubetsu Taisaku ni kansuru Ho) Cattle Hygiene Service Centre Law (Kachiku Hoken Eiseijoho) Veterinary License Law (Juishiho) Veterinary Treatment Law (Juiryoho) Pharmaceutical Affairs Law (Yakujiho) Horse Racing Law (Keibaho ) Japan Central Racing Association Law (Nihon Chuo Keibakaiho)

Management improvement 1993 Law to Promote the Strengthening of the Agricultural Management Base (Nogyo Keiei Kiban Kyoka Sokushinho)a 1952 Agricultural Land Law (Nochiho ) 1971 Special Measures Law Concerning the Sale of State-Owned Agricultural Land (Kokuyu Nochito no Uriharai ni kansuru Tokubetsu Sochiho) 1946 Agricultural Management Base Strengthening Measures Special Account Law (Nogyo Keiei Kiban Kyoka Sochi Tokubetsu Kaikeiho) 1951 Law Concerning the Agricultural Committees etc. (Nogyo Iinkaito ni Kansuru Horitsu)

1950 1951 2002 1950 1949 1992 1960 1948 1954

1952 1953

1996 1965 1988 1960 1955 1950 1949 1956 1953 1999

Table 5.1 Continued

1970

1947 1944 1948 1956 1995

1933 1955 1955

1933 1980 1973 1961 1961 1987 1952 2002

1923 1993 1996

1947 1961 1996

(Table 5.1 continued )

Agricultural Cooperative Union Law (Nogyo Kyodo Kumiaiho) Agricultural Cooperative Union Merger Assistance Law (Nogyo Kyodo Kumiai Gappei Joseiho) Law Concerning the Reorganisation and Strengthening of the Credit Business of the Central Bank for Agriculture and Forestry, Designated Agricultural Cooperative Unions etc. (Norin Chuo Kinko oyobi Tokutei Nogyo Kyodo Kumiai to ni yoru Shinyo Jigyo no Saihen oyobi Kyoka ni kansuru Horitsu) Central Bank for Agriculture and Forestry Law (Norin Chuo Kinkoho) Law Concerning the Priority Financing of Cooperative Organisations’ Financial Organs (Kyodo Soshiki Kinyu Kikan no Yusen Shusshi ni kansuru Horitsu) Law Concerning the Central Bank for Agriculture and Forestry and the Reorganisation and Strengthening of the Credit Business by Specific Agriculture, Forestry and Fishery Cooperative Unions (Norin Chuo Kinko oyobi Tokutei Norinsuisangyo Kyodo Kumiai ni yoru Shinyo Jigyo no Saihen oyobi Kyoka ni kansuru Horitsu) Agriculture and Fishery Industries’ Cooperative Unions’ Savings Insurance Law (Nosui Sangyo Kyodo Kumiai Chokin Hokenho) Agricultural Housing Associations Law (Noju Kumiaiho) Agriculture and Fisheries Cooperative Unions Deposit Insurance Law (Nosuisangyo Kyodo Kumiai Chokin Hokenho) Agricultural Modernisation Fund Assistance Law (Nogyo Kindaika Shikin Joseiho) Agricultural Credit Guarantee Insurance Law (Nogyo Shinyo Hosho Hokenho) Agriculture, Forestry and Fisheries Credit Fund Law (Noringyogyo Shinyo Kikinho) Agriculture, Forestry and Fisheries Finance Corporation Law (Noringyogyo Kinyu Kokoho ) Special Measures Law Concerning the Harmonisation of Investment in Agricultural Corporations (Nogyo Hojin ni taisuru Toshi no Enkatsuka ni kansuru Tokubetsu Sochiho) Agricultural Movables Credit Law (Nogyo Dosan Shinyoho) Independently Owned Farm Maintenance Fund Finance Law (Jisakuno Iji Shikin Yuzuho) Provisional Measures Law Concerning Financing of Funds for Damaged Farmers, Foresters, Fishers and Others owing to Natural Disasters (Tensai ni yoru Higai Noringyogyoshato ni taisuru Shikin no Yushi ni kansuru Zantei Sochiho) Agricultural Disaster Compensation Law (Nogyo Saigai Hoshoho) Agricultural Mutual Aid Reinsurance Special Account Law (Nogyo Kyosai Saihoken Tokubetsu Kaikeiho) Agricultural Improvement Encouragement Law (Nogyo Kairyo Jochoho) Agricultural Improvement Fund Assistance Law (Nogyo Kairyo Shikin Joseiho) Special Measures Law Concerning Loans to Encourage Engagement in Agriculture by Young People (Seinento no Juno Sokushin no tame no Shikin no Kashitsuketo ni kansuru Tokubetsu Sochiho ) Farmers Pension Fund Law (Nogyosha Nenkin Kikinho)

Rural development 1969 Law Concerning the Development of Agricultural Promotion Regions (Nogyo Shinko Chiiki no Seibi ni kansuru Horitsu) 1990 City Residents’ Farm Development Promotion Law (Shimin Noen Seibi Sokushinho) 1989 Law for Special Exceptions to the Agricultural Land Law etc. Concerning the Leasing of Specific Agricultural Land (Tokutei Nochi Kashitsuke ni kansuru Nochihoto no Tokurei ni kansuru Horitsu) 1987 Community Areas Development Law (Shuraku Chiiki Seibiho) 1988 Multipolar Decentralised National Land Formation Promotion Law (Takyoku Bunsangata Kokudo Keisei Sokushinho) 1992 Law Concerning the Development of Local Core City Areas and the Promotion of Rearrangement of Industrial Facilities (Chiho Kyoten Toshi Chiiki no Seibi oyobi Sangyo Gyomu Shisetsu no Saihaibi no Sokushin ni kansuru Horitsu) 1987 Comprehensive Recreation Zones Development Law (Sogo Hoyo Chiiki Seibiho) 1998 Law Concerning the Promotion of the Construction of Superior Rural District Housing (Yuryo Denen Jutaku no Kensetsu no Sokushin ni kansuru Horitsu) 1952 Law for Introducing Electricity to Agricultural, Mountain and Fishing Villages (Nosangyoson Denki Donyu Sokushinho) 1993 Law Concerning the Development of Base Infrastructure for Revitalising Agricultural and Forestry Industries etc. in Specific Agricultural and Mountain Village Regions (Tokutei Nosanson Chiiki ni okeru Noringyoto no Kasseika no tame no Kiban Seibi no Sokushin ni kansuru Horitsu) 1971 Law to Promote the Introduction of Industries etc. to Rural Regions (Noson Chiiki Kogyoto Donyu Sokushinho) 1965 Mountain Village Development Law (Sanson Shinkoho) 2000 Special Measures Law to Promote the Independence of Depopulated Regions (Kaso Chiiki Jiritsu Sokushin Tokubetsu Sochiho) 1985 Peninsula Development Law (Hanto Shinkoho) 1987 Law Concerning Special State Fiscal Measures Regarding Specific Projects for Regional Development Countermeasures (Chiiki Kaizen Taisaku Tokutei Jigyo ni kakaru Kuni no Zaiseijo no Tokubetsu Sochi ni kansuru Horitsu) 1953 Outlying Islands Development Law (Rito Shinkoho) 1994 Law Concerning the Development of Base Infrastructure for Agriculture, Mountainous and Fishing Village Staying-type Leisure Activities (Nosangyoson Taizaigata Yoka Katsudo no tame no Kiban Seibi no Sokushin ni kansuru Horitsu) 1949 Land Improvement Law (Tochi Kairyoho ) 1957 State Managed Land Improvement Works Special Account Law (Kokuei Tochi Kairyo Jigyo Tokubetsu Kaikeiho) 1961 Water Resources Development Promotion Law (Mizu Shigen Kaihatsu Sokushinho)

Table 5.1 Continued

Water Resources Development Corporation Law (Mizu Shigen Kaihatsu Kodanho) Coastal Law (Kaiganho ) Agriculture, Forestry and Fishery Industry Facilities Disaster Compensation Works Expenses National Subsidy Provisional Measures Law (Norinsuisangyo Shisetsu Saigai Fukkyu Jigyohi Kokko Hojo no Zantei Sochi ni kansuru Horitsu) Law Concerning Special Financial Assistance etc. to Cope with Severe Disasters (Gekijin Saigai ni Taisho suru tame no Tokubetsu no Zaisei Enjoto ni kansuru Horitsu)

Sources: Norinsuisan Roppo, 2003, pp. 9–14; Personal communication, MAFF official, December 2003.

Miscellaneous 1993 Administrative Procedures Law (Gyosei Tetsuzukiho ) 1999 Law Concerning Information Disclosure by Administrative Organs (Gyosei Kikan no Hoyu suru Joho no Kokai ni kansuru Horitsu) 2002 Independent Administrative Corporations General Rules Law (Dokuritsu Gyosei Hojin Tsusokuho) 1992 Law Concerning the Preservation of Wild Animals and Plants Threatened with Extinction (Zetsumetsu no Osore no Aru Yasei Doshokubutsu no Shu no Hozon ni kansuru Horitsu) 1994 Law Concerning the Promotion of the Execution of Water Quality Preservation Works (Suido Gensui Suishitsu Hozen Jigyo no Jisshi no Sokushin ni kansuru Horitsu) 1974 Production Green Land Law (Seisan Ryokuchiho )

Food 1994 Law for Stabilisation of Supply – Demand and Price of Staple Food (Shuyo Shokuryo no Jukyu oyobi Kakaku no Anteiho) 1921 Food Control Special Account Law (Shokuryo Kanri Tokubetsu Kaikeiho) 1951 Agricultural Products Inspection Law (Nosanbutsu Kensaho)

1962

1961 1956 1950

80

The MAFF and agricultural intervention

Finance Corporation, the Water Resources Development Corporation, the Japan International Cooperation Agency ( JICA),59 the Japan Central Racing Association ( JRA), the Japan Green Resources Corporation60 and the former Agricultural Land Development Corporation.61 This group also includes the privatised public corporation, Norinchukin. Some approved and public interest corporations are also established by law such as the National Central Union of Agricultural Cooperatives, or JA Zenchu (as part of the agricultural cooperative organisation set up under the 1947 Agricultural Cooperative Union Law), the National Chamber of Agriculture (as part of the agricultural committee system established by the 1951 Law Concerning the Agricultural Committees etc.), the Agriculture, Forestry and Fisheries Credit Fund under the 1987 Agriculture, Forestry and Fisheries Credit Fund Law, the Farmers Pension Fund under the 1970 Farmers Pension Fund Law and the agricultural housing associations under the 1980 Agricultural Housing Associations Law.62 Other laws outline specific aspects of the government’s support and protection system for farmers in which agricultural organisations play a role and hence establish these bodies indirectly and/or prescribe their legally sanctioned activities. Such laws include ●

●

●

●

●

● ●

●

● ●

the Agricultural Disaster Compensation Law (the agricultural mutual aid associations and their federations) the Land Improvement Law (the land improvement organisations along with agricultural cooperative organisations and agricultural land-holding rationalisation corporations)63 the Law to Promote the Strengthening of the Agricultural Management Base (agricultural land-holding rationalisation corporations) the Law Concerning Price Stabilisation etc. of Livestock Products, the Provisional Measures Law for Subsidies to Producers of Raw Milk for Processing and the 1988 Beef Calf Production Stabilisation etc. Special Measures Law (ALIC) the Agricultural Land Law (agricultural incorporated entities and joint farming cooperatives) the Agricultural Improvement Fund Assistance Law (agricultural cooperatives) the 1995 Special Measures Law Concerning Loans to Encourage Engagement in Agriculture by Young People (young farmers’ education centres) the 1953 Agricultural Mechanisation Law (corporations for executing the business of promoting the practical use of high powered farm machinery) the 1951 Law Concerning the Adjustment etc. of Raw Silk Imports (ALIC) the Provisional Measures Law for a Deficiency Payment for Soybeans (agricultural cooperatives and their federations).

The agricultural laws that bestow wide-ranging interventionist powers on the MAFF are supplemented by a number of associated powers derivative of supporting rules that are appended to agricultural legislation. The FC Law, for example, had an enforcement ordinance with 27 articles detailing all kinds of supplementary details

Modes and means of agricultural intervention 81 to the actual law itself such as the definition of staple food, the enactment time and conditions of the basic plan for the control of rice, the conditions under which producers could entrust collecting agents with rice sales to the government, who would decide the producer rice price, the conditions for the government purchase of wheat etc., how the price would be decided and so on.64 The New Food Law has an even more extensive enforcement ordinance of 49 articles dealing with items such as the total area where rice production adjustment is to be implemented, the basic plan for the orderly marketing of rice, the deadline for the sale of voluntarily marketed rice, sales of government rice, entities dealing with the sale of voluntarily marketed rice, entities that are permitted to undertake sales activities and so on.65 In the case of the Land Improvement Law, it has a long and detailed enforcement ordinance and an equally long and detailed enforcement regulation filling in all the regulatory conditions for the operation of the land improvement works system. This includes the requirements for agricultural land development projects, projects regarded as implementing land improvement works, the term of the long-range plan for land improvement and the basic conditions for carrying out irrigation facility repair projects, as well as for authorising land improvement districts (tochi kairyoku) to collect special levies and so on.66 The financial apparatus of agricultural intervention The most important instrument of intervention based on laws and ordinances is financial. Agricultural policy in Japan is propelled by means of government funds allocated principally from the central and local government budgets and from the FILP.67 The agricultural, forestry and fisheries budget (norinsuisan yosan),68 the bulk of which is administered by the MAFF, is part of the government’s GA budget. The MAFF also administers seven special accounts that provide a significance source of funding for the agriculture, forestry and fisheries sector: the Food Control, National Land Improvement Works, Agricultural Mutual Aid Reinsurance, Measures to Strengthen the Agricultural Management Basis, Forests Insurance, Fishing Boat Reinsurance and Fisheries Mutual Aid Insurance and National Forestry Works special accounts. The GAA budget provides part of the funding for the Agriculture, Forestry and Fisheries Finance Corporation. The GA budget for agriculture also subsidises the corporation (see Table 8.1).69 The agricultural, forestry and fisheries budget is the main source of agricultural subsidies. Moreover, subsidies consume a very large proportion of the budget.70 Figure 5.1 shows the relationship between subsidy expenditure and total expenditure in the agriculture, forestry and fisheries budget for 2002, indicating where subsidies fit into the overall pattern of GA budget expenditure in this sector. The main categories of expenses in order of size are: Subsidies, Transfers to Special Accounts (including the Food Control Special Account, or FCSA),71 Personnel Expenses, Works and Office Expenses and Directly Controlled Businesses. Subsidies cover a large proportion of the funds for public works (kokyo jigyo) and a large proportion of the funds for general works (ippan jigyo).

82

The MAFF and agricultural intervention [Unit: billion Yen] Transfer to FCSA ¥295.6 (9.3%)

Directly controlled business ¥28.1 (0.9%)

Allocation to special accounts ¥873.4 (27.4%)

Business and office expenses ¥80.3 (2.5%)

Personnel expenses ¥143.7 (4.5%)

General works ¥1,684.9 (52.8%)

Total ¥3,190.8

Public works ¥1,505.9 (47.2%)

Subsidies ¥2,65.4 (64.7%)

Figure 5.1 Breakdown of agriculture, forestry and fisheries (2002). Agriculture, forestry and fisheries general account budget according to expenditure purpose. Source: Norinsuisansho Yosanka, Norinsuisan Yosan no Setsumei [An Explanation of the Agriculture, Forestry and Fisheries Budget], 2001, mimeo, p. 2.

In the period 1960–85, subsidies comprised somewhere between 41 and 63 per cent of the agricultural, forestry and fisheries budget compared with 23–33 per cent of the total GA budget. Over the same period, subsidies for the agriculture, forestry and fisheries sector consumed quite a respectable proportion of the total allocation of subsidies in the national budget (around 15–20 per cent).72 Table 5.2 shows annual figures for the proportion of the total agriculture, forestry and fisheries GA budget allocated to subsidies since 1972. It indicates unequivocally that subsidies as a proportion of the total have risen steadily over the years: from 59.0 per cent of the total in 1972 to a peak of 68.7 per cent in 1994, falling slightly to 64.7 per cent in 2002. Generally speaking, subsidies have consumed around twothirds of the agricultural, forestry and fisheries GA budget over the past decade. The next largest expenditure item – transfers to special accounts – has remained quite steady at just over one quarter of the agriculture, forestry and fisheries GA budget. Nevertheless, the quantity of agricultural subsidies rises considerably if the transfer to special accounts is included (the bulk of this expenditure is consumed by the transfer from the GA agriculture, forestry and fisheries-related

Modes and means of agricultural intervention 83 budget to the FCSA) which, for most of the postwar period, has been ‘essentially a subsidy on rice prices’.73 If this amount is included, then the ratio of subsidy to the total agricultural budget is around 90 per cent. The remainder (i.e. all nonsubsidy expenditure) is basically for administrative purposes including the costs of actually running the ministry itself. Excluding budgetary expenditure on forestry and fisheries and taking agriculture alone, the figures available from 1990 to 1999 show that subsidies represented 63.3 per cent of agricultural expenditure in 1990, rising to 71.7 per cent in 1995, 71.3 per cent in 1996, 71.1 per cent in 1997, 69.7 per cent in 1998 and 65.4 per cent in 1999.74 The higher proportions in the mid- to late-1990s were due to the demand stimulus polices of the government and the URAA countermeasures expenditure package implemented through supplementary budgets75 and dedicated largely to public works (the 1999 figure is the original budget only). Like the agriculture, forestry and fisheries budget, one of the characteristic features of the agricultural budget is the high weighting of subsidies in the total allocation, particularly compared to the budget as a whole, which over the same period (1990–99) displayed a subsidy ratio of between 22.9 per cent and 29.1 per cent.76 Large amounts of subsidies also flow to agriculture from prefectural and municipal governments, either for fully funded local government projects, or as part contributions to central government projects. About one third of total local government disbursement to agriculture, forestry and fisheries is sourced from the national treasury, while net local government budgetary expenditure on agriculture, forestry and fisheries has been a near equivalent of the central government’s allocation in most years and has in fact exceeded it since 1987.77 The execution of agricultural projects with MAFF funding is undertaken for the most part by the MAFF’s ‘assisting forces’, that is, local government and the gaikaku dantai.78 As one MAFF official observes, Kasumigaseki (the MAFF main ministry) cannot undertake these projects and so has to rely on assisting organisations with the help of subsidies. Local government at prefectural and municipal levels carries out a large number of projects with guidance from MAFF regional agricultural administration bureaus (who also help in the drafting of applications for MAFF subsidies and thus assist local government entities through the ‘red tape’ process).79 Nokyo is another core agent of agricultural policy implementation. For example, Nokyo’s role in the gentan80 has been growing because of the trend towards smaller government. Although officially rice production adjustment has been under the control of the Food Agency, in reality, the practical tasks of implementing this policy have been carried out by the agricultural cooperatives.81 Off-budgetary sources of financial support for MAFF allocatory intervention include the FILP and other miscellaneous sources such as the profits of MAFF special public corporations. The FILP funds two special accounts administered by the MAFF (the National Land Improvement Works Special Account and the

Total budgeta

25.3 53 3.5 34 2.2

28.1 46 3.5 27 2.1

1,300

7.3

1,535

7.6

116

61.4 389

59.0 366

94

942

766

Amount allocated to subsidies % of total budget Amount transferred to special accounts % of total budget Personnel expenses % of total budget Business and office expenses % of total budget Amount allocated to directly controlled business % of total budget

1973

1972

Category of expenditure

1,829

6.3

115

37.5 62 3.4 41 2.3

50.5 687

925

1974

2,177

5.3

115

43.0 83 3.8 52 2.4

45.5 935

992

1975

2,413

5.9

142

38.8 92 3.8 54 2.2

49.3 936

1189

1976

2,640

6.7

176

32.5 97 3.7 57 2.1

55.0 859

1451

1977

3,057

7.9

241

25.0 106 3.5 61 2.0

61.6 766

1,883

1978

3,463

8.2

283

23.0 110 3.2 74 2.1

63.5 797

2,199

1979

3,584

7.6

274

21.7 113 3.2 75 2.1

65.4 777

2,345

1980

3,693

7.4

273

21.4 117 3.2 79 2.1

65.9 789

2,435

1981

3,701

3.7

136

27.0 160 4.3 80 2.2

62.8 999

2,326

1982

3,607

3.9

140

25.9 159 4.4 81 2.2

63.6 935

2,292

1983

3,460

4.1

141

25.9 167 4.8 83 2.4

62.8 897

2,173

1984

3,301

4.3

142

24.6 176 5.3 85 2.6

63.2 812

2,861

1985

3,143

0.6

18

36.4 172 5.5 87 2.7

64.8 830

2,365

1986

Table 5.2 Breakdown of agriculture, forestry and fisheries GA budget showing proportion allocated to subsidies, 1972–2002a (Unit: ¥ billion)

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

3,029

3,172

3,159

3,122

3,266

3,312

3,386

3,928

3,550

3,597

3,592

3,376

3,406

3,428

3,401

3,191

Notes a These are original budget figures. b Sub-totals sometimes exceed the total because they have been rounded off.

Sources: Norinsuisansho Yosanka, Norinsuisan Yosan no Gaiyo [Outline of the Agriculture, Forestry and Fisheries Budget], annual, mimeo, various years, http://www.maff.go.jp/soshiki/ kambou/kessan/h15/yokyu_gaisan/index.html; Norinsuisan Yosan no Setsumei, annual, mimeo, various years; ‘Zaisei to Kinyu – Nogyo Kankei Yosan no Suii: Nogyo Yosan no Hiritsu no Teika’, p. 237; Nihon Nogyo Nenkan, 2001, p. 71.

Total budgetb

Amount allocated to 1,937 1,881 1,896 1,857 1,990 2,216 2,241 2,700 2,349 2,375 2,365 2,146 2,131 2,163 2,238 2,654 subsidies % of total budget 64.0 59.3 60.0 59.5 60.9 66.9 66.2 68.7 66.2 66.0 65.8 63.6 62.6 63.1 65.8 64.7 Amount transferred 812 1003 970 959 959 768 806 873 841 853 856 863 899 879 887 873 to special accounts % of total budget 26.8 31.6 30.7 30.7 29.4 23.2 23.8 22.2 23.7 23.7 23.8 25.6 26.4 25.6 26.1 27.4 Personnel expenses 173 175 175 181 189 197 201 202 201 203 205 206 208 206 143 144 % of total budget 5.7 5.5 5.5 5.8 5.8 5.9 5.9 5.2 5.7 5.6 5.7 6.1 6.1 6.0 3.0 4.5 Business and office 89 93 97 102 105 106 110 125 130 135 135 131 138 151 101 80 expenses % of total budget 2.9 2.9 3.1 3.3 3.2 3.2 3.3 3.2 3.6 3.8 3.7 3.9 4.1 4.4 4.2 2.5 Amount allocated to 18 21 22 23 24 25 28 28 29 31 33 30 30 30 32 28 directly controlled business % of total budget 0.6 0.7 0.7 0.7 0.7 0.8 0.8 0.7 0.8 0.9 0.9 0.9 0.9 0.9 0.9 0.9

Category of expenditure

86

The MAFF and agricultural intervention

National Forestry Works Special Account), three MAFF special public corporations (the Agriculture, Forestry and Fisheries Finance Corporation, the Agricultural Land Development Corporation and the Forestry Development Corporation), and one approved corporation (the Bio-oriented Technology Research Advancement Institution, or BRAIN).82 In fact, the major funding source for the Agriculture, Forestry and Fisheries Finance Corporation is the FILP.83 In this way, the corporation constitutes the mainstream flow of finance from the FILP into agriculture. MAFF special public corporations in some instances generate profits as a byproduct of their operations conducted on the government’s behalf. These become part of the financial resources available to the state for public policy purposes.84 The MAFF’s institutional adjuncts Groups within the MAFF’s auxiliary administrative apparatus function as subcontractors of the central ministry. They help to implement agricultural policy and/or provide various kinds of support (including technical support) for the conduct of agricultural administration. The primary ‘assisting forces’ of the MAFF outside the ministry (and its regional and local branches) are local government entities. Prefectural and municipal government bodies conduct all kinds of delegated roles in agricultural administration. Prefectural governments each have agricultural departments (noseibu/norinsuisanbu) while there are agricultural divisions in municipal governments (norinka/noseika). The MAFF has cooperative relations with these departments and divisions. Policy flows through them from the centre (chuo ) to the regions (chiho) and then to the grass roots, or bottom ( genba). Each intermediary organisation is important in getting policy through to the actual targets of intervention. The system forms a top-down, pyramid-like structure.85 The MAFF also stations its own officials in the prefectural-level offices. Every prefectural government has MAFF people (usually younger officials) working in them for the purpose of channelling policy directives and monitoring what is going on at the prefectural level. As well as cooperating with the MAFF in the implementation of its agricultural programmes, prefectural governments have their own agricultural policies. A host of agricultural laws bestow tasks on local government entities including prefectural governors and municipal mayors. For example, roles are allocated to local government bodies under the Agricultural Land Law, the Agricultural Modernisation Fund Assistance Law, the Agricultural Credit Guarantee Insurance Law and the Agricultural, Forestry and Fisheries Finance Corporation Law.86 While the Agricultural Land Law might be national legislation, the actual administrative tasks under this law are divided between the MAFF and prefectural governments. To transfer agricultural land up to 4 ha, a person must receive the approval of the prefectural government, while to transfer agricultural land over 4 ha they must receive the approval of the MAFF minister and so on.

Modes and means of agricultural intervention 87 Under the Food Control Law, the prefectural governors had to notify municipal mayors of the maximum quantity of sales offer that they received from the MAFF Ministry (effectively the Food Agency). This offer was in turn transmitted by the municipal mayors to the rice growers and was an indication of the basic quantity of Food Agency purchase.87 In terms of sheer scale of delegated functions, the Land Improvement Law provides perhaps the most extensive range of duties for local government bodies. For example, Article 5 of the law states that land improvement districts (tochi kairyoku)88 can only be established with the permission of the prefectural governor for the purpose of carrying out land improvement projects. Then, when approval is sought for the project, the opinion of the city mayor must be requested on its outline. The approval of the local government that manages the land must also be sought in cases where it designates the area for the land improvement project, including land for public use. Under Article 8, when an application for a land improvement project is submitted, the prefectural governor must examine and decide if the project plan and rules in the submission are acceptable and notify the result to the applicant, and so on. As these examples demonstrate, local government entities are important actors in regulatory systems where they exercise delegated powers of permission and approval. In the case of subsidies, farmers and farmers’ groups apply through local governments that administer the major proportion of these programmes on behalf of the MAFF. In fact, local governments play a crucial role in absorbing and distributing central government agricultural subsidies and in contributing funding to central government-sponsored agricultural and public works projects. Of subsidies distributed by the MAFF, local government organisations (prefectural and municipal governments) acting as primary recipients or as secondary distributors receive somewhat over half the total disbursed by the ministry.89 Almost all agricultural and rural public works projects, for example, are jointly funded by the MAFF and local government entities, with the proportion outlaid by each entity differing according to the project. These sums are additional to the subsidies that local governments allocate independently for agricultural projects. The MAFF also deploys many of its gaikaku dantai as intermediary agents in support of interventionist objectives. At its instigation, the numbers of gaikaku dantai proliferated in the 1950s, 1960s and 1970s (and even into the 1980s) as the MAFF expanded and consolidated the agricultural support and protection regime. From the MAFF’s perspective, the existence of these groups was officially justified by the purpose they served as subsidiary agents of intervention and, in some cases, in transmitting agricultural policies to the grass-roots membership of these bodies, including agricultural producers and private companies. The 558 related groups or gaikaku dantai listed as operating under MAFF jurisdiction in 2001 consisted of nine special public corporations (either supervised or jointly controlled by the MAFF),90 one privatised public corporation (Norinchukin), eight approved corporations and 540 public interest corporations and others (including intermediate corporations).91 Each group in the last category comes under the umbrella of one or other of the MAFF bureaus.

88

The MAFF and agricultural intervention

The gaikaku dantai extend the ministry’s interventionist reach into every conceivable corner of the agricultural sector as well as related industries. Altogether, these quasi-governmental agencies form a dense network of crosscutting linkages and mutually reinforcing roles that support MAFF intervention.92 Many of these groups conduct assigned tasks under their relevant organising law or as stipulated by other laws, or as approved by the ministry. The range of areas covered by the gaikaku dantai is wide, while the scope of their activities is diverse. Some are directly and specifically integrated into interventionist systems, conducting direct market participation, or regulatory or allocatory functions as proxies of the MAFF. These groups should be considered as mere extensions of the agriculture ministry. They do what the MAFF, given its relatively limited staff and organisational structure, cannot do. At the other extreme are ‘make work’ groups with nominal functions whose role in the MAFF’s administrative scheme of things is largely superfluous, but which have been created to provide cushy sinecures for retired MAFF bureaucrats. These groups exist purely for the interests of those within them; all the rest is mere gloss.93 The most prominent direct market participants amongst the MAFF gaikaku dantai are a number of its special public corporations, with market participation often combined with regulatory and allocatory roles. For example, the JRA runs 10 racetracks nationally while channelling some of its profits as subsidies for the promotion of horse racing and the domestic livestock industry. Its mandate is to provide entertainment through the healthy development of horse races and to organise horse races. It also manages the registration of jockeys and horses, examinations for jockeys and horse training. As already noted, the Agriculture, Forestry and Fisheries Finance Corporation operates in the agriculture-related lending market whilst also subsidising interest rates for its ‘customers’. Agriculture and Livestock Industries Corporation (ALIC) continues many of the functions that were previously undertaken by its predecessor organisation, the LIPC,94 in relation to price stabilisation of livestock products and the provision of subsidies to the livestock industry. The LIPC was 94 per cent state-owned with the balance owned by private investors (from the livestock industry). As a state trading enterprise (STE), the LIPC dominated the beef import trade under the import quota (IQ) system between 1966 and 1991.95 One of its official functions was to purchase, sell and store imported beef with an approximately 80 per cent share of the beef import market. The balance was held by the Japan Meat Council, a public interest corporation of the MAFF’s Livestock Bureau96 as well as with other quasi-governmental organisations such as the Japan School Lunch Association. In 1975, the LIPC also acquired powers to buy, sell and stockpile domestic beef (which became a ‘designated’ meat), in order to consolidate its role in the beef price stabilisation programme. Under this programme, the LIPC bought domestic beef if wholesale prices dropped, or were likely to drop, below a standard stabilisation price (gyuniku antei kijun kakaku) set by the MAFF Minister, and sold imported beef and domestic beef already purchased and stocked when

Modes and means of agricultural intervention 89 prices were low, if wholesale prices rose or were likely to rise above an upper stabilisation price (gyuniku antei joi kakaku) also set by the MAFF Minister.97 In 1991, beef was liberalised and the LIPC’s beef import role was abolished. However, it retained its functions in relation to beef price stabilisation through the purchase and sale of domestic beef.98 The LIPC’s role in relation to price stabilisation for pork (another ‘designated’ meat) was similar to its role in relation to beef except that it was not involved in the pork import trade (pork was liberalised in 1971). A standard stabilisation price and an upper stabilisation price were set by the MAFF Minister based on production conditions and demand, and the LIPC, through its state trading functions, intervened and controlled prices so that distribution prices fell within the set range. In practice, the LIPC’s market intervention in relation to pork was very limited. In the case of ‘designated’ dairy products (including butter and skim milk powder), the LIPC combined state trading functions, including imports, with a key role in domestic price stabilization systems for these commodities. For dairy products, a price stabilisation system operated. It comprised a ‘stabilisation index price’ (antei shihyo kakaku), which was the manufacturer’s selling price and a ‘standard transaction price’ (kijun torihiki kakaku), which was the manufacturer’s buying price from producers of raw milk for processing. The MAFF minister set both prices. The stabilisation index price consisted of the standard transaction price manufacturers paid to farmers plus allowable manufacturers’ expenses for production and marketing.99 The LIPC purchased designated dairy products if prices dropped, or were likely to drop below 90 per cent of the stabilisation index price and sold stock if prices rose, or were likely to rise, above 104 per cent of the stabilisation index price. Between 1966 and 1995, the LIPC was a monopoly importer of designated dairy products, only formally relinquishing this position under URAA tariffication.100 Additional functions involved the LIPC directly in the allocatory infrastructure of the MAFF in relation to domestic livestock producers, producer organisations and other MAFF gaikaku dantai. It was the main agent of the MAFF in relation to distributing price subsidies to dairy farmers, being responsible for outlaying deficiency payment to producers of raw milk for processing.101 It also disbursed subsidies for milk supply under the School Lunch Program, distributed subsidies for designated assistance schemes (shitei josei taisho jigyo) aimed at promoting the livestock industry, invested in a number of affiliates (public companies, or kosha) in the livestock industry, provided subsidies to producer associations to store livestock products (designated dairy products, designated meats and eggs) for the purpose of ‘market adjustment’, and dispersed subsidies (in the form of deficiency payments) to producers of beef calves.102 Its sources of finance were both the MAFF budget and profits from its state trading functions.103 The LIPC’s board of councilors consisted of representatives of the national organisations ( gaikaku dantai) with which it interacted in the course of its interventionist functions and for whose individual producer, company and organisational members it conducted its interventionist activities. These bodies included the

90

The MAFF and agricultural intervention

Japan Drinking Milk Cooperative Association, the Japan School Lunch Association, the Japan Meat Council, the Japan Ham Sausage Manufacturing Cooperative Association, the National Federation of Meat Industry Cooperative Associations and so on. As the body resulting from the amalgamation of the LIPC with the Silk and Sugar Price Stabilisation Corporation (SSPSC),104 ALIC also acquired interventionist roles in relation to silk and sugar, including assistance programmes to the cocoon and raw silk industry,105 sugar price stabilisation106 and provision of subsidies for sugar industry promotion projects.107 ALIC was constituted in a similar fashion to its organisational predecessor: 95 per cent state ownership with the balance provided by private investors in agriculture-related industries. Groups such as ALIC which have an extensive range of key interventionist roles contrast strongly with other gaikaku dantai organisations with purely nominal functions. Most quasi-government bodies of the MAFF fall somewhere in between these two extremes. They perform designated tasks in narrow fields such as ●

●

● ●

managing specific agricultural programs including directing subsidies to particular recipients for particular purposes (e.g. Central Fruit Production and Delivery Stabilisation Fund Association, Vegetable Supply Stabilisation Fund and Compound Feed Supply Stabilisation Organisation) regulating specific activities (e.g. Japan Agriculture and Forestry Standards Association, Japan Meat Grading Association and Japan Grain Inspection Association) managing particular markets (all the commodity exchanges)108 running a particular trade (e.g. Japan Meat Council).

Other gaikaku dantai do not have specifically interventionist roles but are part of the larger picture of support and protection for agriculture and associated sectors. They conduct ● ●

research (e.g. Food and Agricultural Policy Research Centre) promotional functions (e.g. City and Agricultural, Mountain and Fishing Village Exchange Revitalisation Organisation, Rural Regions Industry Introduction Promotion Centre, National Rice and Wheat Improvement Association and Food Distribution Structural Improvement Promotion Organisation).

This last group of organisations exists explicitly to promote certain agricultural and related policies. On balance, statutory agricultural organisations (which run the gamut of special public corporations, approved corporations, public interest corporations and others) are most closely integrated into agricultural administration. In conducting their assigned duties, these entities operate most directly as arms of the ministry. The MAFF imposes varying degrees of supervisory and financial control over their activities, depending on the status of the group. For example, the articles

Modes and means of agricultural intervention 91 and clauses of the MAFF’s organisational ordinance depicted in Table 4.2 shows that the various MAFF bureaus and divisions are concerned with the management and activities of special public corporations such as ALIC and the Agriculture, Forestry, and Fisheries Finance Corporation as well as conducting inspections of the agricultural cooperatives and closely monitoring the activities of any group that conducts financial functions such as Norinchukin, the agricultural credit fund associations, and the agricultural and fisheries cooperatives’ deposit insurance organisations. The special public corporations and approved corporations decide the details of their tasks for each year, but must get the minister’s approval (substantively the ministry’s approval) for their annual business plans. For example, the law stipulates that the Agriculture, Forestry and Fisheries Finance Corporation must draw up an annual management and finance plan and obtain approval for the plan from the MAFF Minister. ALIC, on the other hand, had to compile a business method plan prior to start-up, while every year it has to draft an annual management plan as well as a budget and get them both approved by the minister. As Takeuchi comments, although the special corporations consume considerable sums from the budget for their payrolls, they virtually have no role in managing their own activities or business outside the strict control by the related ministry and the MOF. Each ministry usually sends middle managers to related special corporations in line with the ministries policies. Perhaps special corporations are special because they are given ‘special’ treatment by bureaucrats, despite the fact that they have no reason to exist.109 Overall, the gaikaku dantai are an important category of subsidy recipient from the MAFF budget. The MAFF allocates large sums of money for commissioning the tasks, works and research by these groups. They regularly receive over 40 per cent of the MAFF allocation, not far behind local government.110 These proportions underline the fact that the vast bulk of subsidies flow to sub-contracted, agricultural-administering agencies of the central government. The MAFF pays public and semi-public organisations to assist in the execution of agricultural policy in exchange for large quantities of funds that they can disperse for their designated purposes. Only a small proportion of subsidies are paid directly to farmers,111 such as price supports and payments to curtail rice production or to grow other crops. In the case of government programme loans, an interest subsidy is paid, but this is to the distributing organ, not to the farmers. It is only an indirect subsidy to the farmers.112 Subsidies offered directly to farmers are temporary and exceptional, not ordinary and permanent. The reasons for this lie in a political judgement that the selection of farmers who will receive the subsidy is difficult from an administrative or policy viewpoint because it may provoke contradictions and conflicts in rural areas.113 Moreover, as Hayashi points out, because a large proportion of subsidies are directed to purposes such as land improvement, the installation of farm facilities

92

The MAFF and agricultural intervention

and the provision of rural infrastructure, most of them end up in the hands of construction companies, and agricultural machinery and facility makers.114 In some cases, the gaikaku dantai generate their own funding, thus acting as a source of supplementary finance for the MAFF. The LIPC is a good example. It earned large profits from its state trade in livestock products.115 The horse racing industry is another bountiful source of supplementary funding for the MAFF. Three quarters of the JRA’s income from betting tickets is repaid to winning punters, 10 per cent goes into national coffers and the remainder (including miscellaneous income) is used for the management of horse racing. Despite that, there are still surplus funds left over. Half of these go into national coffers with the other half used for the promotion of horse racing and the domestic livestock industry as well as other activities. In 1999, this remaining half amounted to ¥4.6 trillion, which the MAFF had exclusive rights to spend as it wished (i.e. it was the MAFF’s pocket money).116 The JRA’s special promotion fund assistance works, for example, finances organisations like the Japan International Agricultural Council ( JIAC), a body that disseminates information in English about Japan’s agricultural sector and policies. In 1999, the MAFF used the money to fund another gaikaku dantai called the Agriculture, Forestry and Fisheries Policy Information Centre specifically set up to provide a cushy retirement post for former MAFF Administrative Vice-Minister, Upper House member and MAFF Minister, Okawara Taichiiro. The MAFF channelled ¥788.2 million from the JRA into the Information Centre’s budget for the first three years of its operation.117 The potential for profits is particularly high where the MAFF’s special public corporations exercise monopoly or quasi-monopoly rights in markets for particular goods or services. Some public interest corporations also benefit from government-sanctioned monopolies in their particular fields. The National Agricultural Structural Improvement Association, for example, monopolises consultancy work for certain MAFF-funded public works projects.118 Similarly, the sewage works industry in rural areas generates large profits for the Japan Agricultural Community Drainage Association, a public interest corporation that was designated by the MAFF as its representative agent (madoguchi ) for contracting out work relating to the provision of subsidised agricultural community drainage works,119 meaning sewage facilities ( gesuido) in rural areas.120 The MAFF designated the association as its representative for approving requests (nintei shinsei) for the construction of drainage works for sewage in 1982.121 As a result of this designation, the association developed an effective monopoly of business connected to these works.122 The business of the association included not only the approval of requests for drainage works but also drawing up drainage construction plans. Many local governments viewed it as advantageous to order their drainage plans from the association, which led to its virtual monopoly over the drainage construction plan business as well.123 Moreover, the association specifies a particular type of sewage disposal system called the association’s system (kyokaigata), which it developed with the involvement of the main companies dealing with sewage disposal.124 When local governments order a drainage construction plan from the association, it attaches one of the

Modes and means of agricultural intervention 93 kyokaigata plans with its report, thus indirectly forcing local communities to adopt the association’s system. Next, it suggests to local government that they ask the association for guidance in the construction of the system, the price of which is a guidance fee (shidoryo). The construction plan costs around ¥13 million and the additional guidance fee is ¥1.7 million. In 1997, the association earned income of more than ¥2.1 billion from commissions and guidance fees.125 Other companies have invented sewage disposal systems at less cost and of similar quality as the kyokaigata, but they charge that local governments only ever use the latter, which amounts to a monopoly. Because the association monopolises the work of drawing up drainage construction plans, the majority of local governments end up adopting the kyokaigata. The association’s supporting members are 600 companies in related industries (kanren gyokai) such as wastewater treatment facility makers and drainage planning consultancy companies.126 The group collects a supporting membership fee of ¥150,000 from each of these companies. The companies belong to it for purposes of being eligible to obtain contracts for the construction of drainage works. One executive commented that as the association was very influential, his company had to become a member in order to be designated by the association as eligible for getting contracts for public works.127 The association also charges admission fees to 1,300 local government members. Adding these admission fees and supporting membership fees together, the association’s income, excluding its business profits, amounts to ¥150 million per year.128 The collusive relations between the association and industries has been criticised for raising the costs of the public works projects. According to a planning consultancy company, ‘in reality, works costs could be cheaper, but the MAFF and the association hold the real power over the works, and because competition amongst the enterprises is limited, reform is difficult’.129 Designation by the MAFF of the organisation’s status as a representative agent was abolished in 1997, but the organisation’s monopoly continues. Treatment facility makers have alleged that ‘the reality has not changed’, although the MAFF has argued that since the abolition of the organisation’s designation, its share of orders has gone down and so it does not exercise a monopoly.130 In other cases, a mixture of special public corporations, other gaikaku dantai and private corporations will share a market for a particular product or service. For example, the market for agricultural investment loans is shared amongst several different players. The first category of lender consists of government financial institutions (seifu kinyu kikan), principally the Agriculture, Forestry and Fisheries Finance Corporation. Its task is to provide capital that Nokyo’s financial organs and other general financial organs find it difficult to supply.131 In 1999, its share of outstanding loans to agriculture amounted to 10.8 per cent.132 The second category of lender is Nokyo (its financial organs are Norinchukin, prefectural credit federations and local co-ops) with an 82.8 per cent share in 1999. Nokyo’s loans come in two types: ordinary loans and loans where the interest rate is subsidised by the government. The third category is made up of private financial institutions, including city banks and regional banks with a 6.4 per cent share.133

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Three special features characterise the market for agricultural investment loans. First, most of the burden of agricultural loans is clearly borne by two bodies, namely Nokyo and the Agriculture, Forestry and Fisheries Finance Corporation. In the field of agricultural loans, private financial institutions find it difficult to participate because of the distinctive conditions in agriculture. The loans are high risk, offer low profitability, and need to be allocated in large numbers of small lots therefore imposing high transaction costs.134 Second, the roles of Nokyo and the Agriculture, Forestry and Fisheries Finance Corporation are divided, with Nokyo providing short-term loans and the latter providing long-term loans. This division is one of the rules of agricultural finance which has been fixed over a long period. Third, government loans and government-subsidised loans are made under very favourable terms to farmers.135 The bulk of medium-term, production-related capital for equipment investment etc. comes from government loans or governmentsubsidised loans and is, therefore, supplied at a relatively advantageous interest rate compared to ordinary capital markets. The MAFF gaikaku dantai vary not only in terms of the markets in which they operate and their business turnover, but also in terms of their organisational makeup. Some have no members or boards; they merely operate as self-contained units, with a narrow frame of reference and a handful of executive and clerical staff. Others reach down to an extensive company or individual membership that draws an entire cohort of producers or service providers into the MAFF’s administrative purview. Through them, the MAFF can monitor and influence all the private producers and companies operating in a particular field. Nokyo is by far the most significant organisation in this category. JA Zenchu, like the National Chamber of Agriculture, is an approved corporation, while the main Nokyo national economic federations, the agricultural mutual aid associations and land improvement organisations are listed in the category of ‘public interest corporations and others’. The MAFF has created them by law in order to use them for policy mobilisation purposes,136 in short, ‘to advance . . . [its] own policy and organizational ends’.137 Taken together, these bodies act as administrative support organs ( gyosei hojo kikan)138 for the MAFF and thus play a key role in MAFF intervention in the agricultural sector. Each has a membership structure of prefectural and local groups, while at the rice roots, their members are farmers. As organs corporatised into government, these groups perform an extensive range of functions in agricultural administration, including as recipients of government subsidies as noted earlier.139 In many areas of rice production, distribution and storage, for example, constant references are made to the administration and producer groups operating as one (ittai to natta) in the development and implementation of particular measures. In the planned production of rice, which is code for how rice acreage reductions are distributed to individual producers, Nokyo and the MAFF/local government coordinate their actions at national, prefectural and local levels. The MAFF and JA Zenchu notify the prefectural governments regarding their

Modes and means of agricultural intervention 95 respective shares of rice acreage reductions. At the next stage prefectural governments and the prefectural Nokyo central unions finalise their allocation of rice acreage reductions to the thousands of municipalities and local co-ops. Negotiations then take place between municipal government and local agricultural cooperatives. Actual amounts are finally communicated to agricultural communities (nogyo shuraku) and individual farmers by the local co-ops. Production adjustment of rice is thus an integrated system in which decisions are taken jointly by government agencies and agricultural cooperative organisations at each level of government. As Godo points out, the gentan amounts to a production cartel140 implemented by the agricultural cooperatives and local government under the supervision of the MAFF.141 Industry associations (gyokai) that are also MAFF gaikaku dantai organise companies in the food industry (food manufacturing and processing,142 storage,143 distribution,144 transport145), in the agricultural machinery,146 fertiliser,147 feedstuffs148 and agricultural chemical149 industries, in agricultural construction150 and so on.151 Each of these industry associations is attached to a particular bureau of the MAFF and within these bureaus to particular divisions. The groups function to develop a consensus around policy-related issues amongst their members in their respective industries. They combine both public and private functions by serving as a communications medium and transmission belt for information, policy representation and policy mobilisation between the MAFF and their members. In some cases they act as proxies for the MAFF, coordinating their members in line with particular policy directives, and encouraging and enforcing compliance amongst their membership with particular interventionist provisions. Some of the most important umbrella groups amongst the industry associations are the Japan Food Association and Society of Japan Food Industry Executives. The latter was established in 1980 by members of the top management of leading corporations in the food industry (such as Ajinomoto Co., Nippon Meat Packers, Kikkoman Corporation, Kagome Company, Nisshin Flour Milling Co. and so on): [The] society’s primary aim is, through discussion by its members on important issues of common interest that the industry is confronting today, to formulate a consensus on concerted actions, with the goal of helping to stabilize people’s everyday lives and promote the development of the food industry . . . Such activities include the presentation of opinions and requests to government authorities and Diet legislators. With these opinions and proposals, the society also appeals to the general public through the mass media and to the agricultural and fisheries sectors, the distribution industry and other food industry-related sectors.152 Although the society itself emphasises its representational role, it is also the main conduit for MAFF communication into the top echelons of the food industry and acts as a crucial intermediary between the MAFF and the group’s corporate members.

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The MAFF and agricultural intervention

The exercise of MAFF administrative guidance Because the main producers of agricultural commodities are family farms and, to a lesser extent, agricultural incorporated entities consisting predominantly of farmers rather than commercial agricultural production companies, it is often assumed that administrative guidance is not a facet of MAFF intervention. In fact the MAFF issues administrative guidance on any subject relating to the official work of the MAFF, that is, all matters coming under laws and ordinances administered by the MAFF. As for the legal basis of MAFF administrative guidance, it is the same as that of other ministries. In theory it is issued on the basis of law, including MAFF Establishment Law. The general practice is that when specific laws do not provide a basis for administrative guidance, resort is made to the MAFF Establishment Law. However, the reality is that administrative guidance can be issued without any law as a basis. MAFF officials simply pretend to use a law to legitimise their administrative directives.153 The targets of MAFF administrative guidance are all those collectivities and entities referred to in agricultural laws and ordinances including public and semipublic groups, private companies in agriculture-related industries and individual producers. The list of groups includes local government at all levels, regional MAFF bureaus, the statutory agricultural interest groups (agricultural cooperatives, the agricultural committee system etc.), the gaikaku dantai including special public corporations and private sector companies operating in fields under the MAFF’s administrative purview.154 Administrative guidance is also issued to individuals (e.g. rice producers) via local government or Nokyo, and agricultural production groups. The purpose of administrative guidance is to deepen the understanding of producers and producer organisations as well as public and quasi-public bodies with MAFF policy objectives as well as to elicit their cooperation with these objectives. In short, it tells the recipient what the MAFF would like them to do. MAFF administrative guidance comes in various forms (both written and spoken) such as notifications, communications, directives, instructions and advice from ministry officials. For example, MAFF officials use notifications to prefectural governors to cover detailed, specific issues that laws and regulations do not cover.155 They may also be used as a medium of communication and dialogue with producers about agricultural policy and changes to agricultural policy. Following rice tariffication, for example, the MAFF abandoned its traditional method of notification through prefectural governments and its regional bureaus, and decided that it was necessary to communicate directly with producers by dispatching department heads to various regions for dialogue with producers.156 In addition to its communication and informational functions, MAFF administrative guidance has many other policy-related purposes. It is sometimes conducted in order to promote a particular method of agricultural production. For example, MAFF officials ‘engage in the dissemination of agricultural technology amongst farmers and, whenever there is a need for it, give advice and assistance on

Modes and means of agricultural intervention 97 improvements with respect to production, storage and processing of agricultural products’.157 The 1953 Agricultural Products Price Stabilisation Law previously authorised the MAFF to give advice to enterprises or farmers with regard to improving their management and operations, and provided for financial assistance combined with such advice.158 Similarly, farmers seek the guidance of the MAFF about the detail and format of business plans for farm management improvement under the Law to Promote the Strengthening of the Agricultural Management Base. The plans must be approved by the ministry through the local government office in order for farmers to receive subsidised loans. Such administrative guidance is regarded as based directly on the law in question insofar as the MAFF provides advice about the requisite details and content of the farmers’ management improvement plans which are not spelled out concretely in the law itself.159 MAFF administrative guidance is also provided to farmers in order to try and promote a more efficient agricultural sector. In the mid-1990s, the MAFF complemented support and stabilisation price restraint with advice to farmers on how to lower production costs. It issued guidance to dairy farmers to reduce production costs for example. This came in the form of a guideline or future vision or statement of preference of what level the MAFF wanted production costs to be in ‘x’ number of years time.160 The MAFF sometimes uses administrative guidance to influence the agricultural production levels of farmers. One of the best-known examples is the gentan. Indeed, the gentan is often cited as the archetypal example of MAFF administrative guidance issued through assisting organisations to farmers.161 Prior to the enactment of the New Food Law in which production adjustment was legislated into statute,162 the rice acreage control programme was conducted according to administrative guidance issued by the MAFF’s Agricultural Production Bureau, which under the previous MAFF setup, was in charge of implementing the gentan.163 Administrative guidance may also be deployed for explicit regulatory purposes. In the mid-1990s, the MAFF issued 255 directives and instructions relating to financial services offered by agricultural and fishery cooperatives.164 It also issues administrative guidance to prefectural governors about what conditions the articles of association (teikan) of every unit cooperative should satisfy. As a result, there is almost no overlap in the jurisdiction (business areas) of unit cooperatives.165 Likewise, the agricultural committee system has been subject to administrative guidance with respect to its semi-administrative duties in relation to agricultural land ownership. When a farmland conversion plan was submitted to the local agricultural committee, the committee examined the plan and judged whether it was permissible. This examination process and criteria were based on administrative guidance from the MAFF to the agricultural committee. In a partial amendment of the Agricultural Land Law in 1998, the administrative guidance system was abolished and the examination process and criteria for farmland conversion plans were stipulated explicitly in the articles of the law.166 Administrative guidance can also be linked to the MAFF allocatory function. A case came to light in 1999 of Agricultural Structure Improvement Bureau officials issuing excessive guidance to municipal governments in their choice of specific

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companies to construct facilities funded by subsidies being allocated by the bureau.167 On 1 April 2001, the 1999 Law Concerning Information Disclosure by Administrative Organs required all ministries and agencies to make available information to the public on request in an effort to increase levels of transparency and accountability in administration. In the MAFF’s case, these pressures produced a distinct shift in approach towards explicitly written law in place of administrative guidance. As noted in the examples above, the MAFF has sometimes moved to establish a legal basis for intervention that had previously been conducted through administrative guidance. In another example, administrative guidance of some matters under Agricultural Cooperative Union Law and the Agricultural Land Law were also put on a statutory footing. However, while the general trend has been for administrative guidance to be converted to legal precepts in order to entrench the MAFF’s interventionist powers, in some instances, the ministry has been criticised for relying on administrative guidance rather than its formal legislative power. In a much criticised case in the late 1990s, the MAFF issued only administrative guidance to feed companies and cattle farmers not to use ground animal products (meat and bonemeal) in cattle feed because of the risk of transmitting bovine spongiform encephalopathy (BSE). The advice was to ‘refrain’ from feeding meat-and-bone meal to cows.168 It was issued because the MAFF had responsibility for administering the feed industry under the 1953 Law Concerning Safety Assurance and Quality Improvement of Feed. At the time, the law and its enforcement ordinance did not prohibit the use of animal products, but based on the general authority of the MAFF relating to feed business, the MAFF issued the guidance not to use animal products in feed manufacture.169 The fact that the regulatory provision came only in the form of administrative guidance (issued in the name of a lower-level section chief) was attributed with failing to prevent the outbreak of BSE in Japan.170 After the outbreak of BSE was confirmed, however, the MAFF instructed Nippon Meat Packers and its subsidiary Nippon Foods to half beef sales voluntarily. In a similar case, the MAFF issued emergency administrative guidance to dairy processing companies in the wake of a scandal involving Snow Brand Co. whose products caused widespread food poisoning amongst consumers. The practice of amakudari by MAFF officials From an interventionist perspective, the MAFF uses amakudari as a mechanism whereby retired agricultural bureaucrats can run its interventionist empire as well as influence the activities of private sector companies operating in a wide range of industries, both agriculture-related and non-agriculture-related. Gaikaku dantai are the most important target destinations for MAFF OBs, underlining the role that amakudari plays as a mechanism for facilitating agricultural intervention via the MAFF’s extended institutional infrastructure. Indeed, as the following time series data shows, the MAFF relies on its retired officials to manage its auxiliary domain.

Modes and means of agricultural intervention 99 In 1981, 242 ex-MAFF jimukan exhibited the following amakudari profile:171 ● ●

● ● ● ● ● ●

● ● ● ●

●

41 (16.9 per cent) in MAFF special public corporations172 94 (38.8 per cent) in MAFF authorised or public interest corporations (not including Nokyo) 42 (17.4 per cent) in private companies 16 in the legal profession 12 in political office (Lower House-4, Upper House-6, gubernatorial positions-2) 8 in university positions 6 in food industry councils 4 in non-MAFF-affiliated food and agricultural organisations (most were industry associations) 4 in fisheries cooperatives and other fishery organisations 2 in the accountancy profession 2 in consumer organisations 1 each in farm management, banks and securities, Diet research office and Diet library 10 in other miscellaneous positions.

As this profile shows, more than half (a total of 135, or 55.8 per cent) of former jimukan were working in gaikaku dantai.173 It represented by far the largest, single category of post-retirement employment. The private sector constituted the next most significant amakudari destination. Twenty years on in 2001, the amakudari profile of jimukan had altered remarkably little.174 Of the higher number of 265 retired jimukan in post-ministry employment, 29, or 11.0 per cent were working in MAFF special public corporations,175 while 130, or 49.1 per cent, had retired into MAFF approved and public interest corporations (not including Nokyo). The gaikaku dantai category thus accounted for exactly 60 per cent of all MAFF amakudari officials.176 The special public corporations led by retired MAFF jimukan were the JRA, the Farmers Pension Fund, the National Association of Regional Horse racing, the Agriculture, Forestry and Fisheries Finance Corporation and ALIC.177 Amongst this group, the JRA was most extensively penetrated by retired jimukan who occupied eight posts within the corporation.178 In addition to the post of chairman, ex-MAFF officials also occupied two directorships and the post of vice-chairman of ALIC. The National Association of Regional Horse racing and the Green Resources Corporation179 each had three executives who were previously MAFF jimukan,180 while the Agriculture, Forestry and Fisheries Finance Corporation and the Farmers Pension Fund each had two. JICA and the Fishery Resources Development Corporation each had one.181 Only one special public corporation (out of nine) had no former jimukan from the MAFF amongst its executives – the Agriculture, Forestry and Fishery Groups Personnel Mutual Aid Association (also known as the Pension Fund Association for Agriculture, Forestry and Fishery Corporation Personnel). Significantly, this gaikaku dantai is not integral to the implementation of ministry policy but is a pension fund for employees of primary

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The MAFF and agricultural intervention

industry groups.182 It covers members of associations connected with the agriculture, forestry and fishery industries, such as Nokyo.183 The extent to which the executive ranks of these entities are penetrated by retired jimukan underlines the degree to which trusted appointees from the MAFF are relied on to direct the activities of these auxiliary agencies. They manage them as extensions of the ministry. Amakudari is an instrument of intervention where the ministry penetrates its auxiliary infrastructure most deeply with seconded and retired officials. This is particularly the case with MAFF special public corporations. Around 80 per cent of those employed by the special public corporations in the agricultural sector are amakudari officers.184 Moreover, socalled ‘privatisation’ of Norinchukin seems to have made little difference to infiltration of the bank by amakudari officers, with former jimukan occupying the positions of chairman of directors, managing director, asset management auditor and special advisor (with the chairman of directors position at the Norinchukin Research Institute also allocated to a retired MAFF jimukan).185 Amongst approved corporations, jimukan occupied executive posts in six out of the eight groups in this category. The chairman or chairman of directors of the Agriculture, Forestry and Fisheries Credit Fund, the National Chamber of Agriculture, the Vegetable Supply Stabilisation Fund, the Agriculture and Fishery Industries Cooperative Unions Deposit Insurance Organisation and BRAIN were all led by retired jimukan. The Agriculture, Forestry and Fisheries Credit Fund was the most extensively penetrated by ex-MAFF officials holding the posts of chairman of directors, vice-chairman (two), director (three) and auditor. BRAIN had three posts allocated to former MAFF jimukan,186 while the Vegetable Supply Stabilisation Fund had two.187 Of the 540 public interest corporations operating under the umbrella of the MAFF, 94 had retired jimukan in their executive ranks, principally in the positions of chairman or director. Many of these groups had multiple ex-MAFF executives, such as the Agricultural Policy Research Committee,188 the Central Fruit Production and Delivery Stabilisation Fund,189 the Food Livelihood Information Service Centre190 and the Japan Refrigerated Foods Association.191 Just over one quarter of these public interest corporations were industry associations in primary industry-related areas. Recipient groups ranged over a wide spectrum such as the Sugar Refining Industry Association, the Japan Silk Industry Association, the Food Industry Centre, the Japan Horse Association, the National Central Markets Vegetable and Fruit Wholesalers’ Association, the Society of Japan Food Industry Executives, the Japan Fruit Juice Association and so on. Ex-MAFF jimukan filled various posts in these organisations, most prominently as chairman of directors, but also in other positions such as vice-chairman, managing director and advisor. Some of the groups had more than one executive from the MAFF. Significantly, some of the public interest corporations run by retired jimukan were commodity exchanges. This suggests that even where private companies dominate trades in agriculture-related areas, the reality is much closer to government-led market management.

Modes and means of agricultural intervention 101 As with the 1981 profile, a small number of retired jimukan could also be found in agriculture- and food-industry associations that were not gaikaku dantai. Nevertheless, placement of amakudari officials in these groups suggests that the MAFF seeks to grasp within its administrative reach whole private industry sectors in areas related to its administrative jurisdiction. Even where organisations are formally independent of government, they become subject to bureaucratic capture through administrative practices such as amakudari. Private companies represented the second largest target category for retired jimukan in the 2001 group, with 39 out of the 265 amakudari officials (or just under 15 per cent) employed by enterprises of various kinds. Higher numbers gravitated to fields such as livestock and horseracing (5), and food processing and distribution (5), but the range of businesses to which MAFF jimukan descended was extensive. While most common in areas relating to the MAFF’s core policy interests, the types of recipient companies were not restricted to agriculture-related enterprises. Law and economic graduates were obviously welcome in managerial positions in a range of private companies and were not necessarily utilised as agricultural specialists after their employment with the MAFF had ended. The areas of business covered by these companies encompassed marine insurance, manufacturing, shipbuilding, transportation, real estate, finance, construction and public relations. Positions held included chairman of directors, managing director, advisor, counsellor, director, auditor, administrator, vice-president, trustee, branch manager, section chief and so on.192 The diversity of companies involved indicates that the skills and contacts of ex-MAFF officials are valued by companies more generally, while the MAFF, for its part, possesses extended interests in heterogeneous areas of private sector activity.193 The remaining jimukan fell into the following categories: ● ● ● ● ● ● ● ● ● ●

15 in political office (Lower House-5, Upper House-5, local government-5)194 12 in university positions 7 in the legal profession 5 in local government offices 2 in medical clinics 1 in the accountancy profession 1 in a party organisation 1 in the Diet committee apparatus 1 in the Diet Library 22 in other miscellaneous positions.195

Even more than the jimukan, retired MAFF gikan gravitate to amakudari destinations and types and levels of position that correspond to the posts they held in the ministry and the skills they utilised there. For example, many gikan with engineering qualifications who have supervised MAFF-funded public works find post-retirement employment in construction and engineering companies, while scientists and chemists find work in chemical companies. In the construction companies themselves, retired MAFF engineers provide key contacts, information and skills

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The MAFF and agricultural intervention

that give private companies the edge in bidding for public works projects financed by MAFF subsidies. In other ways, the patterns of post-retirement employment of the gikan and jimukan groups are quite different. First, the gikan group is much bigger (reflecting the ratio of technical to general officers in the ministry itself ). Second, gikan retire into an even greater range of companies because the technical skills of the retired gikan are called for across a broader spectrum of private employers. Third, the positions that gikan hold in companies tend to be those where their technical skills can be deployed such as special and/or technical advisors, consultants, auditors, technical (such as engineering) department chiefs and assistant chiefs. Fourth, the gikan display greater diversity of post-retirement employment overall. They are less tied to the MAFF and reach beyond the gaikaku dantai to a large range of private organisations in the primary industry sector such as professional and industry associations. This is partly a reflection of their greater flexibility given their transportable professional qualifications. Fifth, the gikan are not the key actors in the institutional infrastructure of agricultural support and protection that the jimukan are, although their technical skills mean that they make critical input in other ways. While the retired jimukan direct the operations of the extended infrastructure of MAFF intervention, the gikan provide the technical support to this infrastructure where needed. The MAFF thus relies on retired gikan to play the kind of technical support roles that they performed in the mainstream ministry itself. The gikan spread themselves over the many technically orientated gaikaku dantai. The gaikaku dantai not covered by the jimukan are encompassed by the gikan, thus giving almost total coverage of all MAFF gaikaku dantai, with remarkably little overlap amongst the organisations involved. This suggests that just as a division exists within the MAFF between policy officials and technical officials, differences can also be detected between policy-related affiliated agencies and those that conduct more technical-type service functions. Even where there is overlap, the retired gikan hold down more technical bread-and-butter positions, while the retired jimukan occupy the directorships and other executive positions. Where the gikan are in management, it is in the lower-level management positions such as the heads of offices ( jimukyokucho). Finally, the gikan occupy key technical positions in the vast technological infrastructure spawned by the MAFF, not only amongst the gaikaku dantai, but also amongst its experimental stations and research institutes.196 Surveying the amakudari profile of 1,154 gikan in 1981 reveals the following picture:197 ● ● ● ● ● ●

528 or 45.8 per cent in private companies 32 in MAFF special public corporations 7 in non-MAFF special public corporations 441, or 38.2 per cent in authorised or public interest corporations 58 in university positions 34 in consultancy, international and research organisations

Modes and means of agricultural intervention 103 ● ● ● ● ● ● ● ● ● ● ● ●

12 in political office (Lower House-3, Upper House-4, local government-5) 11 in cooperative associations in agricultural, forestry and fisheries industries 6 in banks, securities, insurance and sundry funds 5 in food industry councils 4 in Nokyo organisations 4 in schools 4 self-employed 3 in hospital administration 2 in non-agricultural interest groups 1 in local government administration 1 in a sundry committee 1 in the legal profession.

Compared with the jimukan, this profile shows a larger percentage employed in private companies and a total of 473 or 41.0 per cent in MAFF gaikaku dantai. By 2001 the numbers of retired gikan had inflated even further to 1,891. Detailed analysis of their actual target destinations confirms that retired MAFF technical officials gravitate mainly to positions where their professional and technical expertise can be utilised. This is reflected in the kind of organisations and companies to which they move, and the positions that they hold within these bodies. For example, amongst the special public corporations, the gikan (as opposed to the jimukan) were concentrated in technical positions in JICA (primarily in agriculture-related aid projects overseas), in BRAIN (work in bio-technology areas) and in the Green Resources Corporation (engineering relating to forestry road development and agricultural land development). Amongst the public interest corporations, the gikan can be found in organisations with a more technical focus such as the Japan Plywood Inspection Association, the Milk Transportation Facilities Lease Association, the Marine BioEnvironment Research Institute, the Agriculture, Forestry and Fisheries Technical Information Association, the Fertiliser Science Research Institute and so on. Moreover, they can be found not only in special public corporations concerned with public works such as the Green Resources Corporation, but also in the gaikaku dantai that have a public works focus such as land improvement organisations, the Rural Environmental Infrastructure Centre, the Japan Agricultural Community Drainage Association, the Rural Development Planning Committee, the National Agricultural Engineering Technical League and so on. In general, amakudari routes along which retired bureaucrats travel into MAFF gaikaku dantai are precedent-laden and geared to a system that takes relevant experience into account as well as final levels of appointment within the MAFF. Positions in these external bodies are often linked to specific positions in the ministry such as the key bureaus in which they served in the ministry. For example, an official from the Structural Reform Bureau of the MAFF will end up in something like the National Association for the Structural Reform of Agriculture. Bureaucrats retiring from similar career paths tend to move into the same or similar organisations.198 The equivalent hierarchy or status principle also applies.

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The MAFF and agricultural intervention

Former administrative vice-ministers and directors-general (chokan) of MAFF agencies (Food, Forestry and Fisheries) become presidents of the main supervised special public corportions of the MAFF, such as the Agriculture, Forestry and Fisheries Finance Corporation and the JRA. The same sort of principles apply to the private companies into which these officials retire. They are usually related to the posts in which they have served in the MAFF. For example, an official from the Structural Reform Bureau of the MAFF will retire to the position of director or board member of a construction company,199 while an official from the Food Agency will end up in a food distribution or processing company. In some cases, the gaikaku dantai act as the bridge linking the MAFF to the private sector through a combination of amakudari and outplacing of staff. For example, of the 17 directors of the Agricultural Community Drainage Association, six including the executive director are MAFF OBs. Among the general staff (72 in total), about 10 per cent are either MAFF OBs or seconded from the MAFF.200 After returning to the MAFF, they specialise in rural community drainage works in the Agricultural Structure Improvement Bureau (now Rural Development Bureau).201 Many of the remaining staff members are officials on loan from local governments and employees on loan from the companies dealing with sewage treatment facilities. And while people from companies in related industries work on loan in the kyokai, there are many cases where MAFF OBs work in the kyokai and then ‘descend from heaven’ into public works-related industries. Supporting members of the association clarify the rationale behind this custom, saying that “in order to be nominated in local government tenders, we have to cooperate in terms of posts and money with the kyokai as it is very influential’.202

Conclusion MAFF is the principal agent of government intervention in the agricultural sector. This intervention can be identified as falling into three principal modes: regulatory intervention, allocatory intervention and direct participation in markets. The MAFF intervenes through all the legal, institutional, financial and other means at its disposal. In undertaking its interventionist role, it relies on a vast infrastructure of ‘assisting forces’, a strong legal foundation of laws and ordinances, a financial superstructure of budget and loan funds, and various entrenched practices. While laws and ordinances provide the authorisation for MAFF intervention, subsidies, administrative guidance and the amakudari nexus provide the means. This architecture of intervention is the source of the MAFF’s interventionist power and privilege which is explored in the following chapter.

6

Agricultural intervention and bureaucratic self-interest

This chapter explains the collective and individual benefits that intervention generates for the MAFF and its officials, and estimates how the interventionist regime in agriculture has influenced the MAFF’s ranking in the inter-bureaucratic hierarchy. The first section describes how the MAFF has benefited from intervention and how this is reflected in its power and status as an administrative entity of government. The second section discusses how MAFF bureaucrats gain individually from intervention. In the last section, the chapter discusses how the interventionist regime in agriculture generates the economic and political goods cementing an ‘iron triangle’ of vested interest in agricultural support and protection.

The benefits of intervention for the MAFF and its officials Controlling, guiding, managing, funding and supervising agriculture and associated industries generates all kinds of positive spin-offs for the MAFF and its officials.1 In the 1960s the MAFF’s primary economic power base (in terms of agriculture’s place in the national economy measured in terms of all the usual indices) began to shrink dramatically in the course of rapid industrial growth. Inevitably agriculture’s political and human power base also began to weaken.2 The overall trend was described as the ‘retreat of agricultural policy’ and the ‘sinking basis of the agriculture and forestry bureaucracy’.3 However, the MAFF’s largely untrammelled interventionist powers helped to shore up its standing relative to other ministries in the face of the economic contraction of the sector it administers.4 Government intervention in agriculture via the MAFF is directly reflected in ministry ‘stocks’. These encompass a wide range of MAFF attributes including its total staff complement and size of budgetary allocations as well as organisations created and enlisted to conduct auxiliary administrative functions. Staff numbers The MAFF (the main ministry, regional offices and agencies) has traditionally been the third largest in personnel numbers of the six ministries administering

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The MAFF and agricultural intervention

major economic sectors. The following lists the pre-2001 economic ministries in rank ordering by size of staff complement in 1986: ● ● ● ● ● ●

Ministry of Posts and Telecommunications (MPT) – 311,8395 MOF – 75,7266 MAFF – 70,5497 Ministry of Transport (MOT) – 37,5528 Ministry of Construction (MOC) – 26,167 Ministry of International Trade and Industry (MITI) – 12,588.9

A decade later in 1996, the ministries ranked as follows: ● ● ● ● ● ●

MPT – 306,287 MOF – 79,729 MAFF – 46,88710 MOT – 37,696 MOC – 23,857 MITI – 12,404.11

Figure 6.1 compares the post-bureaucratic restructuring figures for core staff numbers in the central ministries in Kasumigaseki. Because some ministries were amalgamated with others, the basis of comparison changed. As the figure shows, the MAFF slipped to fourth ranking with 33,00012 behind the Ministry of Public Management, Home Affairs, Posts and Telecommunications, the MOF and MLIT. It remained well ahead of METI, however. Indeed, the MAFF remained almost three times the size of METI, with the MAFF’s vast interventionist staffing structure making the substantial difference between the numbers of METI officials (primarily policy administrators) and the number of MAFF officials – in total, an additional 20,000 staff members. The difference could largely be attributed to the large number of MAFF officials attached to its regional administration bureaus (17,110), the substantial number of officials attached to the Food Agency (9,688) and the numbers of staff employed by the Forestry Agency including those working in state-owned forests in the National Forestry Service (6,659).13 Many of those in the agriculture ministry were, in other words, employed directly in interventionist activities, which inflated the size of the ministry’s staff complement. The inclusion of 60,000 agriculture-related officials in local government offices expanded the MAFF staff complement even further.14 METI, on the other hand, remained only somewhat larger than the Food Agency. Like all ministries, however, MAFF has endured a quantum decline in staff numbers since the late 1960s. The reduction began in 1968 as a result of the government’s bureaucratic staff reduction plan, but in the MAFF’s case, it was accelerated by the continuous fall in numbers of workers in the National Forestry Service as a result of the contraction in state-owned and directly managed forests. It was also due to the rationalisation of the MAFF’s system of collecting and evaluating agricultural statistics, and declines in staffing levels in the Food

300,000 Annual budget: ¥18,503.1 billion Number of staff: 300,427

Ministry of Public Management, Home Affairs, Posts and Telecommunications

250,000

200,000

150,000

(Number of staff)

Ministry of Education, Science, Sports and Culture Annual budget: ¥9,321.2 billion Number of staff: 139,725 Annual budget: ¥17,420 billion Number of staff: 100,518

Ministry of Health, Labour and Welfare

100,000

Ministry of Finance Annual budget: ¥793.6 billion Number of staff: 50,991

Ministry of Land, Infrastructure and Transport

Annual budget: ¥19,372.2 billion Number of staff: 79,000

Annual budget: ¥7,892 billion Number of staff: 68,248

Ministry of Justice 50,000

Cabinet Office Ministry of Agriculture, Forestry and Fisheries

Annual budget: ¥5,690 billion Number of staff: 36,237

Annual budget: ¥3,400 billion Number of staff: 33,000

Ministry of Annual budget: Economy, Trade ¥930.5 billion and Industry Number of staff: 12,381 Police Agency Annual budget: ¥763.4 billion Ministry of Number of staff: 5,230 Foreign Affairs Annual budget: ¥254.2 billion Annual budget: ¥268.9 billion Number of Ministry of Number of staff: 1,130 staff: 7,589 Environment ¥5 Trillion

¥10 Trillion

¥15 Trillion

¥20 Trillion

¥25 Trillion

(Annual budget)

Figure 6.1 Comparison of the size of central ministries by the number of employees and size of budget in 2001. Source: Kawakita and Onoue, Norinsuisansho, pp. 10–11. Notes a The staff numbers of the Ministry of Education, Science, Sports and Culture and the Ministry of Health, Labour and Welfare include the employees of state universities and state hospitals which became independent administrative corporations in April 2000. b The bulk of the MOF budget comprises government bond-related expenses (¥17,170.5 billion). c The majority of the Ministry of Land, Infrastructure and Transport budget is for public works. d More than 70 per cent of the Ministry of Foreign Affairs budget is related to foreign aid.

108

The MAFF and agricultural intervention

Agency’s regional food offices. The latter decreased because of the reduction in non-rice grain production and the switch to a more market-oriented system of rice sales under the New Food Law. The Food Agency’s administrative workload also contracted because of the introduction of information technology.15 On top of this, the MAFF lost staff numbers in the administrative restructuring of its 49 experimental stations and research institutes into 17 independent administrative corporations (dokuritsu gyosei kikan) in 2001.16 Budget size The MAFF has customarily ranked second amongst the five economic ministries in the size of its budget as a proportion of the total outlaid from the GA budget. Not including the MOF, which allocates funds to bond-related expenses, and the former Ministry of Home Affairs (MHA), which channelled central government funds to local governments, the MAFF was placed just below the MOC in terms of the size of its GA allocation, but this was nevertheless nearly three times larger than that of MOT or MITI, and was far ahead of the MPT’s allocation which was miniscule. The MAFF went on to retain this relative position even after the 2001 bureaucratic restructuring (see Figure 6.1). Size of auxiliary infrastructure In terms of the size of its auxiliary infrastructure, the MAFF is also relatively significant compared with other economic ministries. Not only does it have an extensive regional infrastructure of agricultural administration bureaus and their sub-units as well as a network of Food Agency regional offices, but in 2000, it came fifth amongst economic ministries in the number of its affiliated public interest corporations (491),17 compared with 903 for MITI, 849 for the MOT, 716 for the MOF and 566 for the Ministry of Health and Welfare (MHW). The MOC came behind the MAFF with 345 and the MPT with 220.18 In 2001, the MAFF rose to fourth place with 487 public interest corporations.19 Intervention as a source of bureaucratic power The functions that the MAFF performs as an interventionist agent of the state are key sources of its bureaucratic power, which involves the exercise of market power as well as regulatory and allocatory authority over its jurisdictional clients. Allocatory intervention generates the primary rationale for the MAFF budget which, as already noted, devotes around two thirds of expenditure to subsidies. The power to allocate subsidies and particularly those for public works is a vested right of the MAFF, and one of the core elements of its administrative power base. It makes the difference between the relative lack of influence that the MAFF exercises over food processing companies – which it does not subsidise20 – and the substantial influence that it exercises over farmers, farmers’ organisations and agricultural gaikaku dantai – which it does subsidise – as well as companies that are

Agricultural intervention and bureaucratic self-interest 109 dependent on the allocation of MAFF public works contracts. For example, the MAFF exerts a great deal of influence over small and medium-sized construction companies in rural areas to whom it, or its organisational proxies, let contracts for agricultural and rural public works.21 Allocating subsidies for agricultural and rural public works projects is the primary administrative purpose and rationale of the Agricultural Structure Improvement (now Rural Development) Bureau. The bureau is in charge of the bulk of agricultural and rural public works programmes and its financial resources are enormous. Indeed, it has been described as an ‘independent kingdom’ within the ministry.22 Given the large and increasing proportion of the MAFF budget spent on public works, the bureau has controlled ever-increasing amounts of the MAFF budget.23 By 1999, it was commanding about 40 per cent of the ¥3.4 trillion in total dispensed by the MAFF.24 By 2002, 52 per cent of the MAFF budget was being allocated through the bureau.25 Moreover, although some subsidy allocations are mandated by law with limited potential for the exercise of administrative discretion, MAFF bureaucrats undoubtedly exercise considerable discretion in allocatory intervention. This power goes back to the prewar period when the Ministry of Agriculture and Commerce (MAC) was the bureaucracy for the Emperor and controlled the farmers through the landowning system. The status of the agricultural bureaucracy was very high amongst the bureaucrats. The MAC distributed a large quantity of subsidies and the farmers were always forced to follow and obey the agricultural bureaucrats. As for the situation after the war, since there was still a large amount of subsidies provided for farmers, there is still a high and low relationship between the agricultural bureaucracy and the farmers. Farmers still go and see the agricultural bureaucracy to lobby for subsidies. This high and low relationship is only created because of money, with the agricultural bureaucracy thinking that they are superior to farmers.26 MAFF officials make multiple discretionary decisions about the allocation of a subsidies: the object and purpose of the subsidies, the main body of the subsidy works, the subsidy cost, the subsidy rate, who the recipients will be, and in the case of public works projects, the project location, the nature of the project itself, its cost and who will carry it out etc. In the case of land improvement projects, for example, the Land Improvement Law lays down the procedures under which such projects are to be undertaken. However, specific matters relating to each project are usually defined by so-called ‘instructions’ ( yoko) or ‘guidelines’ ( yoryo) that the MAFF enforces after budget consultations with the MOF. The guidelines are released in the name of the MAFF administrative vice-minister who is the administrative head of the ministry. Officially the MAFF’s Establishment Law provides the authority for the ministry to exercise its administrative discretion in this fashion,27 but in practice, it is exercised unilaterally by individual MAFF bureaucrats. As Hirose points out, ‘the MAFF’s Structural Improvement Bureau

110

The MAFF and agricultural intervention

decides the entire plan for land improvement projects, examines the plans for individual projects, and makes the budgetary decisions about when and where to begin what projects’.28 At the same time as being a source of power over supplicants for subsidies and public works contracts, the discretionary authority to allocate subsidies places bureaucrats in a superordinate position over politicians seeking allocatory favours and over petitioning groups that also include local government politicians and bureaucrats. The Structural Improvement (now Rural Development) Bureau extensively uses consultancy companies for work on its subsidised public works projects, in addition to the construction contractors for these projects. Which regional areas will be selected for particular development projects, and which companies will be chosen to do what MAFF-sponsored work is a power that officials in the bureau exercise, and over which national and local government politicians (and local government bureaucrats) try to exert influence. Sometimes the power to allocate the particular public works contracts is delegated to local governments or relevant gaikaku dantai, in which case MAFF officials exert administrative guidance over them in their selection of private-sector contractors. The MAFF also uses subsidies as an instrument of its administrative authority over farmers, agricultural groups, local communities and local governments with respect to inducing compliance with the MAFF’s agricultural policy goals. In short, subsidies are an instrument of policy mobilisation. For example, when the voluntarily marketed rice system was introduced in 1970, subsidies were paid both to farmers and the cooperatives to switch to the new system from the government rice system under which the Food Agency, rather than rice wholesalers, purchased the rice. The MAFF’s rice production adjustment policy is another good example of the ministry’s policy mobilisation hinging on subsidy power. Satake argues that the traditional policy method of MAFF bureaucrats is a combination of subsidies and the use of the social power of local communities, with the gentan illuminating this combination particularly clearly.29 The MAFF introduced the gentan in 1970 with the objective of adjusting supply and demand and maintaining prices by organising the planned reduction of rice production.30 Until reforms were introduced in 2000 allowing producers and Nokyo to participate in decisions about the allotment of gentan scale and acreage, the MAFF allocated gentan acreage equally by prefecture, that is, requiring them to reduce rice fields by the same amount. In addition, the same gentan rate was uniformly applied to all farm households in each prefecture. The rule applied even to the prefectures that actively produced rice such as Niigata and affected rice brands in greater demand from consumers such as koshihikari. This forced even motivated farmers to decrease planting.31 Under such a uniform system, farmers found it difficult not to participate in the rice production adjustment programme. The equal allocation of gentan acreage to all farmers meant that if one farmer failed to play by the rules, all the others would be penalised. A kind of gentlemen’s agreement operated that everyone should observe the same restrictions. Pressure from agricultural communities effectively made it compulsory for every household to participate.32 There was no official punishment from the MAFF for violating the gentan, but it reserved the

Agricultural intervention and bureaucratic self-interest 111 right to retaliate by cutting subsidies to the town or village. The MAFF exacted a budget penalty from those municipalities that did not observe their acreage reduction targets. Because, in this event, all the town or village would suffer, MAFF strategy ensured that there was a big social obligation on everyone to make his or her contribution to the gentan. The same sort of MAFF leverage was behind Nokyo’s acceptance of the abolition of the FC system and its replacement with the new food system in 1994–95. Rumour had it that JA Zenchu abandoned its stance of holding on to the FC system at all costs in exchange for subsidies and funds for marketing operations. The money was allegedly delivered through the federated Nokyo system, that is, from the National Federation of Agricultural Cooperatives ( JA Zenno) to the prefectural economic federations and then to the local co-ops.33 A similar MAFF strategy reportedly accounts for the reversal of Nokyo’s position on the URAA. As Domon explains, on December 15 1993, the day the GATT agreement was reached, Zenchu made an organisational decision at a national conference of central union chairmen that it would not cooperate with the gentan and would not permit deliveries from the cooperatives of rice for ‘other use’ (tayotomai ). But on 26 February 1994, for no rational reason, it revoked this decision. Besides displaying the usual lack of principled response, this action revealed the usual picture of cosy relations between the MAFF bureaucrats and Zenchu officials distorting agricultural policy in sharp relief. The reason why Zenchu rescinded its decision was because of the close connections between MAFF bureaucrats and Zenchu officials. There is a story from many communities that if producers and Nokyo take action to oppose the MAFF’s plans, it skilfully puts pressure that reverberates on public works projects. The MAFF puts pressure on local communities, and if they defy MAFF policy, it influences the allocation of public works such as roads and bridges.34 In this case, Nokyo was persuaded by the prospect of a very large compensation package of subsidies, including public works subsidies, to agriculture and rural areas.35 In the circumstances, Domon concluded that the MAFF’s adopting such policy methods (seisaku shuho) made the realisation of agricultural policy reform completely impossible.36 The discretionary powers of MAFF officials over almost all aspects of subsidy allocation are only matched by their discretionary powers to grant permits, licenses and approvals, and to authorise, designate and consent. For example, under Article 11 of Agricultural Cooperative Union Law, agricultural cooperatives must obtain the approval of the ministry when they wish to conduct savings business.37 As already noted, the establishment of approved corporations also requires ministry authorisation, while the annual business plans of special public corporations and approved corporations must be submitted to the MAFF for approval. Certain types of farmland trade under the 1952 Agricultural Land Law must also be approved by the MAFF.38 In some cases, the ministry’s discretionary

112

The MAFF and agricultural intervention

powers are delegated to prefectural governors and municipal mayors. On balance, however, the MAFF is one of the most interventionist economic ministries when measured according to the overall number of regulations that it administers.39 In 1995, its total of 1,400 regulations compared with 1,780 for MITI, 1,607 for MOT, 1,374 for MOF, 841 for MOC and 292 for MPT.40 The Food Agency If rice is the symbol of Japanese agriculture, then the Food Agency has been the principal symbol of the MAFF.41 It occupied an elevated position within the ministry, with the director general of the Food Agency automatically proceeding to the position of MAFF administrative vice-minister. For such a sub-unit of the MAFF, extensive and direct intervention in the rice, wheat and barley markets (the quantum of interventionist functions with respect to rice, for example, has extended to inspection, purchasing, import, storage, sales, commodity exchange management and production adjustment) provided the very rationale for its existence. From the MAFF’s perspective also, staple food control has been a core regulatory system and hence retaining the system has helped to preserve the agricultural bureaucracy’s power and authority.42 As Choi, Sumner and Song point out, ‘this system was a major source of institutional rent for both the agricultural cooperatives and Food Agency. The rent partly goes to farmers through rice incentives. But it mainly goes to the Food Agency and the agricultural cooperatives.’43 The Food Agency remained the biggest employer of any MAFF sub-unit from the time of the MAFF’s reincarnation after the Second World War. Rice market intervention kept upwards of 10,000 officials employed in the Food Agency for most of the postwar period (including in the Food Agency’s prefectural and local offices). Without the ability to regulate grain markets, radical restructuring of the agency would have been necessary with its attendant job losses.44 Even in 2002 the Food Agency was nearly double the staff size of all other MAFF bureaus (including the minister’s secretariat) put together.45 This is despite all the changes to the FC system in the 1990s and partial import liberalisation under the URAA. In theory, these policy shifts should have contracted the agency’s role to managing the country’s rice stock and issuing propaganda in order to expand the domestic consumption of rice, but in fact it continued to have more employees and bigger budgets than the Ministry of the Environment (Kankyosho) and the Ministry of Foreign Affairs (Gaimusho).46 Staple food control has also absorbed large quantities of funding from the budget, requiring levels of expenditure at much higher levels than might have otherwise been the case. The FC system has been one of the major consumers of MAFF budgetary allocations, chiefly through GA budget transfers to the FCSA to cover deficits in the Food Agency’s direct marketing operations as well as subsidies to assist the operation of the voluntarily marketed rice scheme and management costs (kanri keihi ) of running the FC system. Together with production adjustment payments, these made up what have been traditionally known as FC expenses (shokuryo kanrihi ).47

Agricultural intervention and bureaucratic self-interest 113 As Table 6.1 indicates, FC outlays represented 46.0 per cent of the agriculture, forestry and fisheries budget (and 5.6 per cent of the national GA budget in 1970). As a proportion of the agriculture, forestry and fisheries budget, they gradually fell to the 30–40 per cent range in the early to mid-1970s, and to the 20–30 per cent range between 1977 and 1985, with steady declines thereafter. Even in 1992, however, FC expenses still represented just under 10 per cent of total agriculture, forestry and fisheries GA budget expenditure and by 2002 they had crept up again to 11.9 per cent. Thus, supporters of the FC system have not only been rice farmers themselves (because the government subsidised rice prices), Diet members (because of the electoral rewards they reaped from farmers), and Nokyo (because of commissions and concessions they received from MAFF for handling rice),48 but also the agricultural administrators themselves. Although the fundamental premises of the system were political, the MAFF drew its own institutional advantages from the system. As Kawasaki puts it, ‘if the FC system were abolished, the MAFF and the Food Agency would lose their expansive power, their large budget and their large personnel all at once.’49 As he elaborates, ‘one of the reasons why reform of the FC system took so long was because those on the administrative side ( gyoseigawa) were worried that they might lose their positions, their vested rights and their interests if the system were discontinued’.50 MAFF gikan Intervention supports the jobs and activities of large numbers of MAFF gikan who outnumber the mainstream law and economics graduates in certain divisions of the main ministry.51 The Rural Development Bureau, for example, has been called a gikan kingdom (okoku).52 Its Rural Infrastructure Division has 49 gikan compared with 11 jimukan, while its entire Infrastructure Department has 142 gikan compared with 27 jimukan.53 The gikan thus constitute the dominant power structure within the bureau.54 Many of the gikan who specialise in agricultural engineering in the bureau are graduates of the Department of Agriculture at the University of Kyoto. They enter the MAFF on a particularly well-travelled route. The prevalence of gikan in the Rural Development Bureau compares with their much-diminished position in the Management Improvement Bureau, which has 214 jimukan, compared with 92 gikan.55 Likewise, the gikan are prominent in the MAFF’s regional bureaus, their branch offices and sub-branch offices as well as in the local offices of the Food Agency, where many have provided technical support in areas such as public works and rice inspections. Amakudari Aside the numbers of posts within the ministry (i.e. jobs) and the psychic benefits of exercising discretionary power, the most important benefit of intervention for individual bureaucrats is the opportunity to retire into organisations and companies operating within MAFF jurisdiction and which depend on the granting of various interventionist favours by the MAFF. Amakudari generates handsome

Profit (⫹) /loss on the purchase and sale of domestic rice

195.9 388.1 366.7 354.3 260.6 262.7 96.1 66.2 81.6 99.5 104.7 69.9 77.5 85.3

Year

1970 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987

164.1 196.0 227.8 252.3 266.3 294.1 319.5 273.1 233.2 198.6 197.5 201.0 181.0 160.5

Rice control (i.e. management) costsa

0.8 117.9 142.0 138.8 156.0 152.3 131.8 142.5 126.1 116.1 125.6 131.3 122.6 113.7

Voluntarily marketed/‘other use’ rice subsides; rice demand and supply/rice cultivation management stabilisation countermeasures subsidiesb

Financial supplementation ( from Imported Food Control Account) to cover the loss on disposal of stockpiled rice

360.8 702.0 736.5 745.4 682.9 709.1 547.4 481.8 440.9 414.2 427.8 402.2 387.1 359.5

Deficit in the Domestic Rice Control Account

12.4 13.3 11.4 21.5 42.8 68.8 69.9 75.7 94.8 88.9 65.7 113.9 107.5 101.1

Loss on the purchase and sale of domestic wheat

Wheat cultivation management stabilisation fund etc. subsidy

22.3 ⫺84.0 9.0 86.0 105.9 68.7 59.6 83.6 92.0 115.3 125.4 130.3 187.8 197.2

Profit/loss (⫺) on the purchase and sale (and management expenses) of foreign rice and wheat

354.5 802.2 741.7 684.4 626.3 720.6 571.7 488.3 461.9 410.1 420.2 410.1 328.2 283.7

Balance of loss in all accounts

374.6 811.4 822.9 730.5 631.2 753.8 652.1 651.9 640.2 572.5 540.3 456.1 363.7 472.6

Transfer to FCSA from GA budget (FCSA deficit)

81.8 106.1 78.7 95.6 304.5 228.1 303.4 362.2 365.2 344.7 268.3 239.1 250.1 215.6

Production adjustment payments

Table 6.1 Food Control Special Account and Food Control/staple food-related expenses, 1970–2003 (Unit: ¥ billion/per cent)

456.4 917.5 901.6 826.1 935.7 981.9 955.5 1,014.1 1,005.4 917.2 808.6 695.2 613.8 688.2

Total FC/staple food-related expensesc

46.0 40.1 36.2 29.8 29.0 27.1 25.3 26.5 26.3 24.9 23.2 20.5 18.7 19.3

FC/staple food-related expenses as a % of agriculture, forestry and fisheries budget

5.6 4.4 3.7 2.8 2.7 2.5 2.2 2.2 2.1 1.8 1.6 1.3 1.1 1.2

FC/staple food-related expenses as a % of GA budget

⫹74.0 ⫹30.8 ⫹31.5 ⫹30.5 ⫹26.2 ⫹112.0 105.9 59.6 39.4 ⫹10.6 ⫹21.9 10.6 35.3 16.6 N/a N/a

137.7 130.7 136.1 119.1 106.8 73.4 65.9 90.2 88.3 99.8 104.2 72.3 80.6 71.2 N/a N/a

114.2 113.1 145.2 141.2 135.5 135.9 94.3 118.5 80.2 126.4 183.2 176.9 161.3 196.9 N/a 68.2

⫹6.2 ⫹3.1 ⫹20.3 N/a N/a

244.5 233.0 249.8 229.8 216.1 97.3 266.1 268.3 207.9 215.6 265.5 253.6 274.1 264.4 N/a N/a

114.9 99.5 90.6 70.2 75.7 70.7 64.1 54.2 57.0 68.3 65.6 73.9 1.4 0.2 N/a N/a 85.0 88.5 N/a 108.6

166.6 120.6 113.2 115.7 108.1 107.7 111.6 58.1 57.6 58.4 64.4 73.1 77.8 62.9 N/a N/a

214.8 233.2 249.3 202.8 200.2 77.1 232.1 275.3 219.2 239.4 279.5 266.8 287.4 293.6 N/a N/a

262.0 232.0 232.0 210.0 207.0 210.0 190.0 183.0 177.0 175.0 243.4 243.3 246.7 250.4 295.6 N/a

218.4 227.2 172.6 171.5 145.9 101.2 74.8 89.3 133.4 133.0 24.2 25.3 d 90.0 83.5 70.4

480.4 459.2 404.6 381.5 352.9 311.2 264.8 272.3 310.4 308.0 267.7 268.7 246.7 340.4 379.1 N/a

13.9 13.3 12.3 11.2 9.4 6.0 5.9 5.9 7.6 7.9 5.9 6.7 6.3 9.0 11.9 N/a

0.8 0.7 0.6 0.5 0.5 0.4 0.4 0.3 0.4 0.4 0.3 0.3 0.3 0.4 0.5 N/a

Notes a These expenses cover collection, freight and storage fees, administrative expenses and interest costs on government-purchased rice, and collection and inspection fees as well as administrative expenses and interest costs on voluntarily marketed rice. b Between 1970 and 1983, this figure was for various subsidies for voluntarily marketed rice; between 1984 and 1992, it was the total for voluntarily marketed rice subsidies and the distribution of rice for ‘other uses’; between 1993 and 1995, it was for subsidies for balancing demand and supply of rice by system (i.e. government rice and voluntarily marketed rice) and by use; in 1996–97, it was a subsidy for countermeasures to promote planned distribution; and from 1998, it was for rice demand and supply and rice cultivation management stabilisation countermeasures subsidies. c Total FC expenses equal the amount transferred to the FCSA from the GA budget plus production adjustment payments. d There is no figure for 2000 because the rice production adjustment programme at the time ran over two years (1998–99).

Sources: Beika ni kansuru Shiryo, various issues; Norinsuisansho M¯eru Magazin, No. 30, 15 January 2003, p. 5.

1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

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financial rewards for retired agricultural bureaucrats, not only in the form of salaries, but also in terms of the payouts they receive when they retire from their post-MAFF positions or move from one amakudari position to another. Not surprisingly, one of the most important functions of the gaikaku dantai from the perspective of individual agricultural bureaucrats is to furnish lucrative amakudari opportunities for retired agricultural bureaucrats. These organisations are called ‘MAFF descent from heaven corporations’ (Nosuisho amakudari hojin). Indeed, bureaucrats consider agriculture as a favourable target into which they can retire because of the abundance of grants and subsidies poured into agricultural organisations like water.56 The data on the amakudari patterns of MAFF bureaucrats presented in Chapter 5 underscore the fact that the MAFF’s extensive organisational empire is, on balance, an important source (if not the most important source) of employment for retired officials, both jimukan and gikan. For example, about 50 affiliated agencies in the grain industry, including Zenshokuren, the Japan Grain Inspection Association, the National Food Storage Association, the National Food Inspection Association, the National Rice and Wheat Improvement Association, the National Federation of Wheat Polishing Industry Cooperative Associations, the Flour Millers Association and the Japan Bread Industry Association provide postretirement employment for Food Agency officials. The Japan Grain Inspection Association is a major target of amakudari by former rice inspectors. Indeed, ‘every association is full of ex-bureaucrats from the Food Agency’.57 Likewise, the benefits of a flourishing agricultural and rural public works industry for MAFF officials (especially the gikan) carry over into retirement, with many of those employed in public works-related positions in the MAFF moving into gaikaku dantai and private companies operating in the MAFF-related public works sector. As Yokota points out, the primary beneficiaries of MAFF-sponsored public works projects are not farmers but special public corporations and public interest corporations that have priority in winning tenders and which will eventually be an amakudari destination for MAFF bureaucrats.58 He argues further that the MAFF creates public works projects not for the development of agricultural infrastructure but for the profit of MAFF officials. The most likely projects are those that will contribute to the selfinterests of MAFF bureaucrats.59 It is also significant that construction companies employ more retired MAFF gikan than any other single private enterprise sector.60 On the other hand, special public corporations such as the JRA, ALIC, the National Association of Regional Horse Racing and the Green Resources Corporation, as well as the approved corporation (the Agriculture, Forestry and Fishing Industries Trust Fund) are extensively penetrated by retired jimukan, because these entities either generate large quantities of funds from their operations or are involved in allocating large quantities of MAFF funds to their particular industry. They are in a position to finance lucrative second careers for retired senior officials from the MAFF. The ‘big three’ (gosanke) posts that attract the highest level of remuneration are the chairman of the board of directors of the JRA, the president of the Agriculture, Forestry and Fisheries Finance Corporation and the chairman of the board of directors of Norinchukin.61

Agricultural intervention and bureaucratic self-interest 117 Post-retirement careers in politics Agricultural intervention also supports post-retirement careers for agricultural bureaucrats in politics, because it enables them to build support networks around the allocation of ministry patronage. A career in the agricultural bureaucracy as well as positions in the gaikaku dantai provide a potentially fertile field of votes to gather at election time. In seeking national electoral office, retired MAFF officials have the advantage of occupying ministry posts that are conducive to building a grass-roots base of voting support, in particular, latching on to the vote-generating power of subsidies. Indeed, the relatively large proportion of subsidies in the MAFF budget is a source of political power for MAFF officials, which they can leverage to gather votes.62 As Tahara reveals, this is sometimes done by allotting quotas for vote collection to local government section chiefs, who, if they fail to fill their quotas, see their offices suffer personnel and budget cuts.63 The potential for leveraging voting support is particularly salient in the case of MAFF gikan who administer public works programmes. Many of these officials have been posted to prefectural agricultural departments and MAFF regional bureaus where they have built firm relations with local administrators and political figures, who later become key actors in the grass-roots electoral machines of ex-MAFF officials aiming to win Diet seats. Political aspirants from the rural public works industry take very well established steps into the Diet, with new candidates replacing those vacating Diet seats. The land improvement industry, for example, has reserved a number of Diet seats for former MAFF structural improvement gikan over the years.64 Indeed, the only recruiting ground for land improvement politicians is from the MAFF. As Hirose comments, ‘the fact that the land improvement districts form political leagues and return representatives to the Diet with whom they link hands is understandable. But why do these representatives always have to be bureaucrats?’65 The Structural Improvement (now Rural Development) Bureau is regarded as powerful enough to send two former bureaucrats to the Upper House by mobilising the vote and money power attached to agricultural public works.66 In fact, the MAFF extends the contracts for land improvement works over several years in order to ensure the kickbacks to the ministry keep rolling in terms of votes.67 As Diet politicians, these ex-MAFF technocrats are expected by their supporters to push for continuing subsidies for these industries and to intervene with key bureaucrats exercising discretion about allocating funding for particular projects in particular localities, including the choice of the particular contractor. Patently, many votes are attached to agricultural policies that provide a political base that can be potentially mobilised for electoral purposes. One clear measure of the MAFF’s political standing and the importance of agricultural policy issues in national politics is the numerical prominence of ex-MAFF officials amongst those retired bureaucrats moving into positions in the Diet (although no Japanese Prime Minister has been a former MAFF bureaucrat). The MAFF has traditionally ranked third behind the MHA and the MOF in the total number of former officials taking up national political office. However, the MAFF far outstrips

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MITI. As one former MITI official commented: ‘Unlike Diet members who came from the MOC or MAFF, those who came from MITI have not restored much profit to their local districts, so former MITI bureaucrats are not necessarily in a favorable position in the elections.’68 Moreover, in terms of success rates, the MAFF exceeds the MOF and comes not far behind the MHA. In the 1986 Lower House elections, for example,69 three quarters of new candidates from the MAFF were successful, compared with all of the MHA candidates. In contrast, only just over one-third of ex-MOF officials were successful and one-third of ex-MITI officials. Ex-MOC and ex-MHW candidates had a 50 per cent success rate. These figures suggest that the agricultural sector can be counted on to deliver the required number of votes on election day and that the MAFF is second only to the MHA in terms of the reliability of the votes collected from ministry clientele. Over the years the numbers of ex-MAFF officials in the Diet have remained remarkably stable. In 1982, 7 Lower House Diet members were former MAFF officials while 10 Upper House members were former MAFF officials – making a total of 17.70 In 1995, 11 Lower House Diet members and 5 Upper House Diet members were former MAFF officials, making a total of 16.71 The same number with the same distribution across the Lower and Upper Houses were members of the Diet in 1997.72 By 1998, the figure had climbed to 18,73 but by 2001, it had slipped back again to 17.74 Harnessing the power of agriculture in national politics The prominence of ex-MAFF officials in the Diet and the votes attached to agricultural policy, which can be harnessed not only by retired agricultural bureaucrats but also by other politicians, underscores the fact that in spite of agriculture’s decline in relative economic terms, the MAFF’s standing in the hierarchy of ministries and agencies continues to be sustained by the oversized ‘weighting’ of agriculture in national politics. This ‘over-weighting’ is both part cause and part consequence of the regime of agricultural support and protection. MAFF officials exert discretionary power over policies that provide political goods that can be used by politicians for mobilising support.75 Agricultural intervention is, therefore, necessary to generate the political goods that cement the MAFF’s relations with agricultural politicians and which underpin the political influence of the farm sector. The MAFF has a politically influential clientele base and powerful allies in the ruling party with whom it shares vital common and complementary interests. It is undeniably a ministry with powerful political backing. Because it presides over a highly politicised sector of government policy, the MAFF’s overall influence has been augmented within the governmental system. The MAFF says to other ministries: ‘We have politicians behind us, so you must do what we want’. This is useful in trade disputes vis-à-vis a ministry like the Gaimusho, for example, which operates without a domestic constituency (except for companies seeking foreign aid projects) and which relies mainly on foreign pressure ( gaiatsu) to back it up.

Agricultural intervention and bureaucratic self-interest 119 MAFF intervention thus rests on a strong political foundation. The ministry’s power and standing is buttressed by the political power of the agricultural sector. Moreover, the major thrust of this political power is in the direction of maintaining intervention, not relinquishing it. Had agricultural support and protection not been so vitally significant to the LDP, the MAFF might have had a more difficult task in maximising intervention. MAFF and LDP interests converge on a fundamental level and the MAFF can count on the LDP to protect its interest in maintaining the interventionist regime because this coincides with the interests of the LDP in maintaining farm support. Politics and intervention are thus inextricably intertwined. Japanese commentators frequently point to the so-called ‘big power’ of the MAFF, citing the excessive amount of funds used to compensate the agricultural sector following the URAA,76 the fact that in the management of the collapse of the housing finance companies ( jusen), Nokyo was able to evade its responsibilities by transferring a large proportion of its financial institution losses to taxpayers77 and the fact that the MAFF preserved its organisational identity and title in the restructuring of the bureaucracy in January 2001.78 The survival of the MAFF in its original form was testimony to the protection it received from its LDP backers and its own organisational power.79 The 1990 report of the Administrative Reform Committee (Gyosei Kaikaku Shingikai, or Gyokakushin) entitled the ‘Construction of a New Japan for the 21st Century’ recommended as part of a proposal for the reorganisation of the central government’s ministries and agencies that the MAFF be amalgamated with the MOC as a public works ministry, or converted into a Land Preservation Ministry (Kokudo Hozensho).80 In 1997, the interim report of the government’s Administrative Reform Council (Gyokaku Kaigi) proposed that the whole of the MAFF, excluding one part of forestry administration, should shift to a newly established Ministry of National Land Development (Kokudo Kaihatsusho).81 The rationale was that the stable supply of food was closely related to the preservation of national land. The new ministry would also absorb the River Bureau which would be detached from the Ministry of Construction.82 In the latter case, the council reasoned that administration of water was also closely connected to the stable supply of food, and because the importance of dams for drinking and agricultural water had increased. However, as a MAFF official commented, under this proposal ‘the MAFF was “gone”. Not surprisingly, it strongly opposed the idea of disappearing and politicians strongly backed it up’.83 In the end, the MAFF avoided amalgamation and integration into these other ministries, thus keeping its separate existence. As a ministry that ‘grasps’ subsidies and votes, it was considered too inviolate (seiikika) to amalgamate or rationalise.84 The MAFF thus came through the bureaucratic reshuffling process almost unscathed, retaining its title85 and organisation intact.86 As a result of this outcome, ‘it completely lost any opportunity for self-reform’87 admitted one MAFF official. Nor did any major job losses occur in the MAFF as a result of its internal reorganisation in 2001. This is despite the fact that the bureaucracy-wide

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administrative reform programme was predicated on a global reduction in the number of government officials by 25 per cent by 2010. The number of MAFF officials only declined because some attached organs of the MAFF were detached and converted into independent administrative corporations.88 As noted earlier, the MAFF’s 49 experiment and research institutions, inspection stations and other outlier organisations, including the National Agricultural Research Centre89 were restructured into 17 independent administrative corporations.90 In summary, an extensive interventionist regime in agriculture combined with strong political foundations are the two most important factors sustaining the MAFF’s ranking in the intra-bureaucratic hierarchy of ministries and agencies. Intervention plus political backing are the primary sources of the MAFF’s power and prestige, and thus its wider standing in the policy community and amongst the public at large. In the hyper-competitive world of bureaucratic power, prestige and finite resources, a ministry’s ranking is directly influenced by the political protection it receives as well as the ministry stocks generated by intervention. Individual MAFF officials identify with these institutional attributes as well as benefiting individually from the enhanced status, career opportunities and career benefits of belonging to the agriculture ministry. Intra-ministry competition Not only are ministry stocks maximised through intervention, but also those of the internal bureaus and divisions within them. As noted above, just as the MAFF presides over agriculture and associated sectors, these sectors break down into particular sub-sectors and industries that are administered by different agencies, bureaus and divisions. In the aggregate, the MAFF seeks to maximise bureaucratic self-interest, but in practice, intervention maximising usually takes place at the individual agency, bureau and divisional level. This means that each ministry contains a group of sub-units whose relations are rivalrous in terms of domain maintenance and resource acquisition. Inter-bureaucratic competition is thus replicated internally within the ministries. Such internal sectionalism is captured in the general notion of bureaus representing ‘independent kingdoms’ (dokuritsu okoku). The MAFF is a compound of internal units each of which is engaging in intervention-maximising behaviour in competition with other units in the same way as individual ministries are competing with each other. Inter- and intra-ministry competition is also replicated at the individual level. For example, as one insider observed, each individual official’s ability is judged by the amount of subsidies he can obtain for the projects that he has conceived. If he cannot use the entire budget that is available, he gets a very low evaluation and is regarded as not having high ability. Each official occupies the position for three years. During that time, he tries to devise new projects to use more budgetary funds. He knows what kind of project is more acceptable to his boss who decides in the division or bureau which projects will go ahead.91

Agricultural intervention and bureaucratic self-interest 121 Competitive relations amongst individual officers in certain spheres, however, do not prevent identification of these officers with the collective gains to the MAFF from intervention. In fact, such relations merely serve to entrench such identification. The MAFF’s auxiliary agencies Intervention provides the organisational rationale and financial underpinning of the semi-public agricultural organisations attached to the MAFF and employment for their staff, suggesting that intervention-maximising is the driving force within these organisations as well as in MAFF proper. The gaikaku dantai including the special corporations and other institutional interest groups spawned by the MAFF operate in their own protected spheres, conducting authorised and sanctioned activities and services for the MAFF and for their respective members and clientele, and in many cases presiding over highly uncompetitive practices as part of the institutional infrastructure of intervention. Many of them occupy fields of economic and service endeavour that could be taken over and conducted more efficiently by private enterprise. Moreover, their anti-competitive practices prevent private enterprise from gaining a foothold in the many areas in which the gaikaku dantai operate as quasi-monopolies. Their power often stems from their special status as MAFF offshoots and from their delegated ability to grant benefits to private enterprise such as designated status, or the allocation of public works contracts on projects funded by the MAFF. In other words, they, like the MAFF, often write the rules of the game in their respective spheres.92 The MAFF’s gaikaku dantai have entrenched themselves within the wider framework of agricultural intervention and developed vested interests of their own which they seek to protect and promote as institutional interest groups.93 These vested interests relate to their subsidy consumption and their delegated allocatory, regulatory and other interventionist powers. ALIC is a good example. As the LIPC, it had a powerful vested interest in the state trade in beef imports, which it operated from July 1966 until liberalisation in April 1991. The trade underpinned several of the organisation’s own regulatory and subsidy powers. First, as an STE, LIPC officials exercised considerable power in the issuing of quota licenses.94 For a private company wanting to buy and sell imported beef, it had to be registered to do so and its operations had to conform to the prescribed administrative format.95 Second, profits from the beef import trade constituted a lucrative source of funding that the LIPC could dispense as financial aid (subsidies and investment loans) to a range of domestic livestock groups and enterprises for designated assistance schemes.96 From 1991 onwards, the LIPC received funds for the same purpose from the tariff on imported beef via the MOF and MAFF.97 Similarly, the LIPC’s profits from the trade in imported dairy products were diverted to subsidising producers of processing milk and for subsidising or investing in designated assistance projects.98 Third, LIPC officials, either as active duty officials seconded from the MAFF or as ministry OBs, could look forward to retirement positions in some of the

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organisations that received the benefit of LIPC financial assistance, or companies that gained a piece of the beef quota action. LIPC officials developed close and, in some cases, collusive relations with private Japanese beef distribution, wholesaling and trading companies in the exercise of their regulatory powers. These companies offered attractive retirement prospects. As Moore argues, in the case of ‘state agencies who control beef imports . . . to their own direct benefit . . . [o]n retirement, the officials of the import licensing agency may take up posts in the wholesaling firms’.99 The LIPC exemplified this setup: ‘Since an accommodating officer is often rewarded after retirement with a lucrative position in a firm he has assisted, he has a disincentive to abolish the import quota system.’100 The LIPC’s vested institutional interests thus derived from its position as an adjunct to the government in livestock price stabilisation schemes, its monopoly and semi-monopoly operations as a state trader and its role as a disbursement agency for subsidies to various recipients in the livestock sector. Its interests lay in an elaborate system of support, promotion and protection for the Japanese livestock industry. Not surprisingly, it resisted the process of beef liberalisation during the 1970s and 1980s, and in particular any devolution of its powers to the private sector in relation to beef importation. Furthermore, it saw itself as a strong opponent of foreign interests bent on breaking open the Japanese beef market and in this respect adopted a political position in its dealings with representatives of these overseas interests. The LIPC also resisted the idea of liberalising the dairy product market because of its vested interest in the regulated trade in imported dairy products. The MAFF extended its powers and buttressed its interests in intervention by creating the LIPC as an adjunct to its livestock administration. This meant that vested interests continued to multiply through the MAFF’s auxiliary organ. These ultimately extended to the various recipients of LIPC subsidies and investments under its designated assistance schemes.101 Thus, the LIPC formed the core of a nexus that connected it to a range of other groups such as the agricultural cooperatives, public interest corporations (and the group members of public interest corporations, such as industry associations and jointstock companies), public companies, Nokyo-related companies and industry associations operating in the livestock sector.102 Livestock farmers were only secondary and indirect recipients of LIPC funding through these designated assistance schemes. As Japanese commentators observed, the pool of cash generated by the LIPC’s buying and selling operations was designed to assist livestock farmers, but most of it was ‘soaked up along the way by more than 100 different . . . non-functional institutions providing generous salaries for bureaucrats who . . . descended from heaven to the lusher pastures of the livestock industry’.103 One investigative report revealed that one of the MAFF’s extra-departmental groups, the Japan Meat Consumption General Centre set up in 1982, spent ¥416 million in 1987 from subsidies provided by the LIPC on pointless projects such as promoting beef and pork cookery courses.104 The LIPC/ALIC story is repeated many times over in the MAFF’s administrative domain. Each of the MAFF’s gaikaku dantai has a stake in its own particular

Agricultural intervention and bureaucratic self-interest 123 segment of the agricultural support and protection industry making it unlikely that it would contemplate its own demise with equanimity. For the executives of these organisations, preservation of the institutional framework of agricultural support and protection stands for jobs and salaries as well as for job opportunities for their career functionaries. Likewise for the beneficiaries of group services, it means continued government support and assistance, or regular contract work through membership and other links to affiliated agencies.

The private interest of MAFF officials in intervention Finally, mention should be made of the opportunities for personal, private gain by MAFF officials exercising discretionary interventionist power. So-called ‘private goods’ or ‘private-stock-maximising’ takes the form of entertainment services such as wining and dining, gifts (including monetary gifts), free travel and other perks for ministry officials provided by jurisdictional clients. Similar benefits are available to officials who operate interventionist systems as proxies for the MAFF. The agricultural bureaucracy has not been immune to accusations and criticisms of bureaucratic corruption in recent years, although political pressure from the LDP has reputedly blocked close investigation of a number of allegations of corruption.105 The bribery scandals that have come to light suggest that collusion between bureaucrats and those they supervise is endemic in the MAFF as it is elsewhere. Prominent amongst the entities involved are companies in agricultural and rural construction and consulting, food distribution (domestic and importing) enterprises and agricultural cooperative organisations. The provision of private goods in the form of monetary rewards and other forms of direct personal benefits is particularly prevalent in policy areas where there are large allocations of subsidies. In particular, public works represent a category where personal and collective self-interest, and the political and bureaucratic dimensions of intervention, all intersect. As already noted, the allocation of these subsidies (when, where and how much) is the task of MAFF bureaucrats, with the Agricultural Structure Improvement Bureau (now Rural Development Bureau) playing an important role. The bureau has been at the centre of numerous corruption allegations and scandals in recent years. In some cases, the officials involved have used their formal powers over subsidy allocation actively to solicit private benefits. Between March 1997 and March 1998, close connections between MAFF bureaucrats in the Agricultural Structure Improvement Bureau and companies were the subject of public revelations on a number of occasions. In one such scandal, a document compiled by a disaffected businessman (Mr A) surfaced referring to the close relationship between himself and a MAFF official (Mr B) between 1992 and 1994. During that period, the MAFF bureaucrat had worked in the Agricultural Structure Improvement Bureau where he made decisions on the allocation of subsidies. Mr A, at the same time, was running a consultancy company and had an interest in Mr B’s subsidy work. According to the document, Mr A gave Mr B cash and also expensive golf goods for favours in relation to the

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allocation of subsidised works. Mr B was known in the MAFF as a planner of agricultural structural improvement works. One of these works was the so-called ‘Refresh Village’ scheme that was launched in 1995 at a total construction cost of ¥100 billion, 40–50 per cent of which came from the central government via the MAFF.106 This kind of subsidised project was something that Mr B was able to initiate largely at his own discretion, using the Uruguay Round (UR) countermeasures policy of ¥6.01 trillion as an excuse or pretext. Because the UR countermeasures fund (UR taisakuhi) was exceedingly large,107 Mr B was mindful of the need to find projects to consume the fund. Mr A criticised Mr B for thinking up a project to waste the MAFF budget, and for concentrating the allocation of the budget on specific gaikaku dantai and on private companies ( gyosha) with which he had strong ties. The document drafted by Mr A was passed to MAFF officials and to an internal MAFF investigation committee, but Mr B went unpunished in the face of his denials and lack of evidence.108 In January 1999 the Second Criminal Investigation Department of the Police Agency commenced an inquiry into suspected corruption amongst bureaucrats in the Agricultural Structure Improvement Bureau, examining whether project subsidies were allocated to companies in exchange for favours including foreign travel. In one such case, a former assistant division chief (kacho hosa) had traveled to South Korea several times since April 1996 at the expense of consultancy companies and had also been wined and dined at their expense more than 30 times.109 The same bureaucrat was involved in similar activities in relation to Ogawa Nokyo in Kagawa Prefecture, which had paid for this travel to South Korea on a number of occasions in order to play golf. Between 1989 and 1998, Ogawa Nokyo received a total of ¥1.21 billion in subsidies from the Agricultural Structure Improvement Bureau for the establishment of various facilities for farmers’ cooperative use.110 The same MAFF bureaucrat was arrested on bribery charges in March 2000, after the police investigation confirmed that he had charged his personal spending on food and drinks (which amounted to ¥1.9 million) to an executive of the agricultural cooperative concerned in return for diverting taxpayers’ funds into cooperative projects.111 The episode was depicted in the press as exemplifying ‘the ministry’s tendency to generously channel huge sums into the coffers of agricultural and fisheries cooperatives’.112 According to the same report: ‘The bribery case should be the signal for the Government to take a serious critical look at farm ministry policies. It could be termed “structural rot” that penetrates deep into the psyche of farming, forestry and fisheries policies administration.’113 The police also described corruption in the Agricultural Structure Improvement Bureau as ‘structural’ given the large quantities of subsidies allocated by the bureau. The MAFF had itself investigated reports of corruption within the Agricultural Structure Improvement Bureau and issued a mid-term report in February 1999. According to the report, authorisation and distribution of public works were undertaken by assistant section chiefs in charge (tanto kacho hosa), and excessive guidance was given to municipal governments in order that they pass business to particular consultancy companies with respect to public works for the promotion of mountain villages. However, the MAFF did not officially report the results of the investigation

Agricultural intervention and bureaucratic self-interest 125 and punishment of those who were involved in these dealings because it could not tell if the bureaucrats concerned approached the companies on purpose or not.114 In July 1999, the MAFF issued oral warnings to five officials of the Structural Improvement Works Division (Kozo Kaizen Jigyoka) of the Agricultural Structure Improvement Bureau because they did not report dining with people from private companies. It also instituted a shakeup amongst the personnel of the division. Of the 27 officials in the division, 13 were reshuffled. Further investigations within the MAFF resulted in salary cuts, admonitions and warnings for 18 officials, including three jimukan (the remaining officials were gikan) in December 1999. The actual dealings between the bureaucrats and company executives included dining with company officials, overseas travel, and the charging of the costs of drinking and dining to the MAFF’s account. More than half of these instances occurred after the promulgation of the so-called ‘MAFF Moral Regulations’ in 1996, which supposedly enforced even stricter office regulations.115 Yet another example of corruption centring on the Agricultural Structure Improvement Bureau came to light in mid-2000, when it was revealed that the mayor of Niiharu Village in Gumma Prefecture had paid ¥1 million into the bank account of the assistant chief of the bureau in December 1994, two years prior to the construction of an agricultural bridge in the village, which bore the names of both men on plaques in the middle of the bridge.116 The two individuals had close relations, which had been regarded as problematic for some time. In addition to the gift of ¥1 million (reportedly a down payment on a total of ¥2.6 million), the assistant chief of the bureau also received gifts of shrubs and was squired around the village in the official car when he visited the village hot spring. In fact, both he and his wife were the subject of ‘entertainment offensives’ by local officials whenever they visited.117 Niiharu village was a typical village in the mountains. It used to be a centre for silkworm rearing, but in later years became reliant on public works and on the money spent by guests at the hotspring. Its mayor advanced the idea of a ‘rural park’ integrating agriculture and tourism. In fact, the mayor of Niiharu village taking full advantage of public works subsidies had gradually built bridges, roads and tourist facilities, and was successively re-elected to the mayor’s job. An information centre was built in the village with subsidies from the UR compensation package. The agricultural road bridge was another ‘godsend’ from the same package despite the fact that it would only be used by several families and a tiny farming equipment business.118 The village’s share of the total cost was relatively small.119 Questions were also raised about the fact that the mayor received a total of ¥32 million in subsidies to build a new house (because his old house was demolished for prefectural public works to construct a village road). The assistant chief of the Agricultural Structure Improvement Bureau ended up retiring from the MAFF, but in the same month as his retirement, MAFF Minister Tamazawa Tokuichiro stated in the Lower House Agriculture, Forestry and Fisheries Committee that ‘Gifts and transport given to the official are not against the rules set by the Moral Regulations for MAFF staff members, but this issue has inevitably contained some aspect that could cause the misunderstanding of the public’.120 The MAFF vice-minister used similar words of reprimand but took no action.121 As Yokota concludes, however, the

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example of Niiharu village ‘points to the widespread practice of local politicians using “entertainment offensives” from below, coupled with abuse of power from above’.122 Commentators identified two main causes of corruption in the Agricultural Structure Improvement Bureau. The first was the excessive quantities of subsidies flowing from the UR countermeasures package, which enabled the MAFF (and specifically the Agricultural Structure Improvement Bureau) to waste large amounts of funding using the package as an excuse. Such a profligate funding environment reputedly did severe damage to the financial sense and mentality of staff members of the bureau whose job it was to think up subsidy projects.123 The second structural cause related to gikan personnel issues. Direct control of the bureau by the MAFF Minister and the Minister’s Secretariat was reportedly difficult. Amongst the gikan, including those in related divisions of the regional agricultural administration bureaus, personnel matters were closed, meaning that transfers into and out of that part of the ministry were uncommon.124 The gikan thus worked in a closed world virtually free from their minister’s supervision, and they tended to stay in one position relatively longer than the jimukan, enabling them to build cosy relations with companies and other subsidy recipients over longer periods of time.125 Outside the MAFF main ministry, corruption allegations have frequently swirled around the operations of the special public corporations. The LIPC as the state trader in beef was at the centre of a number of bribery and corruption scandals in the 1980s. In 1987, for example, the LIPC was embarrassed by revelations of bribery scandals in which Hannan Corporation Ltd, a major Japanese beef importer, was alleged to have been bribing officials of the LIPC to grant them a piece of the import quota action. The company chairman was convicted in early 1988 for bribery, and the head of the corporation’s meat division, whom police claimed ‘was receiving large sums of money from meat traders in return for a favourable allocation of beef from the corporation’s freezers’126 was also convicted of accepting bribes. The police also discovered that another major Japanese meat industry lobby group head had bribed the division head for three years.127 The latter was in charge of allocating import quotas under Japan’s Simultaneous Buying and Selling system, and allocated the largest quota to Hannan Corporation.128 MAFF and other government officials caught up in sordid corruption scandals contributed to the push for a new ethics in government law (the National Public Service Ethics Law), which took effect on 1 April 2000. The law prohibits bureaucrats, in principle, from receiving gifts – money or goods, or both – as well as entertainment from people they deal with in connection with their official duties. Golf outings and other goodwill trips with business people are also prohibited, even if expenses are ‘split’. Wining and dining with them is also forbidden unless permission is granted.129 The altered legal environment may help to loosen the tight and potentially corrupt nexus between MAFF officials and those they supervise. The reforms will also reduce the quantity of private goods flowing to bureaucrats and possibly lower the attractiveness of a public service career for potential entrants into the MAFF as well as into other ministries.

Part III

The pursuit of MAFF interests in intervention

7

Maintaining the foundations of MAFF intervention

In applying the theory of bureaucratic intervention-maximising to the MAFF and its policy preferences, I argue that the MAFF strives continuously to extend its jurisdictional authority to new, growth areas of intervention while, at the same time, mounting considerable opposition to proposals that might reduce the scope and scale of this intervention. Accordingly, the MAFF obstructs reforms that attack the fundamentals of intervention, circumscribe its interventionist powers or undermine the entrenched architecture of intervention. The MAFF is most vitally concerned with policies that affect its interventionist powers and prerogatives. It fiercely resists any disturbance to the core structures and modes of intervention, and to its organisational integrity and ability to intervene. In order to maintain the regime of agricultural intervention, the MAFF has sought to preserve the very rationale on which it rests by retaining a viable but dependent farm sector. In a similar vein, it has endeavoured to preserve its constituent base by engineering policies that keep population on the land and in rural areas. Likewise, in order to prevent any erosion of the elaborate architecture of intervention, the MAFF has shielded its auxiliary agencies from administrative reform and fought to retain the financial benefits of state trading in agricultural imports. The MAFF has also sought to extend the web of vested interests in intervention by cementing producer and political interests in the agricultural ‘iron triangle’ and by allowing private sector actors to gain privileged access to certain regulated markets. It has tried to expand its own interventionist domain beyond core interests to as many other interests as possible on the periphery. Indeed, it has pushed the jurisdictional boundaries into a host of agriculture-related areas. It has also endeavoured to preserve the interventionist practices from which personal and private benefits flow. Finally, it has attempted to defend its own organisational integrity by refusing to countenance any derogation of its subsidy powers, by substituting new regulatory functions to those lost to privatisation, by linking internal structures to legally sanctioned agricultural policy goals and, when its own performance has been called into question, by permitting internal restructuring that basically safeguards its organisational integrity and avoids any loss of interventionist control.

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Maintaining a viable but dependent farm sector In some respects, things have never been more difficult for Japanese agriculture.1 Agricultural policy is being formulated against a background of declining food self-sufficiency,2 depopulation of rural areas, an increase in abandoned farmland,3 aging of the farm population4 and internationalisation, meaning the opening of the Japanese market to imported agricultural products. There is no doubt that the socio-economic, demographic and production base of agriculture is weakening. The decline of agriculture measured by the standard statistical measures is not a phenomenon that began in the 1990s; it is a process that has been continuing inexorably since the 1950s. Negative socio-economic trends in the farm sector have profound implications for the MAFF given that its primary constituency is farm household population and their productive activities. These trends have created concern within the MAFF about the future viability of the farm sector. Because the survival interests of agriculture are very much aligned with the survival interests of the MAFF, the ministry seeks above all to prevent Japanese agriculture going into terminal decline. Accordingly it has engendered deliberate policies to preserve, maintain and protect farming as an industry at all costs. Associated with the preservation of agriculture is the MAFF’s goal to maintain agricultural land, because without land, agricultural production, particularly rice production, cannot be undertaken. Agricultural land preservation (meaning regulating land use to ensure that land remains useable as farmland and reserved for agricultural activities) has been legislated into the New Basic Law.5 In March 2000, the MAFF finalised a guide for preserving the nation’s agricultural land based on the Agricultural Promotion Law.6 It contained a plan to maintain the total quantity of agricultural land in 2000 at about the same level as in 1999.7 Of course, safeguarding agriculture as an industry and agricultural land as the most important factor of production are perfectly compatible with a range of possible MAFF motives, including a desire to serve the interests of farmers and the agricultural cooperatives, and even the national interest. The self-serving nature of the MAFF’s motivation is revealed in the kind of agricultural sector that the ministry is trying to safeguard. The ministry’s primary goal is to protect and preserve the inefficient, small-scale, family-based, land-holding system. In other words, it wants a viable but dependent farm sector, one requiring bureaucratic intervention in order to survive. Thus, while the MAFF’s basic survival interests entail the preservation of agriculture as an industry, maximising intervention requires first and foremost that farming be preserved in a form that demands high levels of support and protection. The MAFF does not want a competitive, stand-alone agricultural sector. It aims to keep agriculture weak enough to need intervention. Fundamentally, the MAFF desires to maintain conditions that underpin the continued existence of farms with levels of efficiency that ensure agriculture remains at a comparative disadvantage to industrial sectors and uncompetitive in world markets.

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This type of agriculture also maintains farm numbers and thus the demographic weight of rural areas in the national population. The size of the rural population in turn affects the strength of the MAFF’s client base.8 As Nishikawa explains, The MAFF stresses that the existence of farm villages, which support the farmers, are in danger, and it says that it will take countermeasures against the rapidly dwindling farm labour force. But doing this is for administrative demand and a reason to ensure its own existence.9 A similar view has been expressed elsewhere: the MAFF ‘wants to keep this situation in order to maintain the number of its employees and even more importantly, to keep its budget’.10 The MAFF’s goal of keeping a viable but dependent farm sector helps to explain a number of its key policy preferences. The first is the importance the MAFF has attached to small-size farm household incomes11 through various means including agricultural commodity pricing policies, income support measures to ‘stabilise’ farm management and direct payments to farmers in hilly and mountainous areas.12 These policies also double as measures to secure successors for family farms and to make farming an attractive employment option for the younger generation in the face of succession problems in the industry. The MAFF wants to safeguard Japanese agriculture by ensuring that generational change does not bring about the demise of farming. However, the MAFF’s farm incomes policy is viewed through the lens of its own self-interest rather than the interests of the farmers. The second is the MAFF’s priority spending on improving social infrastructure in rural areas13 and why it is concerned to attract industry to rural areas and to generate employment for part-time farmers to supplement their agricultural incomes. One of the rationales for the MAFF in sponsoring public works projects is to furnish jobs for part-time farmers who moonlight as agricultural and rural construction workers. The money earned also helps farmers to pay debts incurred as a result of participating in MAFF-sponsored land improvement projects.14 These policy priorities can only be explained in terms of an overall objective to preserve the dominant structure of part-time farming in Japan. A broad exposition of MAFF goals in this area was encapsulated in the 1990 Depopulated Regions Activation Special Measures Law (Kaso Chiiki Kasseika Tokubetsu Sochiho ) which aimed to promote industry in depopulated regions, to increase stable employment by developing industry infrastructure, to modernise management in agricultural, forestry and fisheries industries, to foster small and medium industry, to promote the introduction of industry into rural areas and to develop tourism. Associated objectives were to secure transport and communications connections between depopulated and other regions by developing transport facilities such as roads and communications facilities; to improve the welfare and stability of the lives of residents by achieving the promotion of culture and education as well as maintaining medical facilities; to foster the welfare of aged

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persons and others and to develop the livelihood environment of rural areas (namely putting in place improved social infrastructure).15 Last but not least is the MAFF’s stance on agricultural land transfers and the commercialisation of farming, which it seeks to regulate and to restrict respectively. It is prepared only to support very limited forms of non-family-based farming operations16 and for most of the postwar period, the MAFF has fought by means of a highly regulated agricultural land policy severely to restrict agricultural land sales amongst farmers and the entry of private companies into agriculture. These policies notwithstanding, the official rhetoric of the MAFF has, since the passage of the 1961 Agricultural Basic Law (Basic Law) advocated a programme of cultivating larger-scale, independently managed farms, rather than protecting small-scale farming.17 Agricultural policy has not, in theory, been supposed to target all farmers, but to separate out independently managed farms ( jiritsu keiei noka)18 and selectively develop them.19 As Terayama notes, promoting the development of independent farms meant encouraging a core farmer class and a separation policy (senbetsu seisaku) that eliminates poor farmers.20 According to former MAF Administrative Vice-Minister Ogura Takekazu who was the principal architect of the Basic Law, one of the fundamental measures to be implemented under the law was improving agricultural structure, which he defined as encompassing the two factors of land tenure and farm organisation.21 The law was based on the fundamental idea that ‘expansion in the scale of management was necessary’.22 In Ogura’s view, improvement of the agrarian structure entailed ‘the enlargement of the scale of farming through a decrease in the agricultural population’.23 He argued that the possibility of enlarging the scale of farming in order to raise agricultural productivity and overcome the disparity between agricultural and non-agricultural sectors rose after 1955 because agriculture rapidly lost its population and ‘this . . . seemed to promise the possibility for the enlarging of the scale of farming’.24 Accordingly, Article 2, Clause 3 of the law declares that the State shall take the necessary measures: ‘To rationalise land tenure and modernise farm businesses through enlargement of farm size, regrouping of farmland . . . and so forth.’25 This core provision is further elaborated in Article 15 headed ‘Developing Family Agricultural Management and Fostering Independent Management’. It sets out that The State shall not only ensure the sound development of family farm businesses through the modernisation thereof, but will take the necessary measures to promote as many family farm businesses as possible into economically viable units (defined, hereinafter, as family farms with such size as permits, out of the family members in a normal composition, those engaged in agriculture to be more or less fully employed while displaying normal efficiency, and to earn incomes which enable those concerned to make a living comparable to those engaged in other occupations).26 Ogura envisioned the creation of independent, viable farming units achieved by rationalising land-holdings through greater mobility of cultivated land. Land

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would be transferred either through sale or leasing in order to enlarge the land holding per farm and the scale of farm operations. Thus, the Basic Law aimed to increase land transfers and expand the size of agricultural production units in order to raise farm incomes. However, even in the early 1960s, agricultural experts remarked that while MAFF bureaucrats claimed that they wanted to develop independent farms, they maintained a stance of covering all farmers, including part-time farmers, under the umbrella of agricultural policies.27 Others commented that ‘the MAFF’s official policy is to develop larger-scale independent farmers, but in practice, what it has actually progressed is the preservation of part-time (rice) farming’.28 With the passage of time, the predisposition to target the weakest producers with intervention rather than the strongest by winding it back became more and more entrenched. In practice, the MAFF’s intervention-maximising goal enabled small-scale, part-time farmers to survive under an elaborate system of support and protection. The policy of the MAFF provided the conditions for the existence of ‘inefficient management bodies that prevent the desirable aggregation and utilization of farmland’.29 One of the primary obstacles to increasing farm size was land policy administered by the MAFF. By regulating agricultural land ownership and restricting land transfer, particularly the sale of agricultural land, the MAFF effectively sabotaged its official structural policy of scale enlargement. The starting point of postwar land regulation was land reform under the Occupation, which prohibited agricultural land ownership to persons who did not cultivate it themselves, such as landlords, and which transferred ownership rights to cultivators. The fundamentals of the postwar agricultural land system were further entrenched in the Agricultural Land Law.30 The principal objective of the law was to protect owner-cultivators ( jisakuno) who represented the so-called fruits (seika) of land reform. Accordingly, the law restricted agricultural land ownership rights to persons who cultivated it themselves. Article 1 of the law states clearly that ‘it is recognised that agricultural land owned by cultivators themselves is the most appropriate (tekito)’.31 The legislation thus provided a firm base for the ideology of the agricultural land-cultivator principle (nochi kosakusha shugi). Article 1 of the law states that the objectives of the law are to stabilise the position of cultivators and to advance the productive power of agriculture (the twin goals of greater production and protection).32 The ongoing process of ‘land reform’ since 1952 has underscored the importance to the MAFF of maintaining the basic structure of farming centring on small-scale, family-owned farms embodying the owner–cultivator principle. As already pointed out, the most significant structural obstacle to the expansion of farm size in Japan has been land policy itself. Many of the restrictions on the sale and leasing of agricultural land have been preserved in order to uphold the legal barriers to land acquisition by farmers seeking to become large-scale agricultural entrepreneurs. Restrictions imposed by the Agricultural Land Law have prevented direct leasing or selling by farmers, in short, any kind of title transfer of farmland.33 Because of the difficulty of buying or leasing farmland, large-scale

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farms in Japan have emerged only slowly, making a complete travesty of all the MAFF’s structural reform goals. Under the law, persons entitled to cultivate agricultural land were initially restricted to natural (as opposed to juridical) persons and their families, that is, farm households (noka), but in 1962, amendments to the Agricultural Cooperative Union Law and Agricultural Land Law were required in order to facilitate the achievement of Articles 1734 and 1835 of the Basic Law which moved in the direction of expanding the scale of farming operations by permitting various kinds of cooperative farming arrangements. As Terayama explains, the purpose of the law was to modernise agriculture by promoting two core policies: developing independently managed farm households ( jiritsu keiei noka no ikusei ) and encouraging cooperative management (kyogyo keiei no jocho).36 The amendment to the Agricultural Land Law permitted the ownership and right of use and usufruct37 of agricultural land by legal persons (hojin) and established a system of agricultural incorporated entities (nogyo seisan hojin).38 An agricultural incorporated entity was an agricultural production corporation whose activities were limited to the management of farming, whose members were restricted to those who had transferred ownership or the right of use and usufruct to the legal person, and those who were ordinarily engaged in the activities of the legal person, and whose members were a majority of the directors.39 Such entities did not, therefore, stray too far from the owner–cultivator principle, even if farming were done on a group, or ‘corporate’ basis. The amendment to the Agricultural Cooperative Union Law permitted legal person associations of agricultural affairs (noji kumiai hojin)40 to be organised as one type of agricultural incorporated entity. In the same amendment, Nokyo was permitted to undertake land trust business in which farmers could entrust the sale or leasing of land to the agricultural cooperatives. Such business was approved as an exception to the Agricultural Land Law. However, jointstock (i.e. commercial) companies and public interest corporations were excluded from agricultural land ownership.41 These kinds of cooperative and group farming arrangements were designed to expand the scale of farm operations and improve efficiency of management by instituting a corporate management style but, at the same time, keep agricultural land in the hands of owner-farmers. The arrangements presented no threat to the dominance of small-scale, family-based farming or to the owner–cultivator principle. As Tanaka observes, the MAFF continued to develop the concept of jiritsu keiei noka in the late 1960s as a plan to foster modern enterprise-type management, but it simultaneously acknowledged the relatively large proportion of part-time farms in the total and thus expounded a plan for assisting collective production organisations (shudanteki seisan soshiki) to undertake collective harvesting and cultivation. The new production modes pooled the efforts of part-time farm households whilst simultaneously advancing the model of independently managed farm households as the core of Japanese agriculture.42 Subsequent developments in the legal system governing agricultural land ownership moved in the same direction, that is, towards an incremental easing of the

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restrictions on agricultural land leasing in order to facilitate group farming of various kinds. In a significant amendment to the Agricultural Land Law in 1970, controlled tenancy charges (i.e. rent control) were abolished and a standard (kijun) tenancy charge was fixed. Restrictions on the ownership of tenanted farmland (kosakuchi) were also deregulated. If the total size of the tenanted land were not more than 1 ha (4 ha in Hokkaido), it was made an exception to the restrictive provisions on tenancy in the Agricultural Land Law. Preferential rights to acquire tenanted land by tenant farmers were also relaxed, thus deregulating protection for cultivators. If there were an agreement between farmers and prospective tenants, ownership of tenanted land could be transferred to non-tenant farmers. Under the new provisions, farmers could transfer the ownership of their agricultural land acquired through land reform to others, provided that they had cultivated it for more than 10 years. The 1970 amendment also permitted the establishment of corporations to rationalise the ownership of agricultural land in the form of the agricultural land-holding rationalisation corporations.43 In addition, the 1970 amendment to the Agricultural Land Law deregulated various conditions relating to agricultural incorporated entities. Restrictions on leased land area (previously limited to up to half from non-members) and employment restrictions (previously more than one half of the labour power had to be provided by members), etc. were abolished. However, conditions relating to those responsible for management were fixed, and those regularly employed who were agricultural land suppliers still had to be in the majority. The shift in the main type of agricultural land transfer from ownership to leasing became clearer with a 1975 amendment to the Law Concerning the Development of Agricultural Promotion Regions. The amendment permitted the inauguration of projects to promote agricultural land utilisation with municipal governments as the main works agents. At the same time, the establishment of utilisation rights to farmland in a form that was an exception to the application of the Agricultural Land Law was encouraged. This so-called Agricultural Land Law ‘bypass system’ developed into a basic means of transferring agricultural land with the enactment of the 1980 Agricultural Land Utilisation Promotion Law (Nochi Riyo Zoshinho). The new law ‘aimed at concentrating farm land toward relatively large-scale farmers via land-lease agreements’.44 Under it, various activities were made exceptions to regulations of the Agricultural Land Law pertaining to the approval system for the transfer of title, restrictions on the ownership of tenanted land and renewal of leasing through due legal process. The purpose of the law was to promote the establishment of utilisation rights for cultivators over agricultural land. Article 1 referred to the promotion of agricultural land utilisation, improvement in agricultural management and promoting the productive power of agriculture. The governor of each prefecture was charged with approving land utilisation plans put up by local municipalities while the utilisation promotion works aimed to improve the use of agricultural land, establish agricultural land utilisation rights and foster the consignment of agricultural work (i.e. contract farming). Although the amount of leased agricultural land subsequently increased, the policy was not successful because ‘the Japanese government could

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not completely give up the owner–tiller principle discussed in the 1952 Agricultural Land Law’.45 Other factors contributing to the policy’s lack of success included the favourable treatment it allowed for owner–farmers in terms of inheritance tax as well as the high price of agricultural land into which were built expectations of the availability of agricultural subsidies.46 In the mid-1980s the MAFF publicly argued that ‘now is the time to expand the scale of farming by renting land’ as the central theme of its structural policy aiming to concentrate land in the hands of the future ‘bearers’ (ninaite)47 of agriculture with strong enthusiasm (iyoku) for management.48 With this change in emphasis, the ‘owner–cultivator principle’ metamorphosed into the ‘cultivator principle’ (kosakusha shugi ), meaning that cultivators were restricted to agricultural landowners and lessees. The MAFF was particularly concerned about the rising number of farming families with aged members and no successors. These households numbered about half a million out of 3.5 million rice farming families in 1985.49 Various schemes to expand the scale of farming through cooperative-type farming arrangements based around land leasing were advanced to deal with these problems. The MAFF promoted policies for land use by cooperative production units, that is collective land utilisation (shudan (danchi )teki tochi riyo ), which entailed the development of agricultural production through various forms of collectivisation (danchika) of land use (i.e. use of agricultural land by groups), also referred to in Japanese as nochi no danchiteki riyo or nochi riyo no shudanka. Each of these schemes took agricultural communities (nogyo shuraku) as their basic unit. The formation of regional agricultural collectives or production units (chiiki nogyo shudan) was encouraged from 1983 and by 1984, 16,000 units or regional agricultural management groups (chiiki eino shudan) had been formed, covering about 10 per cent of the 140,000 agricultural communities nationally.50 The idea was for these communities to form machinery and production associations in order to utilise land, machinery and labour power more efficiently as a means of raising the overall production power of Japanese agriculture. The schemes were designed to reduce the cost of capital goods per farm household and use labour and land to achieve higher cost efficiency.51 The MAFF reasoned that the most effective way of reducing production costs was to expand the scale of farm management. The bigger the size of the farm unit, the more labour and machinery costs could be economised.52 Cooperativisation and sharing of management and operational tasks, as well as contracting out of operations facilitated the achievement of this goal.53 Despite the obstacles to the use of agricultural land by groups, such as the high price of leasing agricultural land and the dispersion of small plots,54 the use of land by groups was considered the lynchpin of regional agricultural reform in the mid-1980s.55 The Agricultural Land Utilisation Promotion Law was amplified and reinforced by the enactment of the Law to Promote the Strengthening of the Agricultural Management Base in 1993.56 The stated objective of the law was to foster efficient and stable farm management. Article 1 envisaged planned agricultural management improvement, more intensive agricultural land utilisation

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and rationalisation of agricultural management control (kanri). The legislation established the ‘authorised farmers system’ (nintei nogyosha seido). Under this system, farmers submitted management improvement plans that were integrated into prefectural government basic plans and municipal government basic projects to rationalise the ownership of agricultural land.57 Various measures under the law envisaged the transfer and accumulation of agricultural land to specific management. The reforms were said to have achieved a shift in concept from the principle of owner–cultivator agriculture ( jisakuno shugi) to the leased-land principle (shakuchi shugi),58 that is, a tenancy-oriented system based on utilisation rights. The new law also expanded and strengthened the activities of the agricultural land-holding rationalisation corporations such as ‘controlled cultivation’ (kanri kosaku), investment in agricultural incorporated entities, works other than management such as agricultural commodity marketing, and training works.59 Those undertaking these works were prefectural public companies, agricultural cooperatives, and municipal agricultural public companies and municipalities who qualified as agricultural land-holding rationalisation corporations. Some of these organisations undertook large-scale ‘controlled cultivation’ that was authorised as part of the leasing and marketing activities of the rationalisation corporations while they were holding the land.60 However, most of the so-called ‘authorised farmers’ under the 1993 law were engaged in facilities-type intensive management such as horticulture. Only a minority undertook land utilisation-type management such as rice farming. In other words, structural policy through agricultural land transfers and authorised management support policies produced a mismatch.61 They failed to encourage expansion of production scale in land-intensive agriculture62 which was the ostensible target of structural policies. Moreover, in spite of all the state support under the law for the loan of cultivation purpose (kosaku mokuteki no taishaku), the amount of land involved only grew in a very modest fashion, from 64,157 ha in 1993 to 87,766 in 1998. In total, the area of land under continuing utilisation rights amounted to only 394,000 ha in 1998, or 7.7 per cent of the total land under cultivation.63 In addition, whilst the formation of agricultural incorporated entities received policy support under the law, according to the 1995 census for gross agricultural production, these organisations produced only 0.6 per cent of paddy field rice, 0.9 per cent of vegetables and 2.7 per cent of fruit. In addition, their share of cultivated land amounted to only 2.2 per cent.64 Agricultural incorporated entities as of 1995 still numbered only 9,522 which represented a mere 0.4 per cent of the total number of so-called ‘farm management units’ (nogyo keieitai)65 undertaking the marketing of farm products (i.e. commercial farm households66 including those that had formed themselves into corporations – one per farm household) and agricultural enterprises (most of which were corporations in the form of either noji kumiai hojin, or jointstock companies,67 limited companies, and limited and unlimited partnerships).68 Moreover, according to MAFF survey research in 1998, in only 24.6 per cent of cases was the effect an expansion in the scale of farm management.69

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Overall, the legal changes from 1970 onwards produced only a limited amount of agricultural land mobilisation, which encompasses all kinds of transfers of agricultural land rights, including ownership rights, tenancy or leasing rights, and utilisation and profit rights. Trends in agricultural land transfer can be mainly seen by looking at rises and declines in ownership rights transfers and its relationship to tenancy. If one looks at trends in agricultural land mobilisation since the 1960s, the area of land transferred for purposes of cultivation has been increasing. Whereas the total amount of agricultural land transferred in 1960 was only just above 60,000 ha, it rose to 75,000 ha each year between 1965 and 1974, and to 80,000 ha in 1969. After 1975–79, the quantity fell below 60,000 because of the gentan and the consequent disincentives to grow rice. The lowest figure was 55,000 ha in 1975. More recently the total amount of transferred land rose to 100,000 ha each year, and in 1997, it was 112,000 ha.70 This was still only 2 per cent of the total agricultural land acreage in Japan, a miniscule proportion. The biggest increases could be seen in transfers through leasing, while transfers through sales declined from 1973 onwards and were surpassed by transfers through leasing in 1981. Thus, the Agricultural Land Utilisation Promotion Law clearly institutionalised land transfers through leasing. A total of 87.6 per cent of agricultural land transfers of this type were authorised under the law, with the balance sanctioned by the Agricultural Land Law. The area where rights are continuously managed by the former law is, however, only 366,000 ha, which is about 7.3 per cent of the whole area of cultivated land (4,946,000 ha).71 The main conclusion to be drawn from these policy trends is that the MAFF wants to keep very tight control over the land transfer process, and prefers leasing arrangements to wholesale land sales by part-time farmers to farm households wishing to expand their scale of operations by acquiring land by purchase. Such a trend would move farmers off the land and diminish farm household population. Moreover, large-scale, full-time farm households run along entrepreneurial lines might reach the point where they no longer needed agricultural support and protection. The consequent reduction in farm household population (many not employed in agriculture in part-time farm households) would not be available as targets for non-agriculture-related subsidies that the MAFF also dispenses.72 On the other hand, family farms have been increasingly encouraged to come together to expand the scale of production through various types of group farming operations that continue to entrench the cultivator principle. The MAFF’s solution to the scale problem of Japanese agriculture has been to encourage farmers to farm either in various types of collective production complexes or in agricultural production corporations. In other words, farmers have been encouraged to farm in groups, but when they are disinclined to continue farming, to transfer their cultivation (not land) rights to others, including special group-type farming corporations. Where cultivators have been in short supply and where there has been some potential for exploiting economies of scale, the MAFF has permitted land leasing to corporate bodies who take over the production activities on that land and who manage farming in a more entrepreneurial fashion. In short, cultivation rights can be transferred, but ownership rights are another matter.

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Agricultural land policy after the passage of the Agricultural Land Law in 1952 thus represents what might be called a ‘third way’ – namely, endeavouring to expand the scale of farming operations through cooperative group farming ventures whilst retaining the cultivator principle. Under this system, land leasing has gradually become more acceptable because it facilitates farming by agricultural production corporations which helps to get around the problem of generational change in households with no successors at the same time as keeping people resident in farm houses. However, in the MAFF’s conception, the cultivator principle still positions family farming and to a lesser extent agricultural production corporations as the ‘bearers’ of agriculture. What the ministry has tried to prevent from the beginning is the dominance of the agricultural sector by large-scale, self-supporting farms, and even less the conversion of Japanese agriculture into a commercial farming industry run along business lines. Either scenario would have meant creating a much more efficient farm sector thus reducing the need for agricultural intervention. If the MAFF had really been concerned about creating a bright future for the nation’s farming it would have sought above all to put agriculture into the hands of those most able to undertake it efficiently and productively. As some observers note, the class of farmers occupying farms of viable management size should in theory have been the primary generators food supply.73 In reality, of course, the MAFF’s goal of maximising farm dependency has taken priority over its goal of expanding production scale. In sum, if the MAFF had really wanted to alter Japan’s agricultural production structure to create a thriving, self-supporting industry, it would have done much more selectively to support only those farmers who were motivated to expand their scale of operations by taking measures to ensure that they could acquire extra farmland easily and quickly. In short, the MAFF would have facilitated increased mobility of agricultural land. It would have revised the Land Law to make the sale and transference of farmland to other producers easier; it would have encouraged leasing of farmland: It would have created a favourable environment for large-scale producers to rent agricultural land;74 it would have offered small-scale farmers incentives to leave farming in the form of structural adjustment subsidies; it would have reformed the taxation system in order to deny concessions to owner–farmers in areas such as inheritance tax; it would have forced the pace of structural adjustment by reducing or eliminating support for small-scale, uncompetitive farmers and last but not least, it would have permitted stock-holding companies to own and cultivate agricultural land. With these kinds of reforms, structural improvement could have progressed rapidly through amalgamations of small farms into larger farms of the requisite size, and large-scale, commercial farming might have eliminated the most inefficient sectors of Japanese agriculture. As it is, the MAFF has attempted to initiate few of these reforms because they would have reduced the quantum of its intervention in the long run. Putting such policies in place would not only have transformed agriculture, they would have reduced the need for intervention, making the policy controls and agricultural subsidies redundant.

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In practice, land policy has only been modestly reformed over the years to promote increased mobilisation of agricultural land. Too many restrictions remain to permit expansion in the scale of operations sufficiently to develop a farming industry dominated by self-supporting farms.75 The MAFF has continued to provide assistance and protection at a level at which small-scale, inefficient farms have strong incentives to remain in farming. This reflects the ministry’s dominant, unstated policy of supporting inefficient, small-scale, part-time farm households.76 Furthermore, by supporting the weakest farmers, the MAFF has undermined the potential of larger farms to grow. The average size of farms over the past 40 years has expanded only by 36 per cent (17 per cent if Hokkaido is excluded).77 MAFF intervention-maximising has dictated that agriculture be left predominantly in the hands of small-scale owner–farmers, even if this policy preference did not render the best outcomes for Japanese agriculture and led to a decline in its international competitiveness.

Creating and defending gaikaku dantai and their functions The MAFF has a vested interest in organising and maintaining ministry-related groups and their functions for several reasons. First, they extend the reach of the MAFF’s interventionist administration. The core interventionist functions of the ministry are supplemented by a diverse range of administrative assistance organisations. These groups provide the necessary institutional infrastructure for maximising intervention. Second, the gaikaku dantai can be used to justify the allocation of funds from the MAFF budget as recipients of subsidies and as recipients of investment funds from the FILP. In this fashion, they generate a self-perpetuating demand for MAFF expenditure and thus a continuing rationale for a substantial proportion of the ministry’s fiscal allocations. Third, as more and more officials retire and positions already filled are not being vacated, the MAFF is compelled to find increasing numbers of posts and organisations for larger and larger numbers of retired officials. Another increasingly pressing consideration is need to preserve and if possible expand amakudari options in the public sector given the rising media and public criticism of amakudari into the private sector.78 In this sort of environment, public sector positions become more valuable. Indeed, one of the primary driving forces sustaining the number of gaikaku dantai is the need to maximise amakudari options. Official justification is always offered for the establishment of affiliated groups, but sometimes it is an ex post facto one.79 The Agriculture, Forestry and Fisheries Policy Information Centre was established by the MAFF in October 1999 as a gaikaku dantai of the Minister’s Secretariat Planning Office (Daijin Kanbo Kikaku Shitsu). Its real purpose was to furnish a comfortable sinecure for former MAFF Administrative Vice-Minister and later MAFF Minister Okawara Taichiiro, the so-called ‘Don’ or ‘Godfather’ of Japanese agricultural policy, who retired from his Upper House seat in the Diet in July 1998.80 Under Okawara’s headship, the main function of the centre was policy evaluation relating to agriculture, forestry and fisheries, and research and investigation into techniques for undertaking

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evaluation. Even though one of the original rationales for establishing the centre was to have a ‘third party’ view of such issues, and even though the centre was supposed to be an independent organisation separate from the MAFF, all its executives and staff members were MAFF OBs. Its budget was supplied by the JRA via the MAFF’s Minister’s Secretariat Planning Office. In other words, the surplus funds from one affiliated agency were used to finance another. Establishing the centre also required an amendment to the act of endowment (Basic Rules/Regulations) of another gaikaku dantai, the Agriculture, Forestry and Fisheries Promotion Association, which was set up 74 years previously in the Taisho era, by becoming a public interest corporation inlaid in that organisation. In that sense it was parasitic on the old corporation.81 In this way, however, the MAFF evaded the requirement to abolish one group in order to set up another. However, the need for the organisation in the first place was highly dubious: ‘Unlike scientific institutions, there is no need for equipment for the Centre. Internal documents can be obtained for free. I don’t see why ¥800 million had to be spent on researching methods for policy evaluation.’82 As one media commentator concluded, The MAFF is going to create its own department for policy evaluation like other ministries, and if opinions from third parties are needed, they should set up a research committee and invite external participants or request private bodies to research. In fact, the centre itself is asking external bodies to do some of its research. In the beginning there was Okawara. He used the opportunity of the introduction of the policy evaluation system to establish an unnecessary institution, and by becoming chairman of the centre, he holds himself up as a boss of the nosui zoku. This is the fundamental problem of the centre. The Minister’s Secretariat privatises public money and systems.83 The MAFF has also been prone to reinvent its affiliated bodies by allotting them new tasks when their original organisational rationale has weakened or disappeared. A good example is the Agricultural Land Development Corporation, a special public corporation (kodan) whose official duties were described as ‘agricultural land adjustment works’. It was initially set up in 1965 (under a different title) to engage in agricultural land development in order to expand food production. As its original land development raison d’être slowly eroded, by degrees it acquired other functions such as servicing agricultural facilities, farm mechanisation, soil improvement, purchase of livestock, land reclamation, and the construction of roads and sewage networks in rural areas – in short, the maintenance of existing land plus social infrastructure construction.85 Its diversification into new businesses was sanctioned in order to keep the organisation functioning for the benefit of retired MAFF bureaucrats. Its real function, according to the critics, was ‘to provide bureaucratic sinecures’.86 It had six directors, all of whom were retired high-ranking bureaucrats. Of the lower level executive posts, just under half (10 out of 23) were similarly occupied by ministry OBs. Of all executive posts within the corporation, 21 were actually ‘reserved seats’, representing guaranteed

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pension rights for OBs from the MAFF and other bureaucratic bodies. Not surprisingly, the corporation was described as ‘a bureaucratic fossil, a skeleton of an agency whose mission was fulfilled decades ago. Its preservation is sanctioned purely for the benefit of the former bureaucrats who feed like a swarm of parasites on the public money still clinging to the bones’.87 Over the years, however, the MAFF has faced increasing pressures for reform (i.e. abolition and restructuring) of its gaikaku dantai. Nevertheless, the MAFF’s revealed preferences have been very much in favour of organisational maintenance and preservation of function. It has only reluctantly accommodated pressures to abolish or restructure its affiliated organisations, whilst preserving as much of the original organisation and functions as possible. For example, when the MAFF had to concede to foreign pressure on beef import liberalisation, it took care to preserve the LIPC’s institutional functions, rights and powers as far as possible. Between 1988 and 1990, for example, the LIPC was obliged to transfer an increasing amount of its beef importation rights to private traders under the agreement with the United States and Australia. Nevertheless, the MAFF substituted by allocating the LIPC a function in relation to livestock industry data collection. The LIPC subsequently lost function and therefore power as a result of beef trade liberalisation in April 1991, which marked the end of the LIPC’s beef import and sales operations. It was, however, compensated in advance by the assumption of a new role in relation to administering the deficiency payments programme for domestic beef calves.88 Beginning in 1991, the LIPC received substantial funds from the new subsidy category called the ‘beef tariff revenue Livestock Industry Promotion Corporation exceptional subsidy’ for this purpose.89 It was under this exceptional subsidy category that the feeder calf price subsidisation scheme was implemented. In 1995, ¥95.2 billion was paid to the LIPC from this source to cover its operating expenses in relation to the feeder calf price stabilisation scheme.90 The scheme, which was one of the most important targets of LIPC subsidies after liberalisation, was jointly funded by the LIPC and farmers through levies. Furthermore, the LIPC (now ALIC) retained its core function in relation to price stabilisation of livestock products in the domestic market,91 its subsidy programs in relation to designated assistance schemes in the livestock sector and its provision of a deficiency payment to producers of raw milk for processing. The MAFF ensured that even after the liberalisation of beef, the revenue from the tariffs on beef was thus used to support the same policy objectives as before. In April 1995, as compensation for liberalisation of the market for dairy products and the loss of its official status as the sole importing agency for designated dairy products, the LIPC (now ALIC) assumed a new role in relation to the importation of designated dairy products, which more or less preserved its import monopoly. Although these commodities could henceforth be imported by private companies, the tariff equivalent (TE) would be paid to the LIPC which would buy the products from the importers. The LIPC also imported the obligatory MA amount.92 The same system operated with respect to raw silk imports, with ALIC buying and selling raw silk imported by private importers, thus pocketing the TE.

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ALIC’s functions in relation to price stabilisation were also potentially altered as a result of the switch to new pricing systems for raw milk for processing in 2001 and for domestically produced beet and cane sugar in 2000. However, although the commodity policies changed, ALIC remained the actual instrument of support for dairy farmers and for domestic sugar producers. For example, instead of disbursing the deficiency payment to producers of processing milk, ALIC pays direct income subsidies to dairy farmers as grants. Similarly, ALIC outlays subsidies to domestic sugar producers rather than purchasing and reselling the sugar to these producers.93 Administrative reform in the 1990s which specifically targeted the special public corporations attached to all ministries was actively resisted by the MAFF and resulted in only very limited restructuring of agricultural public corporations. The MAFF was prepared to countenance reforms only on the condition that it was able to preserve the core interventionist functions performed by these organisations whilst nominally conceding to rationalisation pressures. As part of the re-examination of the status of various agricultural special public corporations, the MAFF canvassed the option of amalgamating the SSPSC with the LIPC.94 It attempted to retain both corporations with minimal reforms, however, although the LIPC expressed its intention to deregulate one or two items. Even though the MAFF had earlier consolidated the Sugar Price Stabilisation Corporation with the Japan Silk and Cocoon Corporation in 1981, the SSPSC still operated separate accounts and payrolls for the staff of each of the former corporations (31 for silk thread and 84 for sugar). The payrolls for each were drawn from their respective accounts. Furthermore, the SSPSC continued to be administered by two separate agencies of the MAFF: the Agriculture, Sericulture and Horticulture Bureau for silk and the Food Distribution Bureau for sugar. Given this methodology of operation, critics were sceptical of the value of amalgamating the SSPSC with the LIPC. It seemed likely that the reorganisation would only create a corporation with three similarly separate and distinct divisions.95 MAFF officials opposing the restructuring also argued that it only had limited potential to save money in terms of salary savings. Although it might mean one less executive director and one less assistant executive director as well as one less director in charge of general affairs, the number of other officials would probably remain constant and therefore salary reductions would not be great. Moreover, deregulation of the activities of these organisations would not necessarily follow.96 In the final analysis, the MAFF saw advantage in being able to offer up the proposed amalgamation as a sacrificial lamb to the administrative reform process and the LIPC and SSPSC became ALIC in October 1996. The MAFF touted the move ‘as one link in progress towards administrative reform’,97 claiming that it ‘was aiming at the more efficient management of its designated duties in relation to agricultural product price stabilisation’.98 The reality, however, was MAFF acceptance that the SSPSC was a natural target for amalgamation because of the dramatic decline in the number of Japanese raw silk producers. Aside from this, nothing much changed. MAFF officials were adamant that abandoning the price stabilisation policy for cocoons and raw silk was not on the agenda.99 Furthermore, the newly formed ALIC, like the former SSPSC, operates

144 The pursuit of MAFF interests in intervention as two discrete halves (two organisations in one). Each retains its ‘own (old) embedded identities and loyalties’.100 As predicted, the only streamlining involved a small contraction in the number of executives, with one executive director instead of the previous two, and a reduced number of directorships. The MAFF also took advantage of the amalgamation to nominate new roles for ALIC which not only took over all the administrative tasks of its two predecessor organisations, but also assumed additional functions in relation to the promotion of sugar as well as supplying reports in relation to silk thread and sugar.101 These promotional activities involved several schemes: supplying subsidies for programmes to rationalise sugar production and distribution, and programmes that contribute to the production of sugar and its consumption. Another new activity was to collect and provide information on the sugar sector, including information to domestic and foreign recipients and service to the general public.102 As ALIC’s first President, Yamamoto Toru, stated, his organisation not only took over the former activities of the LIPC and SSPSC, ‘but also has an expanded role in implementing such new activities as the promotion of the rationalization of production and distribution of sugar’.103 Pressures on the MAFF to accommodate moves for administrative reform of its corporations did not stop with ALIC, however. It was forced to come up with additional sacrifices. In 1997, the MAFF decided to abolish the Agricultural Mutual Aid Fund, an approved corporation set up under the Agricultural Mutual Aid Fund Law (Nogyo Kyosai Kikinho) of 1952. The fund acted as the nationally federated body of the prefectural agricultural mutual aid federations and a funding pool (subsidised by government) for the agricultural mutual aid activities of the prefectural federations and local agricultural mutual aid associations.104 Its abolition left the conduct of agricultural mutual aid to the local associations and prefectural federations, but there was no contraction of function overall, hence MAFF’s agreement to the reform. Another MAFF gaikaku dantai slated for abolition in 1997 was the Agricultural Land Development Corporation, mentioned earlier. What resulted, however, was considerably less than abolition. On 1 October 1999, the Agricultural Land Development Corporation was amalgamated with the Forests Development Corporation to become the Japan Green Resources Corporation, another kodan to undertake public works, which the MAFF reasoned would have a better chance of survival given its environmentally friendly title. What the amalgamation involved was identical to ALIC. The new body continued to conduct the combined works of the previous two groupings, that is, forestry road construction and forestation in watershed areas (by the Forests Development Corporation) and the broad range of public works undertaken by the Agricultural Land Development Corporation under the rubric of ‘developing national land’. The same bodies simply operated under a new organisational umbrella. Nothing was lost: only two organisational titles and a few executive positions, but not sufficiently large in number significantly to affect the amakudari prospects of MAFF officials.105 The MAFF resisted the proposal to abolish another approved corporation, the National Chamber of Agriculture,106 arguing that as mobilisation of agricultural land was one of the core agricultural policies, there was an undisputed need for

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an organisation that could assist in this work. This same proposal (for abolition of the chamber) was to reappear a few years down the track. In June 2001, a Koizumi administration task force approved a plan calling for a thorough review of 157 government affiliated agencies – 74 special public corporations and 83 government-authorised entities. Assent was given by the MAFF in the form of ‘will abolish’ or ‘will study abolishing’ only for the Agriculture, Forestry and Fisheries Groups Personnel Mutual Aid Association (also called the Pension Fund Association for Agriculture, Forestry and Fishery Corporation Personnel), which, significantly, was not an amakudari destination for MAFF bureaucrats.107 In December 2001, the Koizumi administration again in hot pursuit of ‘structural reform’108 finalised its plan for reorganising and rationalising special public corporations and approved corporations. The reform programme envisaged closure of 17 public corporations, the privatisation of 45 public corporations and the restructuring of 38 public corporations into 36 independent administrative corporations. Included in the plan were proposals to abolish the Vegetable Supply Stabilisation Fund and amalgamate it with ALIC, convert ALIC into an independent administrative corporation and make efforts to reduce subsidies for producers of processing milk and for beef calf producers, restructure the Japan Green Resources Corporation and the Farmers Pension Fund into independent administrative corporations, continue to review the position of the JRA and the National Association of Regional Horse Racing, proceed with the abolition of the Pension Fund Association for Agriculture, Forestry and Fishery Corporation Personnel whose amalgamation with the Social Security Pension System had already been decided, abolish two approved corporations – BRAIN and the Marine and Fisheries Resource Development Centre and amalgamate them with other independent administrative corporations (the former with the National Agricultural Technology Research Corporation) and privatise two others – the National Chamber of Agriculture and the Central Association of Fishing Boats Insurance. The MAFF proceeded with the abolition in 2002 of the 1958 Agriculture, Forestry and Fisheries Groups Personnel Mutual Aid Association Law (Noringyogyo Dantai Shokuin Kyosai Kumiaiho) under which the pension fund for those employed in agricultural organisations had been established. As planned and accepted by the MAFF, the mutual aid associations were absorbed into the Social Security Pension System. The MAFF could easily trade this concession because from the perspective of its own interest, the amalgamation was not particularly significant. The pension fund was in a financially weak position because of the declining number of workers in agricultural groups. It was, therefore, an economically rational move for the MAFF to amalgamate it with another pension fund.109 None of the MAFF’s own vested interests were involved. MAFF personnel were covered by an entirely separate pension fund, while, as noted earlier, the fund was not an amakudari destination for MAFF OBs. As for the rest of the reform plan, the MAFF opposed it behind the scenes, although it could not say so officially.110 The reasons for its objections included the prospect of a contraction in interventionist function with the abolition and privatisation of corporations, the greater difficulty for MAFF OBs to move to

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retirement posts in independent administrative corporations (because they have been effectively privatised) and the fewer numbers of posts in the relevant bodies because of amalgamation. In the event, the MAFF agreed only to a limited number of the proposals, preferring the amalgamation (preservation of function) option rather than outright abolition or privatisation. It agreed to the amalgamation proposal for BRAIN with the National Agricultural Technology Research Corporation. In response to objections that the unification of the two bodies would give rise to the problem of an allocating and receiving organisation being one and the same (BRAIN previously funded the National Agricultural Technology Research Corporation), the MAFF replied that it would issue administrative guidance to the organisations to be financially transparent.111 On reducing ALIC subsidies to dairy and cattle producers, the MAFF did no more than say it would try to reduce them in order to achieve productivity gains, although it added that controversy over subsidy reductions occurred every year and was nothing special, and would not affect farmers directly.112 On the conversion of several of its special public corporations into independent administrative corporations, the MAFF conceded on the Japan Green Resources Corporation which became an independent administrative entity entitled the Independent Administrative Corporation Green Resources Organisation in 2002. With respect to a separate proposal for the Agriculture, Forestry and Fisheries Finance Corporation to be amalgamated with seven other state financial organisations, the MAFF pressed strongly for the retention of the corporation as a separate body. It argued that the corporation’s character was different to other financial organs because it undertook agricultural management guidance in addition to providing loans.113

Safeguarding the benefits of state trading import systems State trading is a type of import control that has positive spin-offs for MAFF intervention maximising in the form of institutional rents. The MAFF fought to preserve these institutional rents even in the face of considerable pressure to pass on more of the profits from the operations of these systems to consumers. It was not prepared to relinquish or curtail its powers in this area. Traditionally the state-controlled import systems operated by the MAFF and its associated special corporations have chiefly concerned staple grains (rice, wheat and barley), beef, raw silk and some dairy products. These import trades have been used as a rich source of off-budget financing for the agricultural sector. As the Far Eastern Economic Review observes, Japanese consumers pay many times the world price for farm products. Government agencies control the import of beef, wheat and a range of other agricultural commodities. International prices are paid, but the agencies slap on high margins, and fund farmer-subsidisation programmes from the profits.114

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As already elaborated in the previous chapter, by operating the beef import system as a state trade, the MAFF was able to use profits generated by beef imports to support the domestic livestock industry under the management of the LIPC. This system allowed inexpensive imported beef to be sold into the Japanese market at high prices with the LIPC capturing ‘most of the margin between import and wholesale prices as trading profits’.115 These profits were generated essentially by the difference between the imported price of beef and the LIPC’s selling price, elevated to the domestic beef price stabilisation band through LIPC imposts. In 1986, the LIPC’s selling price was 50 per cent on average higher, and in 1987, 30 per cent on average higher than the price of beef at the time of import into Japan by trading companies. As Longworth comments, the involvement of the LIPC in beef importing is always publicly claimed to be primarily for price stabilization purposes. But another, and perhaps paramount, reason for the expansion of the role of the LIPC especially during the early 1970s, was the desire to capture more of the profits on imported beef for the public sector.116 As already noted, the LIPC disbursed its profits from the sale of imported beef to the domestic livestock industry. The funds were used principally to finance various assistance and investment programmes, with not only producers, producer organisations and gaikaku dantai benefiting from the available loans and subsidies but also private enterprises in livestock-related industries. Marginal profits from the sale of imported beef in fiscal 1984 were around ¥33 billion, and of this, around ¥24 billion was spent on the promotion of the Japanese livestock industry including a little under ¥5 billion for stimulating the distribution and consumption of beef. More than 70 per cent of marginal profits were, therefore, used for the furtherance of the domestic livestock industry.117 In 1986, the profit accruing to the LIPC from price hikes on imported beef realised ¥50.5 billion, while in 1987, the figure was ¥45 billion.118 The accumulated profits from buying and selling beef enabled the LIPC to channel ¥66 billion in 1986 and ¥71.5 billion in 1987119 into the hands of 113 Nokyo and livestock-related groups, as well as MAFF gaikaku dantai as subsidies for various ‘designated assistance projects’.120 The total was almost equivalent to 70 per cent of the budget of the MAFF Livestock Bureau.121 The funds being disbursed by the LIPC in the mid-1980s rose dramatically not only because of increases in the quantity of beef coming into Japan but also because of the revaluation of the yen after September 1985 following the Group of Five meeting. In 1985, the LIPC earned an estimated ¥3–4 billion just from the increased value of the yen, and anticipated additional profits of ¥20 billion in 1986.122 Minimal concessions were made to consumers as a result of the meteoric rise in the value of the yen. The MAFF’s basic response to calls for cuts in beef prices was unsympathetic: ‘The prices of agricultural products on the international market are subject to big fluctuations. So, it is impossible to reduce the domestic prices at once, even if some foreign exchange differential profits are obtained.’123

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As one newspaper editorial argued, the government absorbed the profits instead of lowering the prices at which it sold imported products to private enterprises. It does not want to lower these prices because it will make even more conspicuous the extraordinarily high price the government is paying domestic growers for their wheat. In the beef trade, it is estimated that profits will amount to several billion yen in fiscal 1986. Officials in charge of agricultural administration do not even take up the problem of foreign exchange differential profits for discussion. The reason is that the agricultural administration gives top priority to the maintenance of the price-support system which aims at ‘protecting domestic agriculture’ and ‘securing the stabilized supply of food’ rather than promoting the interests of consumers.124 In the event, the refund of marginal profits on beef imports was only realised on a small scale.125 There were some token gestures such as beef sales promotions through ‘Meat Fairs’ and ‘Beef Week’, some rationalisation of the distribution system and a lowering of prices (a reduction in the imported beef price in socalled ‘designated stores’ by 10 per cent).126 Only the first and last of these affected consumers directly, but they involved just a small share of the total amount of beef distributed.127 The MAFF frowned on refunding all high-yen differential profits directly to consumers through low-priced sales, arguing that: ‘We want to avoid throwing the prices of home-produced beef into confusion.’128 It also justified its reluctance to lower retail beef prices further by arguing that the foreign exchange profits on beef purchases would be distributed not only to consumers but also to producers and distributors.129 Although the profits were not nearly as large, the LIPC (now ALIC) also operated a similar system with respect to the importation of designated dairy products with the profits on its purchase and sale of these goods redirected to the deficiency payments scheme for producers of raw milk for processing and to various designated assistance projects. Under this system, the MAFF applied for subsidy grants from the LIPC which paid these subsidies to prefectural dairy councils130 that acted as centralised milk collection and sales associations for farmers in each prefecture and which passed on the deficiency payment from the government to producers via the agricultural cooperatives. ALIC’s other organisational predecessor – the SSPSC – generated funds later disbursed to domestic producers from its monopoly raw silk import trade. Textile companies paid an import price to the SSPSC which included a commission to the corporation plus an extra ¥1510 per kilo to cocoon-producing farm households.131 Under the state trading system that governed the wheat trade, the loss on the Food Agency’s purchase and sale of domestic wheat (at which it bought high from domestic producers and sold lower to wheat wholesalers)132 was more than covered by its profits from the purchase and sale of imported wheat (which also covered management expenses in relation to wheat) given that domestic prices

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were five times the international price of wheat.133 In 1988, the loss on the Food Agency’s trade in domestic wheat (the reverse margin, or gyakuzaya between its buying price plus administrative expenses, and its selling price) was ¥132,750 per tonne, while its profit on imported wheat (the difference between the cost price to the Food Agency of imported wheat and its selling price, including administrative expenses) was ¥39,658 per tonne.134 However, given that the quantity of foreign wheat traded by the Food Agency vastly exceeded the quantity of domestic wheat traded, its profits on the former vastly exceeded its losses on the latter. Indeed in some years, its total profits on foreign wheat transactions were double its loss on domestic wheat transactions.135 Thus, the Food Agency, through its state trading operations, was able to take advantage of the efficiency of foreign agricultural producers to subsidise domestic producers by obtaining foreign wheat at markedly lower prices than domestic wheat and selling it to Japanese food processors at inflated domestic wholesale prices. It was Japanese consumers who bore the real costs of this MAFF strategy. Price support systems for domestically produced commodities were, therefore, predicated on state trading profits on large quantities of imports of those same commodities. As Toda points out, it appears that their price support systems are firmly maintained on the assumption that large quantities of them are imported. This is also the case with sugar. This scheme implies that the system is a measure for financially protecting domestic products by means of putting a certain level of burden on cheap imported products, which constitute a major part of the entire supply to the domestic demand. Namely, domestic wheat products accounting for 10% of the total supply are financially protected by imported wheat constituting 90% and domestic sugar products accounting for 30% are protected by imported sugar constituting 70%.136 As in the case of beef and the LIPC, the Food Agency pocketed almost all the windfall profits from wheat imports owing to the rise in the yen’s value in the mid-1980s. In fact profits from the state import trade in wheat, particularly in the mid- to late-1980s when the international price of wheat declined and the yen appreciated in value, brought particularly spectacular budgetary windfalls for the Food Agency. The profit on the purchase and sale of foreign wheat in 1985 ( ¥154.2 billion) was almost double that of 1980 ( ¥87.1 billion).137 In 1985, the Food Agency paid farmers ¥184,000 per tonne for wheat, which it resold at ¥69,000 per tonne, thus recording a substantial loss of ¥115,000 per tonne. In contrast, it bought US wheat on the Chicago market for ¥40,000–50,000 per tonne and then resold it at ¥80,000–90,000 per tonne (a gain of ¥40,000 per tonne).138 In 1986, the Food Agency declined to return the high yen profits to consumers by lowering the consumer price for wheat. It made a profit on wheat import transactions of ¥210 billion with a windfall profit of ¥23 billion from the high yen alone, but this was not reflected in the retail prices of noodles, bread etc. because

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of the FC system which absorbed all the surplus funds. According to the Food Agency, it was better to use all the profits to make up for the deficit in the Domestic Rice Control Account139 (which at the time was running at ¥400 billion as shown in Table 5.1). At most it admitted that the selling price to consumers might be lowered as much as 5 per cent, which translated into a ¥2–3 reduction in the price of bread.140 During the exceptional circumstances of Japan’s domestic rice shortage in 1993–94 when the Food Agency had to resort to large-scale imports,141 it reportedly reaped a harvest of US$1 billion from emergency imports of 300,000 tonnes sold to consumers at inflated domestic prices.142 According to other figures, the Food Agency made a profit of ¥200 billion on the sale of imported rice in 1993 and almost double that (¥389 billion) in 1994.143 The latter exceeded the total transferred into the FCSA from the GA budget in that year (¥190 billion), as shown in Table 5.1.144 The profits from rice imports in both years were used by the MAFF to cross-subsidise the producer rice price through the FCSA and for agricultural mutual aid programmes for rice farmers who had suffered cold weather damage to their crops. In 1993 a total of ¥439.4 billion was provided to farmers through the agricultural mutual aid system for this purpose.145 As Domon reports, some part-time farmers considered it cleverer and easier to receive benefits from the agricultural mutual aid system by deserting crops if it were likely to be a poor harvest. The mutual aid system guaranteed farmers the financial benefits, the value of which was equivalent to 70–80 per cent of the income earned from a usual harvest.146

Expanding the web of vested interests in intervention The existence of an ‘iron triangle’ in the agricultural sector is widely acknowledged and has been documented.147 The parties to the agricultural ‘iron triangle’ are the MAFF, the LDP and farmers/Nokyo. Intervention generates the economic and political goods that cement interlocking network amongst these parties. For farmers, intervention delivers a whole panoply of economic and social benefits,148 including agricultural incomes boosted by artificially high ‘administered’ prices for farm products, border measures such as tariffs, tax and pension concessions, crop-related incentive payments and direct payments for farm management stabilisation. Additional benefits include subsidies and subsidised loans for agricultural disaster relief, farm improvements, land improvement and small business ventures in which part-time farmers engage. Side-employment in construction firms is a further positive spin-off from the agricultural public works industry for part-time farm households. Farmers constitute a MAFF client group firmly wedded to the benefits that intervention provides. For Nokyo, the interventionist regime has sanctioned highly regulated marketing and distribution systems for agricultural commodities and farm inputs that have enabled it to extract monopoly rents from agriculture-related businesses.149 Organisational subsidies, commissions for conducting assigned semi-administrative tasks and jobs for executives and officials of farm organisations are also generated.

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For LDP politicians who work to deliver concessions and benefits in the form of agricultural support and protection, the agricultural policy regime delivers varying amounts of votes, organised campaign support, election workers, official organisational endorsement and political funding from farmers, farmers’ organisations, MAFF auxiliary agencies, and construction companies that undertake agricultural public works. What is not widely known is that a host of private sector companies are also drawn into the web of vested interests in agricultural intervention. Private-sector enterprises in agriculture-related industries gain conspicuously by operating within the ‘magic circle’ of MAFF patronage. They benefit financially from lowinterest government programme loans supplied by organisations such as the Agriculture, Forestry and Fisheries Finance Corporation150 and LIPC/ALIC,151 as well as from subsidies allocated through the MAFF budget. In addition to direct financial gains, some agriculture-related industries also benefit indirectly from supplying goods purchased by farmers with the help of subsidies, such as agricultural machinery. Many of the private sector companies profiting from MAFF intervention are, in fact, so-called Nokyo-related companies.152 Public works is another vast and lucrative field of private sector benefit. Construction companies also obtain contracts for the vast range of public works projects financed by the MAFF (often in concert with local government). Because public works funding ends up principally in the pockets of construction companies rather than farmers (who are only eligible for subsidised loans for these projects), the MAFF, when put in a position to choose, seeks to husband its relations with construction contractors more assiduously than its relations with farmers. In fact, the nexus between agricultural construction companies and the MAFF is reportedly closer than that between the farmers and the MAFF. In a 1989 land development scheme in Ishikawa Prefecture, for example, the main gains were to the land construction companies (tochi kensetsu, or doken gyosha) that undertook the earthworks for the project rather than to the farmers who participated in it.153 The construction companies reaped the financial rewards from participation irrespective of what happened to the land afterwards. Their capital power enabled them to acquire the agricultural land that remained unsold after the project’s completion.154 One of the local farmers complained that: ‘We were completely defeated by the land construction companies and bureaucrats.’155 The same kind of comment was made in relation to a project in the Nanbu region. As the head of one land improvement district commented, ‘given the organised adhesion of bureaucrats and related industry circles, it cannot really be an industry for promoting agriculture’.156 As these examples quite clearly illustrate, private sector enterprises are often the preferred beneficiaries in the MAFF calculus, with the MAFF-business nexus profiting at the expense of farmers. This is because public works projects are central to the MAFF’s desire to maximise allocatory intervention. In some cases, the farmers are the reluctant parties to these projects compared with the agricultural bureaucrats, local governments and private construction

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companies.157 Land improvement projects illustrate this observation most dramatically, with the putative beneficiaries – the farmers – forced to pay part of the cost of the projects and purchase large agricultural machinery, further adding to farm debt . . . For whom are these public works projects really carried out? Those taking the lion’s share of the money are the general contractors that receive contracts for the highly profitable projects, those politicians who intervene in such projects, and the MAFF itself, for it has succeeded in securing a raison d’etre as promoter of such projects.158 Amongst the other non-farmer beneficiaries of MAFF regulatory intervention are also private businesses that are permitted to extract ‘rents’ from participating in regulated farm trades. Whenever the MAFF designates ‘players’ in a particular market, it is bestowing vested rights on particular private sector actors. Benefits are exchanged for acceptance of bureaucratic controls. Examples of market privilege abound in agriculture-related industries. For example, under the FC system (and to a lesser extent under the new food system),159 rice farmers could only sell their rice through designated channels. As a result there was almost no competition amongst rice collectors (chiefly agricultural cooperatives) with respect to marketing commissions, which were, not surprisingly, higher than they would have been in a deregulated market. Rice collectors were, therefore, able to make administratively sanctioned profit margins. Farmers might have benefited from competition amongst rice collectors but this was effectively prohibited by the FC system, which the MAFF wanted to retain as its core regulatory structure by keeping designated distributors on side with various concessions. At the next stage of rice distribution, rice collectors could only send the rice on to certain wholesalers with a similar regime of designated routes operating for the rice wholesaler – retailer stage. Not only Nokyo but also other officially designated participants such as the private rice collectors affiliated to Zenshuren, who acted as collectors of both seifumai and jishu ryutsumai and other ‘approved’ rice traders (those belonging to Zenshokuren and Zenbeishoren) were thus rightfully seen as constituent elements of the network of vested interests in Food Control.160 At each point, profits were guaranteed, although business was regulated. In addition, all government-sanctioned collectors and wholesalers were provided with administrative subventions of one kind or another. It was important for the MAFF to retain the support of these businesses for the highly restricted system of rice trading. In the absence of support, it would be harder for the MAFF to hold on to it.161 All the beneficiaries of the FC system thus encapsulated a very wide range of interests, public, semi-public and private. Even the MAFF admitted that changes concerning rice under the FC Law could not be revealed (in the wake of the URAA) ‘because of the multifaceted influence of such changes on producers, farmers, organizations, politicians and rice traders (emphasis added)’.162 As Domon points out, There are numerous people who conducted business under the FC system: 3.83 million rice-planting farmers, 49,000 agriculture-related officials in

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national agencies including 11,000 officials in the Food Agency, 60,000 agriculture-related officials in local government offices, 360,000 officials in Nokyo, those in the gaikaku dantai and the agricultural policy tribe in the ruling and opposition parties, 276 wholesaling companies, 70,000 retailers, the agricultural materials industry, the black market rice dealers, and so on. Those who drew the most benefits under the FC system were officials in the Food Agency. They survived without substantial tasks under the FC Law which should have been abolished a long time ago. Nokyo and the wholesalers came next. The FC system enabled Nokyo to exercise a monopoly of the rice collection business and to receive numerous agricultural subsidies. Wholesalers could also continue their business without serious management efforts because of restraints on new entrants. Agricultural materials makers also gained benefits from the system by providing farmers with agricultural machines and tools that were several times higher than international prices. The black market rice dealers, who should have been opposed to the FC system, also shared in its profits. They made profits by being parasitic on the system like sucking fish. In contrast, honest producers and consumers suffered losses.163 Other examples of government-sanctioned profits can be found in the agricultural import industry. According to Satake, import restrictions were designed to protect domestic agricultural producers. However, in reality, they often resulted in monopolistic profits for traders and distributors more than for domestic producers.164 The Food Agency (now Food Department),165 for example, has a number of companies working for it as rice import traders. These have to be registered with the agency166 to import MA rice and sell it to the government (22 companies), or import SBS (simultaneous buying and selling) rice where private importers of MA rice and domestic purchasers of the rice (registered wholesalers and food manufacturers) make a joint bid (44 companies). To be registered with the Food Agency, trading companies have to meet certain qualifications, either the standard set by the agency for participating in general bidding or the standard set by the agency for participating in SBS bidding.167 In practice almost all of these companies are Japanese trading companies,168 which are then subject to MAFF administrative guidance in the conduct of the trade. For example, the Food Agency can ‘guide’ the bidding price by setting a ‘target bidding price’.169 However, participation in the trade gives these companies opportunities to benefit from administratively sanctioned profits, with the Food Agency restricting entry into the trade through the registration process.170 The beef import trade prior to quota liberalisation in 1991 is another good example. It was rife with rorts, rents and so-called special rights (tokken). The major beneficiaries were the 36 general trading companies authorised by MITI to import beef plus those firms permitted to buy and sell imported beef (domestic distributors and end-users designated by the LIPC). The latter included those authorised to buy and sell imported beef under the so-called private quota

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administered by the Japan Meat Conference, plus those allocated a share of the LIPC quota. A small number of beef retailers were also advantaged. In the case of the LIPC quota, the LIPC purchased the beef from the designated importing companies and what it did not put into storage, it sold at auction in wholesale markets to users’ associations by competitive tender,171 and to so-called ‘designated’ stores, some 2,300 retail stores to which it provided beef directly. Thus, the beef import trade was a system of government-sanctioned participation that generated rents for all those involved in exchange for operating in a restricted trade. As Longworth observes: ‘To the extent that the LIPC levies, surcharges and trading profits are less than 100 per cent of the gap between the cost of imported beef and its true wholesale value, the Corporation is allowing private interests to make excessive profits on beef imported under the LIPC quota.’172 His study in the 1980s revealed that not all of the profit margin on imported beef is collected by the LIPC and the JMC. The right to import beef into Japan is still an extremely valuable asset . . . While the precise value of the benefits enjoyed by those who have the right to import beef is impossible to estimate, some idea of the general order of magnitude can be obtained. For example, consider the full set chilled beef imported by the LIPC ‘one-touch’ system during the latter part of 1981. According to the rough calculations . . . the available profit margin was around ¥800 . . . per kg in October 1981. The LIPC ‘one-touch’ levy payable on chilled full sets at the time was only ¥150 . . . per kg . . . leaving a massive ¥650 per kg or ¥650,000 per tonne profit margin for the importers and enduser groups in Japan to share.173 He concludes, One of the well known side effects of adopting import quotas as a means of restricting imports is the creation of a valuable property right or asset, namely the right to import cheaply and sell dearly. Once the Government creates this property right it may be retained by the public sector, it may be dispensed gratis to private sector interests, or it may be sold to the highest bidder. In the case of the Japanese beef import quotas, these extremely valuable rights were traditionally assigned gratis to certain meat trade interests . . . Although the changing role of the LIPC has transferred a sizeable share of the ‘profit’ to Government controlled coffers, the dominant segment of the private trade still enjoys substantial benefits from the present system of importing beef.174 These benefits, or rents, amounted to vast sums by any reckoning. A later ABARE study disclosed that the quota controls provide considerable ‘rent’ to holders of quotas. This rent (or extra profit), which is earned solely by possession of an import quota, is the

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difference between the wholesale price and the price paid by the importer (that is, the import price plus the 25 per cent tariff and local transport). The wholesale price is artificially high due to the quota limit on supply. The estimated total rental income accruing to beef quota owners, including the LIPC, more than doubled between 1983 and 1986, from about ¥68 billion a year to ¥158 billion . . . Since quota rents arise from the elevation of wholesale prices relative to import prices, they act as taxes on beef consumers.175 According to other figures, distributors of imported beef in the early 1980s were earning excess profits of up to ¥75 billion per year from purchasing imported beef at discount prices.176 The size of these rents gave traders holding quota licences a vested interest in the maintenance of the IQ system.177 The big losers from this system were Japanese consumers forced to pay prices that reflected inbuilt LIPC and private traders profits, all in the name of protecting domestic producers. Private importers, after paying the import tax, were free to charge consumers up to seven times the cost of their imported beef, thereby creating the opportunity for massive profits. As Maruyama points out, ‘most consumers believe the argument that the high price of beef is necessary to feed the distributors’ families’.178 Moreover, as illustrated in Chapter 6, such systems not only create opportunities for legitimate rents, but they also encourage collusion between regulators and the regulated, and other criminal opportunities. For example, in March 1988, the chairman of Singapore Sangyo Co. was arrested for an A$14 million tax evasion scam. His firm covered the enormous profits it was making from falling import prices (with the rise in the value of the yen) by creating fictitious expenditures.179 In March 1989, collusion was reported amongst trading companies in relation to the import of frozen beef. A cartel of Japanese trading companies reportedly gained more than A$20 million a year in excess profits on imported Australian beef. Collusion allowed them to make an average profit of 17 per cent on the five LIPC tenders in the first half of 1988, despite the fact that the LIPC permitted a profit of only 3 per cent. At least 36 companies were named (including Mitsui, Mitsubishi, Nissho-Iwai and C. Itoh and Co.) as having bid in collusion for the frozen beef they later sold to the LIPC. The LIPC bought 120,000 of the ‘arranged’ beef at prices believed to have been jacked up to excessive levels.180 The Fair Trade Commission (FTC) investigated the collusion as a possible violation of the 1947 Antimonopoly Law (Dokusen Kinshiho). It suspected that the companies tried to make last minute profits before the decision to liberalise imports in June 1988.181 The LIPC itself denied any collusion, but its credibility appeared to be very low given the critical content of newspaper commentary on the incident. Regulated food distribution and marketing systems thus allow authorised participants, whoever they may be, to harvest rewards unavailable to nonparticipants.182 This is useful for the MAFF because market privilege for certain private sector actors helps to safeguard its own interests. The MAFF permits specific businesses to reap the gains from interventionist systems in order to secure their compliance with restrictions on their activities, to draw associated industries into its

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network of vested interests and thereby to multiply the opposition to any proposed deregulation. When under pressure for reform, the MAFF is able to mobilise the formidable alliance that is underpinned by the interventionist regime in agriculture. Beyond the boundaries of the agricultural iron triangle are a host of private sector companies which considerably expand the web of vested interests in intervention. On a number of occasions, private sector companies and their associations have aligned with producer organisations (and the MAFF) to oppose reform. For example, designated rice traders under the FC system joined Nokyo in resisting deregulation of the rice trade.183 Similarly, during the late 1970s when an alternative deficiency payments-cum-liberalised import scheme for beef was suggested in some quarters,184 the proposal was strongly opposed not only by the MAFF and the LIPC but also by producer groups and livestock-related groups and enterprises. Those in favour of beef import liberalisation came up against an absolute phalanx of organisations with a vested interest in the status quo. In other instances, the prospect of trade liberalisation generated particularly salient alliances between producer and private sector interests. Various companies besides citrus growers advocated protecting Japan’s citrus sector by resisting the abolition of citrus quotas. Importers (about 95 companies with the top 10 controlling 50 per cent of imported oranges) benefited from high profits in the protected market.185 As Hayami explains: ‘Large windfall profits associated with IQ licences can be inferred from sharp declines in marketing margin in bananas, lemons and grapefruit when they were removed from the IQ list.’186 In his view this explained the resistance to the reduction in IQ restrictions from the holders of import licences [for these products], as well as from farm producers and the bureaucrats who had leverage in the allocation of quotas.187 Expanding the web of vested interests in agricultural support and protection therefore involves a multiplication of the groups that benefit from regulated and administered systems. Logically, these consist of a core of primary producer organisations and groups within the administering apparatus of agricultural support and protection. However, the network of vested interests envelops parts of the private sector involved in agriculture- and food-related industries. As pointed out in Chapter 5, an important sub-set of MAFF gaikaku dantai is in fact industry associations of private sector enterprises, and these groups are also members of many of the agricultural gaikaku dantai.188

The New Basic Law and MAFF reorganisation Although the MAFF retained its title and identity in the 2001 administrative restructuring process, it was internally reorganised in accordance with the basic policy precepts in the New Basic Law. Not only did its internal reorganisation directly register the policy priorities enunciated in the law but the alignment of the MAFF’s organisational sub-units with the law’s provisions was also designed to entrench MAFF interventionism in each of the broad areas of agricultural policy. In fact the MAFF drafted the law with its own restructuring in mind. The ministry was ‘reformed’ in order to tackle the tasks of promoting rural areas, securing

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a stable supply of food, demonstrating the multifunctionality of agriculture and achieving the sustainable development of agriculture, all core policy principles proclaimed by the new law.189 In 2000, the MAFF took advantage of the impending reorganisation of the ministry by launching a concept called the ‘Reborn MAFF’ (Shinsei Norinsuisansho). This notion provided a pretext for the adoption of a basic policy aiming for comprehensive (agricultural) management countermeasures (corresponding to the impending creation of the Management Improvement Bureau) and rural development countermeasures (corresponding to the impending creation of the Rural Development Bureau) which amounted to a 5.4 per cent increase in the budget for that year (the total was ¥3.614 trillion).190 The General Food Policy Bureau was established in keeping with the MAFF’s new emphasis on food and consumer policy in the New Basic Law and signified that the MAFF would henceforth place a great deal of emphasis on consumer policy.191 As already noted, the bureau assumed responsibility for the ‘stable supply of food’ and took charge of consumer, market and food service industry policies. Its responsibility for matters relating to the stable supply of food placed it as the core bureau of the MAFF.192 Its Food Policy Division assumed control of the food demand and supply outlook, food security countermeasures and guaranteeing the stable supply of food.193 The Agricultural Production Bureau assumed control of encouraging the production of the major agricultural commodities other than rice and wheat. The Livestock Department in the new bureau took charge of promoting the production of livestock products in order to raise the self-sufficiency rates for these commodities.194 As Kawakita and Onoue observe, the conversion of the Livestock Bureau into the Livestock Department of the Agricultural Production Bureau provides a typical example of the preservation of the existing system, particularly as the official duties of the department were not drastically reduced compared with the functions of the bureau.195 The Management Improvement Bureau became the equivalent of what was originally meant to be the core function of the Structural Improvement Bureau, namely expanding the scale of enterprise in Japanese agriculture and reforming farm management. The latter-day version of this concern was a mandate actively to support and cultivate ‘bearers’ of agriculture. In other respects the Management Improvement Bureau was a totally new bureau in its stress on farm management stabilisation issues (hence the change of title), embodying the shifting emphasis in agricultural policy from price supports to income stabilisation measures.196 Ostensibly concerned with making the agricultural sector more efficient, the bureau in practice targeted its support for farm incomes by means of management stabilisation countermeasures. Its approach, however, is more global than commodityspecific. It is less focussed on income stabilisation for producers of individual products than management countermeasures for a cross-section of commodity producers. In other words, it takes responsibility for the overall management stabilisation of farm households. For example, it is in charge of management income stabilisation countermeasures for the 400,000 farm management units selectively emphasised in the new farm management assistance policy of December 2000.197

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The Rural Development Bureau assumed comprehensive control over policies for agricultural and rural development (code for agricultural and rural public works) because the MAFF acquired specific responsibility for rural policies under the New Basic Law. Moreover, given that the New Basic Law justified public works under the rubric of agricultural and rural promotion, the subterfuge that somehow public works effected ‘structural improvement’ of farming was finally exposed. The Rural Development Bureau also took charge of promoting hilly and mountainous regions, including direct payments to farm households in these regions.198 The expansion in Food Agency jurisdiction including the acquisition of production adjustment (under the 1994 New Food Law) and broader recognition of the agency’s role in relations to WTO agricultural trade negotiations as a result of the restructuring contradicted the general movement towards deregulation and liberalisation of the domestic rice market and could only be interpreted as an assertion of the agency’s administrative relevance in the face of antipathetic policy trends. The changes also pointed to the fact that institutionally vested interests in the MAFF concerned with protecting domestic rice production were now much more directly involved in agricultural trade negotiations under the WTO. Rice market access negotiations were no longer the chief prerogative of the more internationally minded International Affairs Department of the General Food Policy Bureau. The reorganisation of the MAFF bureaus according to the basic precepts of the New Basic Law signified that above all else the agricultural bureaucracy had dug in for a last-ditch defence of its vested interests, particularly in the big-spending areas of agricultural and rural public works. Although the MAFF now administered a New Basic Law for the purpose of ‘reconstructing agriculture’, and although the ministry had been reorganised in line with the new law, no break with convention on the budget side could be seen.199 Furthermore, the law provided an even stronger defence against agricultural trade liberalisation.200

Redesigning Food Agency functions When under pressure from the administrative reform process to relinquish one of its core Food Control functions – rice inspections, which traditionally involved the grading of rice as to quality, and which had long been a big and powerful job for Food Agency officials201 – the agency went out of its way to delay the reform process and to invent new tasks in order to justify its staff numbers. Privatisation began in 2001 with the transference of some rice inspection functions to registered organisations, principally the agricultural cooperatives but also some rice wholesalers (i.e. the established, government-approved organisations who had long participated in the rice trade). However, the Food Agency resisted full privatisation until 2006. As a result of the partial privatisation, some Food Agency officials moved to the International Affairs Division of the MAFF, but those in the Food Agency’s branch offices assumed new roles in relation to the checking of food labels, specifically to determine their accuracy in relation to the inclusion of genetically modified organisms (GMO). The Food Agency also introduced a new scheme whereby

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rice labelling was strictly regulated as to place of origin. In other words, the Food Agency ensured that a new task involving checks that rice labelled as premium rice was actually premium rice was found for its officials.202 Furthermore, the privatised rice inspection function was supervised by the new Food Department in the General Food Policy Bureau which replaced the Food Agency in July 2003.203

BSE and MAFF restructuring Nothing in recent times has undermined the MAFF’s public standing and administrative credibility more dramatically than the outbreak of BSE, or madcow disease, in September 2001. The MAFF had earlier assured consumers that they were safely insulated from the disease whilst taking few effective steps to keep the infection from taking hold in Japanese cattle.204 In fact, MAFF Administrative Vice-Minister Kumazawa Hideaki (who had been director of the Livestock Industry Bureau in 1996 when the MAFF had begun receiving recommendations from the World Health Organisation that the Japanese government ban the use of meat and bone meal feed)205 asserted that: ‘No case of BSE has occurred in Japan and therefore, it is very safe.’206 In 1996, he instructed farmers to ‘refrain’ from feeding meat and bone meal to cows, but stopped short of outlawing it.207 In reality the MAFF failed to institute the ban for fear that ‘raising a ruckus over BSE would cause a decline in beef sales’.208 As Hayano observes, The difference between the governments of the United States and Australia and that of Japan is that the U.S. and Australian governments are more concerned about human health whereas the Japanese government attaches greater importance to shortsighted business interests. The crisis must have brought home to the government how thoughtless protection of industries can work against and cause them serious damage.209 The independent investigative committee looking into MAFF and MHLW handling of the problem criticised the MAFF’s ‘antiquated thinking to attach greater importance to producers than to protection of consumers’.210 Other media commentary noted that, ‘the agriculture ministry lacked the will to take preventive action because the ministry’s chief concern was to promote agriculture, not to protect consumers’.211 The whole episode exposed the MAFF’s much vaunted reorientation towards consumers212 as mere cover for its bias towards protecting producers and its advancement of long-standing interventionist principles such as the stable supply of food (code for agricultural protection), price stability (code for farm income support) and Japanese-style food livelihood (code for increasing levels of domestic rice consumption). The investigative committee recommended the creation of an independent Food Safety Commission (Shokuhin Anzen Iinkai) to take over food risk evaluation from the MAFF and MHLW. In its view, the ‘verticalised administration’ of food safety by the two ministries had prevented a serious lack of coordination between them. Each had followed separate food safety policies. Other proposed

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reforms included giving top priority to consumer protection, establishing an integrated safety system reaching from ‘the farm to the table’, introducing riskanalysis methods and respecting advice from scientists and other specialists.213 In the wake of the scandal, the MAFF offered up the Food Agency as a sacrificial lamb to silence its detractors and to inflict self-imposed administrative punishment before it was imposed by outside forces.214 This move was the end point of a long process of ‘dethronement’ of the Food Agency, which had suffered from falling rice consumption and the marketisation of rice distribution. To some extent, the Food Agency shared its lot with rice, which was also suffering from a decline in its social status.215 The Food Agency was abolished on 30 June 2003, requiring an amendment to the 1999 MAFF Establishment Law. However, the MAFF also saw opportunity in the restructuring process, particularly in the area of food safety which it calculated could become a growth area of regulatory concern for the ministry. The MAFF officially described its reorganisation as leading to ‘the establishment of a new agriculture, forestry and fisheries administration that deploys a food safety administration that emphasises consumers’.216 Although the new Food Safety Commission was set up in the Cabinet Office by the new 2002 Food Safety Basic Law (Shokuhin Anzen Kihonho), Food Agency officials were seconded to the secretariat of the new body which comprised a staff of several hundred (the MHLW also loaned officials to the commission). Moreover, the commission was restricted to the scientific evaluation of food safety while the function of risk management in relation to agriculture, forestry and fisheries products remained firmly in the MAFF’s hands.217 In order further to beef up its food safety regulatory role, the MAFF established a ‘Headquarters for the Promotion of Policy for Food Safety and Peace of Mind’ to provide an appropriate policy outline to ensure food safety from farm to table and to ‘set about establishing new organisations and legislation’.218 MAFF Minister Oshima Tadamori remarked at the first meeting of the new food safety headquarters that: ‘Food safety and consumer peace of mind over food will be key issues for this country in the 21st century’,219 thus endorsing this major new growth area of MAFF intervention. Simultaneously with the abolition of the Food Agency, a new MAFF bureau entitled the Food Safety and Consumer Affairs Bureau (Shohi Anzen Kyoku) was created with exclusive responsibility for food safety measures, including riskmanagement and food consumption administration,220 including issues such as the correct use of production materials including fertiliser and feed. The formation of the new bureau helped to consolidate the MAFF’s professed jurisdictional rebalancing from a ministry of (agricultural) producers to a ministry of (food) consumers. The organisational rationale of the Food Safety and Consumer Affairs Bureau was described as ‘restoring public trust and peace of mind in relation to food safety and promoting a consumer-oriented approach to food administration’.221 The new bureau established new food safety and consumer affairs departments in local agricultural administration offices and in regional agricultural administration

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bureaus. Its total staff complement (in central, regional and local offices) was 4,500. The officials belonging to the new entities were charged with ensuring food safety and peace of mind as set out in the ‘Policy Outline for Food Safety and Peace of Mind’ decided by the headquarters in June 2003. The outline also called for the policymaking process to reflect the views of consumers. Whilst scrapping the Food Agency, the animal and plant quarantine functions of the Agricultural Production Bureau and the food safety management functions of the General Food Policy Bureau and Food Agency were merged and restructured. The aim was to separate safety management from production promotion functions ‘to ensure that safety measures put consumer health first’.222 The remaining Food Agency staff moved to a newly established department in the General Food Policy Bureau called the Food Department (Shokuryobu). The MAFF described the General Food Policy Bureau’s main function as ‘ensuring the stable supply of food’, while the Food Department’s main function was identified as the ‘administration of staple food’223 such as the management of rice reserves. The Food Department was also allotted the task of administering rice policy measures such as production adjustment previously undertaken by the Food Agency.224 In practice, the new department took over all of the functions of the former Food Agency, although some functions such as administrative affairs and accounting moved to other divisions in the General Food Policy Bureau.225 New food departments were created in the regional agricultural administration bureaus and offices to replace the former Food Agency branch offices. The MAFF justified the reorganisation in terms of ‘building a system to ensure the stable supply of food including staple food’.226 One of the major tasks under this policy was improving the food self-sufficiency ratio, thus entrenching inefficient, protected sectors of agriculture. In a further reorganisation of the MAFF, the International Affairs Department of the General Food Policy Bureau was transferred to the Minister’s Secretariat and was headed by a newly created post equivalent to that of director-general of a bureau (sokatsu shingikan – kokusai tanto). The aim was to provide for more efficient lateral coordination within the MAFF on WTO-related issues and ‘to strengthen the response to the international environment’.227 In the International Economic Affairs Division of the new department, the MAFF set up a World Trade Organisation Office. The MAFF’s formal structure thus changed from four bureaus and three agencies to five bureaus and two agencies (see Figure 7.1). However, while the MAFF did penance for its mistakes by relinquishing the Food Agency, there was no reduction in the size and organisational span of the ministry, or the overall quantum of MAFF intervention. Indeed, it was reported that the Food Agency with its large organisation of more than 9,000 officials were simply moved to the newly established Food Department.228 MAFF thus emerged from the BSE debacle with a strengthened role in food safety administration and with a re-ordered but undiminished organisation. MAFF subsequently tried to inject a ‘consumer first’ mentality into its officials by sending them into restaurants and supermarkets to learn what consumers

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AFTER

BEFORE

Minister’s Secretariat

Minister’s Secretariat

Statistics Department Statistics and Information Department Cooperatives Inspection Department Cooperatives Inspection Department

Affairs General Councillor in Charge of International Affairs International Affairs Department

General Food Policy Bureau

General Food Policy Bureau International Affairs Department

Food Agency

Food Department

Administrative Affairs Department Food Safety and Consumer Affairs Bureau Orderly Marketing Department

Agricultural Production Bureau

Agricultural Production Bureau

Livestock Department

Livestock Department

Management Improvement Bureau

Management Improvement Bureau

Rural Development Bureau

Rural Development Bureau

Forestry Agency

Forestry Agency

Fisheries Agency

Fisheries Agency

Figure 7.1 MAFF internal reorganisation of July 2003.

want. MAFF Administrative Vice-Minister Watanabe Yoshiaki’s justification for this turn of events was ‘We should not allow this organisation with 32,000 staff to go under.’229 The MAFF itself summed up the changes as developing an agricultural administration aiming for the stable supply of safe food from the standpoint

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of consumers and protecting the health of the people.230 Far from losing jurisdiction over food safety, the MAFF ended up expanding its administrative authority in this area. Given the de facto preservation of the Food Agency in the new Food Department and its outliers, it would seem that the MAFF has emerged from the BSE scandal significantly strengthened rather than weakened.

Upholding the MAFF’s subsidy powers The MAFF, in concert with the other line ministries, has fought a rearguard action against any reduction in its subsidy powers under the structural reforms of the Koizumi administration, which remains bent on establishing greater local autonomy by changing the system of central government tax grants to local governments. The centrepiece of the ‘Basic Policies for Economic and Fiscal Management and Structural Reform 2003’ (Keizai Zaisei Unei to Kozo Kaikaku ni kansuru Kihon Hoshin 2003) adopted by the Koizumi Cabinet was a so-called ‘trinity’ of reforms (sanmi ittai no kaikaku) aiming for the simultaneous implementation of ‘more tax-levying authority to local governments in exchange for cuts in state subsidies and restraints on revenue transfers’.231 As part of this reform, subsidies from the central government to local governments would be cut by ¥4 trillion over three years (i.e. by fiscal 2006), while tax revenues (such as those from income taxes) equal to about 80 per cent of the subsidy reduction would be transferred to local governments via an expansion in their tax-collecting authority.232 The implications for the agricultural budget would be severe: a reduction, beginning with subsidies, would inevitably result. Moreover, the reforms would greatly weaken the influence and guidance power of the MAFF over local government. The trinity also included a specific agricultural reform with fiscal ramifications: abolition of the regulation that allocates duties respectively to prefectural governments in sponsoring agricultural improvement extension officers and to municipal governments in organising agricultural committees. The reform proposes to grant local governments greater discretion about whether to have agricultural committees or how many committee members and agricultural improvement extension officers they want. The government has traditionally subsidised local governments for part of the cost of agricultural committee and agricultural improvement extension system. The MAFF subsidy includes specific funds for the committee system and extension system, while general fiscal revenue has provided funds that local governments could use at their discretion (if they chose, local governments could select to allocate zero funds from this source to both systems). Under the reform entitled ‘converting the subsidy to general revenue sources’ (kofukin no ippan zaigenka), the MAFF’s ‘tied’ subsidies would either be reduced or terminated in order to allow greater discretion for local governments in allocating funding to these bodies.233 As a result of pressure from the MAFF, the reforms were watered down. The fixed number of agricultural committee members was cut with the subsidy for running the agricultural committee system to local government reduced commensurately. The duty of prefectural governments to establish extension centres was abolished, while the number of extension officers was cut. As with the

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agricultural committee system, the subsidy for funding the agricultural extension programme was reduced. As for the subsidy system as a whole, including conversion of both these subsidies to general revenue, this issue will be examined and resolved by 2006. Moreover, bureaucratic resistance from the MAFF (and other ministries in the same boat) continued to stall any clarification of what impact the proposed Koizumi government’s plan would have on the 2004 government budget. In fact, in compiling its guidelines for the 2004 budget, the Council on Economic and Fiscal Policy (Keizai Zaisei Shimon Kaigi) called for a one-third reduction in the proposed cut of ¥4 trillion over three years. The removal of this target was a direct result of strong resistance from central ministry bureaucrats in concert with opposition from LDP Diet members ‘keen to maintain their local influence by controlling the yen taps’.234

Expanding the MAFF’s interventionist domain Given the inexorable decline in the agricultural sector in spite of (or perhaps because of ) MAFF’s intervention, the agriculture ministry has sought to expand its territorial boundaries into all sectors relating to agriculture, into associated industries and into all aspects of the lives of rural dwellers in order to refashion itself as a comprehensive ministry of food, agriculture and rural areas. Although how wide the area MAFF should cover had always been largely at the MAFF’s own discretion,235 the story of the MAFF’s organisational development in the postwar period has been a history of ever-expanding administrative responsibilities in order to not only sustain but also to magnify the interventionist domain of the ministry. This process has in turn led to the opportunistic reorientation of the MAFF as the government re-ordered its policy and spending priorities for agriculture over the years. This process involved not only the acquisition of new areas of administrative purview but also fresh fields of agricultural spending and regulatory control. In fact, the MAFF’s historical development falls quite neatly into a number of discrete time periods since the 1950s. In the 1950s, the MAFF was primarily a ‘Ministry of Food Production’. The government’s official agricultural policy priority was to boost the output of food in order to feed the nation and, as the chief instrument of this policy, to engineer rises in agricultural prices as an incentive for farmers to produce. In practice, the MAFF reaped a rich harvest of agricultural subsidies from these goals. In the 1960s, the MAFF became a ‘Ministry of Farm Incomes’. The Basic Law sanctioned increases in producer prices in order to boost farmers’ incomes, thus equalising them with those of urban workers. Because of the decline in the relative productivity of the agricultural sector during the period of rapid economic growth, farmers’ incomes slipped behind those of urban workers from the late 1950s onwards. In order to turn this situation around, the MAFF justified large quantities of funds for subsidising the producer rice price. In the 1970s, under the ‘comprehensive agricultural policy’ (sogo nosei ), the MAFF became predominantly a ‘Ministry of Agricultural and Rural Public

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Works’. The sogo nosei was introduced after the rice surpluses of the late 1960s and attendant producer rice price cutbacks. The MAFF was able to use this situation to shift the emphasis in its spending programmes to agricultural production subsidies centring on land infrastructure development (tochi kiban seibi), and to social infrastructure development for farmers and rural dwellers.236 In the 1980s, the MAFF reached the highest point of this trajectory by becoming a ‘Ministry of Rural Development’. As agricultural production subsidies gradually reached saturation point, the MAFF redirected ever increasing amounts of public works subsidies into the development of social infrastructure in rural areas. Spending on agricultural production subsidies and support prices declined in relative terms along with the agricultural sector itself.237 By the late 1980s, the MAFF was further diversifying its interventionist programmes into regional industries, aiming to entice manufacturers into provincial areas in order to provide more diverse employment opportunities for farm and rural dwellers. At this point, the MAFF earned the label of ‘Ministry of Rural Affairs’. Officially the MAFF continued to maintain that farmers were important as producers but in reality it was not just agricultural producers that were important to the MAFF. More significantly, so were rural development contractors and all other kinds of rural industries. In the 1990s, the MAFF metamorphosed into a ‘Ministry of Consumers and Food’, or equally, a ‘Ministry of Domestic Food Supply’, a position first elaborated in the ‘New Policy Directions for Food, Agriculture and Rural Areas’ (Atarashii Shokuryo, Nogyo, N oson Seisaku no Hoko), in 1992 and then developed further in the ‘Agricultural Policy Reform Outline’ (Nosei Kaikaku Taiko) of 1998 and finally entrenched in the New Basic Law of 1999.238 This was integral to the MAFF’s renewed mission to ensure the stable supply of food239 as part of a revamped justification for the maintenance of the agricultural support and protection regime. Unlike the old Basic Law, the new law expanded its scope by professing a regard for the interests of the consumers and general public. This was part and parcel of the MAFF’s strategy of getting consumers on side with respect to international trade negotiations and maintaining the public consensus in favour of preserving Japan’s food self-supply capacity in order to justify its rejection of agricultural trade liberalisation. The MAFF’s acquired stance as a ‘Ministry of Consumers and Food’ was thus quite different from the MAFF’s worldview as a ‘Ministry of Food Production’ in the 1950s. What the MAFF lauded was the role of domestic agriculture in supplying food for the nation by stressing concepts such as food self-sufficiency. The policy imperatives that flowed from this were: preventing further declines in food self-sufficiency, ensuring the stable supply of food at stable prices, maintaining food safety guarantees and so on. At the same time, the concept of food selfsufficiency represented an enhanced defence against agricultural trade liberalisation. As a doctrine, it was codified during the UR negotiations but reached a crescendo in the lead-up to the renewed agricultural trade negotiations under the WTO and finally crystallised in the New Basic Law.240 By aligning producer and consumer interests in concepts such as food self-sufficiency, food security, food safety and the stable supply of food at stable prices, the MAFF was endeavouring

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to entrench its role as a ‘Ministry of Consumers and Food’. Part and parcel of this approach was a new emphasis intervention in the food industry and on the MAFF’s role in representing the food industry as part of its broader mandate to link producer and consumer interests. At the same time, the MAFF was metamorphosing into a ‘Ministry of the Rural Environment’, with a greater focus on the multifunctionality of agriculture (including environmental functions), which comprises one of the main planks in Japan’s ideological defence of its agricultural sector in international agricultural trade negotiations.241 Multifunctionality also justified agricultural spending in the form of direct subsidies to farmers, particularly those whose agricultural activities are classed as having environmental benefits, such as disadvantaged farmers in hilly and mountainous districts. Overall, the New Basic Law legally sanctioned the multilateralisation of the MAFF’s interventionist interests beyond just the producer side (i.e. agriculture). The new law expanded the MAFF’s administrative purview to consumers at the same time as providing ex post facto recognition of the MAFF’s long-standing rural and regional interests covering both public works and rural industry. Indeed, it indirectly indicated all the industries subject to MAFF-directed support, including the food industry. In the 2000s, the MAFF’s food interests have expanded to include food safety in the wake of the BSE scandal. Accordingly, it has been striving to project an image of itself as a ‘Ministry of Food Safety’ by multiplying its interventionist functions with respect to food safety regulations and by stressing the importance it attaches to consumer peace of mind. In summary, the MAFF’s primary agricultural constituency shrank economically and demographically over the years, whilst remaining a core interest. At the same time, the decline of the MAFF’s agricultural constituency has been counterbalanced by the growth of other interests. The MAFF now extends its interventionist functions over an extremely wide domain, embracing not only farmers and agriculture, but also farm-related industries and the lives of rural dwellers more generally. Indeed, the MAFF extends its administrative purview from the farmgate to the entire agri-food sector. Agricultural support and protection is but the nucleus of a huge superstructure of intervention in the agricultural and rural economy and increasingly, in Japan’s food industry. For this reason, it would be a mistake to view the MAFF as concerned simply with farmers and agricultural production.242 The MAFF is also vitally engaged with a range of industries associated with providing inputs into farming as well as those that deal with outputs. The MAFF’s administrative constituency is not, therefore, just peopled with farmers. It embraces all those industries engaged in supplying input services to agriculture such as agricultural land and irrigation construction, as well as rural infrastructure construction (and associated consultancy industries), in addition to those agri-businesses specialising in the manufacture of production inputs such as agricultural machinery, chemicals and livestock feed. The MAFF is also concerned with local industries in rural areas, that is, those that provide employment

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for part-time farmers and other rural dwellers. Many of these industries are involved in public works of various kinds, but also small-scale manufacturing and the processing of products related and unrelated to agriculture. On the output side, the MAFF embraces those industries concerned with marketing, distribution, wholesaling and importing farm products, as well as the food processing, distribution and service industries. The MAFF’s tentacles thus extend into many areas of Japanese industry, all related in some way to the core activity of farming but extending over a much wider range of fields than simply agriculture. On top of its producer interests, the MAFF has also acquired a consumer interest from the perspective of food security and food safety. In addition, the MAFF has extensive international interests, not only in securing stable supplies of food but also in dealing with external pressures (gaiatsu) for market opening. It conducts the international defence of Japanese agriculture as a weak, inefficient industry unable to compete on international markets, but whose survival is bound up with the protection of the MAFF’s own interventionist interests. Because MAFF interests are multi-dimensional, agricultural policy too has many dimensions. As former MAFF Minister Sato Takashi observed, agricultural policy is industrial policy to develop the agricultural sector as an industry; it is social policy to improve the infrastructure of the livelihood environment of rural areas; it is land policy in order to preserve land and its use and to allocate population appropriately; it is consumer policy responding to the needs of consumers; and it is international cooperation policy that makes a contribution to the international trade order from the standpoint of the biggest importer of food worldwide. Agricultural policy has been developed from all these standpoints.243 The MAFF now represents all the diverse interventionist interests described above: it is a ‘Ministry of Agriculture, Food Production, Farm Incomes, Agricultural and Rural Public Works, Rural Affairs, Industry and Environment, and Consumers, Food Supply and Food Safety.’

8

The three pillars of MAFF agricultural policy

Maximising agricultural intervention means that the MAFF strives to maximise regulatory controls over the agricultural economy, maximise direct participation in agricultural and related markets, and maximise expenditure on the agricultural sector. These generic goals translate into a number of core agricultural policy imperatives that are interrelated and which have guided and informed MAFF policy formulation over the years. The so-called ‘three pillars’ of MAFF agricultural policy are rice market control, budget subsidies and limited foreign access to Japan’s agricultural markets. Each of these core policy areas came under intensifying pressure for reform over the years. The MAFF’s response in each case reveals its overwhelming motivation to maximise intervention – by fighting to hold on to its rights and prerogatives, by finding ways to minimise cuts in expenditure, and by defending Japan’s predominantly inefficient, small-scale farming system from international competition. The MAFF contemplated and conceded a measure of deregulation, retrenchment and liberalisation1 only when faced with ineluctable political, economic and fiscal forces. However, it did not yield any more than was necessary to accommodate reform and in ways, first and foremost, that protected its own interests. Had the MAFF been motivated by other considerations – for farmers, for the future of Japanese agriculture, for consumers and taxpayers, or even for the nation as a whole – it would have acted differently.

Rice market intervention The FC system governing the collection, distribution and pricing of rice2 has traditionally been the mainstay of the MAFF’s intervention in agricultural commodity trades. Under the FC system, the Food Agency intervened in the collection, distribution and sale of domestic rice as well as totally controlling rice imports. Given the prominence of rice farming in Japanese agriculture, intervening in all aspects of the rice market meant virtually controlling Japanese agriculture. The MAFF followed the principle of rice market supremacy (kome shijo shugi). Throughout the five or more decades of the FC system’s operation, the MAFF sought to maximise rice market intervention by drawing out the process of reform and initially only permitting adjustments at the margins of rice distribution control.3

The three pillars of MAFF agricultural policy 169 It relinquished controls extremely reluctantly and belatedly, and mostly in the face of imminent system breakdown, that is, when the system threatened to collapse under the weight of its own contradictions. In other words, the MAFF eased regulations when some measure of reform was necessary to keep the system going. Moreover, restrictions were relaxed only where the Food Agency’s authority over the rice distribution system would be least compromised. Reform thus began at the retail-consumer stage and ended at the farm gate-wholesale (i.e. collection) stage. As Kajii points out, ‘controls over the rice collection stage would be amongst the last to be liberalised because the MAFF’s regulation of the collection of the total amount of rice comprised the basis of the FC system’.4 The MAFF thus permitted the scope of its intervention only to contract gradually, working from the periphery to the core. When faced with a choice, the most important consideration for the MAFF was to preserve rice intervention as a means of controlling rice distribution rather than as a means of supporting farmers’ incomes. Distribution control served the MAFF’s interests, while price subsidies primarily benefited the farmers and the LDP. The MAFF was, therefore, less concerned about the producer rice price and more concerned about retaining the FC system as a regulatory regime.5 At particular points in the FC system’s postwar evolution, the MAFF proposed restraints on producer rice price increases, price freezes and cuts, limits to Food Agency rice purchases and enforcement of rice acreage reductions, all moves designed to preserve the system of rice market control by limiting the budget costs of Food Agency rice purchases from farmers in the face of fiscal constraints.6 Rice production adjustment was first introduced in 1970.7 It was designed to support several policy objectives. First, it sought to balance the demand and supply of rice and thus reduce the fiscal burden of blowouts in the FCSA caused by rice surpluses and Food Agency losses on rice purchases from farmers. Second, in acting as a form of volume control, the gentan doubled as an indirect price stabilisation mechanism. Cuts in production sustained high prices which satisfied farm politicians in the LDP. Third, by virtue of these volume control and price support functions, rice production adjustment maintained the basic framework of the FC system. This was the most important objective from the MAFF’s perspective.8 The gentan became a production cartel run by the Food Agency in the interests of maintaining the overall system of rice market intervention. As Yamada also points out, although production adjustment was extremely costly, it was necessary in order to make the planning of supply and demand possible and to maintain the FC system.9 Without the gentan, protecting the FC system would have been impossible because it would have been overwhelmed by surplus rice. The gentan helped to neutralise LDP-engineered price incentives for farmers to grow rice.10 Not surprisingly, the gentan became one of the main pillars of the FC system from 1970 onwards, even though diversion payments ‘did not fully compensate the reduction of rice income [for farmers] at the micro-economic level’.11 When the Food Agency reduced its direct participation in the rice market with the introduction of the jishu ryutsumai marketing channel in 1969, it was heralded as a major act of privatisation and deregulation. However, what the MAFF had in mind was to reduce its losses on rice purchases from farmers which, given

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the quantity of surplus rice, was distorting the MAFF budget, making expenditure harder to justify, and constricting allocatory intervention in areas more desirable to the MAFF, such as agricultural public works. The advantage of the new system was that it absolved the Food Agency from buying all the rice for distribution. Furthermore, while the changes generated the fiction of liberalisation, in reality they involved only a modest loosening of controls. Both the seifumai and jishu ryutsumai distribution channels ‘were still regulated by the government and prices for jishu ryutsumai were monitored’.12 The main official duty of the Food Agency remained buying and selling rice as well as overall supervision of rice distribution. Fundamentally speaking, all rice for sale (except that destined for the black market) ultimately remained under Food Agency management, including voluntarily marketed rice. Although the latter was exempted from direct control (i.e. the producers’ obligation to sell it to the government), farmers still needed to keep figures on how much was distributed through this channel so the MAFF could plan rice production adjustment and keep one of the main system props untouched. The MAFF permitted further incremental deregulation of the FC system in response to demands for some relaxation of administrative controls on the rice market. The reforms were only made possible, however, because they did not represent any kind of fundamental challenge to rice market intervention. In 1972, the principle of quality differentiation was introduced into Food Agency sale prices for rice, controls on the channels from wholesalers to consumers were removed and retail prices were liberalised.13 In 1981, the FC Law was amended to remove the strict rationing system for rice (ration books, or tsucho were abolished), to permit rice wholesalers and retailers to shift from a registration system to an approval system and to introduce a rice supply plan that took into account the various uses and qualities of rice.14 These measures represented a delayed response by the MAFF to the changing realities of the rice market and appeals from consumers, wholesalers and retailers for the excessive restrictions to be lifted. However, as Yamada explains, although the partial reform of the FC Law in 1981 was designed to adjust the gap between the wording of the law and reality, to clarify the treatment of jishu ryutsumai in the law and to permit the law to be more flexibly applied (for instance, the MAFF Minister could develop basic plans for rice supply and demand to meet diversified consumer demand), it also aimed to maintain direct control of the entire rice supply by the state.15 In 1985 further changes allowed more competition into the sale of seifumai by wholesalers and into the collection of seifumai by designated rice collectors. Both changes, however, only effected minor reforms. The former permitted wholesalers buying rice from the Food Agency to show a proposed price (but only within a permitted range), while the latter only affected rice that exceeded the amount the Food Agency had contracted with farmers to buy – in short, it was an exceptional measure.16 In 1987, the Director-General of the Food Agency set up a private inquiry organ called the Rice Distribution Study Group (Kome Ryutsu Kenkyukai). It was charged with looking into the possibility of allowing market influences more directly to influence rice prices. In this instance, the MAFF’s hand was being

The three pillars of MAFF agricultural policy 171 forced by widespread violations of the FC system – by farmers, wholesalers and retailers alike.17 After deliberating for a year, the study group presented its report in November 1987. The report recommended that more competition be introduced into each stage of rice distribution, including collection, wholesaling and retailing.18 Significantly, the study group did not recommend a thorough overhaul of the FC system or liberalisation of the domestic rice market. In March 1988, the MAFF published an ‘Outline for Rice Distribution Reform’ (Kome Ryutsu Kaizen Taiko), which crystallised the proposals of the study group. However, the kind of reforms envisaged merely illustrated the fact that the Food Agency was keenest to protect its own rights and interests.19 The outline proposed that wholesalers be permitted to buy and sell rice both between prefectures and between wholesalers. It also proposed that wholesalers be allowed to conduct a direct trade in rice with primary rice collectors and envisaged legalisation of black market rice with the introduction of the officially endorsed concept of ‘free rice’ ( jiyumai ). The privilege of handling free rice would be allocated to existing wholesalers. The aim of the outline was not to enable farmers to sell their rice to whomever they chose, but to strengthen the control of rice distribution by the Food Agency and to protect the rights and interests of the rice distribution industry. By doing the latter, Food Agency officials would ensure their employment prospects with rice wholesalers after retirement.20 The reforms resulting from the outline were as expected, with the MAFF expanding the business area of rice distributors and relaxing regulations regarding new entrants. In June 1989, the MAFF unveiled a step and stage deregulation proposal for the jishu ryutsumai market. The core of the changes was the creation of a spot market ( genbutsu shijo), which would allow price determination by bidding, initially for 200,000 tonnes of rice, with a bidding limit set at 10 per cent higher or lower than the basic price (kijun kakaku) of jishu ryutsumai.21 The bidding markets would be held in Tokyo and Osaka that were large consumption areas. A MAFF-sponsored Voluntarily Distributed Rice Price Formation Arena Investigation Committee ( Jishu Ryutsumai Kakaku Keiseiba Chosakai) then took up the issue. It proposed the formal establishment of a rice-bidding market that would be managed by a neutral third-party organisation guided and supervised by the MAFF.22 The aim of the price formation venue would be to allow quality evaluation and supply/demand (by types of brands across different production regions) factors to be reflected in the price of rice, and to set a price that would become a ‘dealing indicative price’ for the balance of semi-controlled rice.23 The Food Agency established the Voluntarily Marketed Rice Price Formation Organisation ( Jishu Ryutsumai Kakaku Keisei Kiko) as a government-linked market (seifukei shijo) in August 1990 with all its funding supplied by the MAFF.24 It began operating on 31 October 1990. It was an official bidding market at which rice wholesalers could trade by tender (nyusatsu torihiki) as a means of making ‘markets function better in semi-controlled rice’.25 However, bids that were much higher or much lower than the basic price of jishu ryutsumai were deemed invalid. The restriction on annual price fluctuations was at a maximum of 7 per cent of the basic price of jishu ryutsumai in the previous year.26 As one commentator

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observed, rice was traded within a high standard price band that had nothing to do with the actual demand and supply of rice.27 Other observers were equally cynical about the ‘market’ qualities of the price formation organisation. One observed, for example, that the trade by tender at the price formation organisation was not aiming to give a lead to real market trades. Instead, it was a ‘place to determine the price’ (kakaku keisei no ba). The target quantities for bidding, the participants, the price bands and the method of bidding were still regulated with the result that the organisation’s economic function was deficient. In fact the price formation organisation was widely regarded as functioning as a second Rice Price Advisory Council, or RPAC (Beika Shingikai).28 The price of voluntarily marketed rice determined in this ‘place’ was not connected to actual trends in production adjustment or the amount of the government rice and voluntarily marketed rice being traded.29 Furthermore, because of Nokyo’s continuing monopoly at the auction market and ‘too narrow price ranges set for the auction by the government, the auction did not work as an efficient price-setting mechanism’.30 In fact, the price of rice was substantially a consultation price decided by JA Zenno and the Food Agency. For this reason, the price formation organisation was an incomplete market.31 The requirement also remained for handlers at all levels to be licensed by MAFF, although the approval system for participants changed to a registration system and the conditions for registration were considerably relaxed.32 MAFF regulation of the rice market still extended to ‘implementing the acreage reduction program based on overall demand–supply prospects, deciding the floor rice price, stabilising the fluctuations of rice price through management of inventory, specifying the distribution channels, and, finally, prohibiting rice imports’.33 The MAFF continued to issue ‘an overall plan for supply, distribution, and consumption of rice . . . [which acted as] the basis for controlling production and marketing of rice in Japan’.34 One of the fundamental problems faced by the MAFF in liberalising the rice distribution system was that production control was not possible without maintaining existing rice distribution channels, and the FC system could not be preserved without production control. The MAFF’s view of the changes was that problems such as surplus rice production could be solved within the existing system by streamlining the operations of the FC system itself, rather than by abolishing it. That was its motivation for reform. It permitted the entry of competitive market principles into the system sufficient to keep it operational. At the same time, it minimised any adjustments that would have lowered the level of Food Agency intervention. Not surprisingly, it had limited flexibility in tinkering with the system in order to achieve these mutually contradictory objectives. Reform increments had to be accommodated without reaching the point of FC abolition. The New Food Law implemented in November 1995 was a logical end point of the reform trajectory of the previous decades. It permitted the greater play of market forces in determining rice prices although the changes still fell well short of a free market. At the same time, rice distribution remained under partial Food Agency control while rice production was legally brought under Food Agency planning and management.

The three pillars of MAFF agricultural policy 173 The new law altered the regulations governing rice collection, wholesaling and retailing. It gave farmers’ greater choice of rice distribution and sales routes by recognising three channels for rice marketing. The first two preserved the existing system: seifumai and jishu ryutsumai were retained but comprised a new category of so-called ‘orderly marketed rice’ (keikaku ryutsumai). Farmers selling orderly marketed rice were required to use ‘specified channels’,35 that is, those designated by the government for seifumai and jishu ryutsumai. Orderly marketed rice was also synonymous with the so-called ‘planned distribution system’. The changes envisaged that voluntarily marketed rice would become the main channel for rice sales by further institutionalising the price formation market. This was, in effect, designed to block the rapidly increasing private rice market.36 The new law established the Voluntarily Marketed Rice Price Formation Centre, which took over from the Voluntarily Marketed Rice Price Formation Organisation as the public (i.e. MAFF-managed) market (kosetsu shijo). The functions of the centre were specified in the New Food Law, thus codifying in legislation changes that had already taken place with the establishment of the price formation organisation in 1990.37 The centre would henceforth function as a central wholesale market for jishu ryutsumai, with tender prices from wholesalers acting as an index for the local market price and for Nokyo’s selling price.38 The main price setting for rice would, therefore, follow the lead of tenders submitted to the price formation centre. However, bidding at the centre was regulated which hindered price formation that reflected real trends in supply and demand.39 The system operating at the centre permitted rice to be traded only within a relatively narrow price range thus preventing demand–supply factors from fully registering in the tender prices. As one Japanese commentator observed, ‘rice was bought and sold within a very high standard price band that was unrelated to demand and supply’.40 Another study also concluded that In effect the Staple Food Law frees the rice market only to a limited extent, the major limitation being in the restrictive way that rice prices are determined. The relatively high level of administered prices [i.e. seifumai price] evident in 1996 together with the restriction on price fluctuations in the Voluntarily Marketed Rice Price Formation Centre, combine to place direct upward pressure on prices of about one third of domestically produced rice, which will indirectly influence the rest of the market. The end result is that rice prices in Japan are likely to remain at artificially high levels. This is probably one of the main reasons that the Staple Food Law has not prevented the accumulation of . . . excessive rice stocks.41 The fundamental problem was that domestic rice producers remained significantly insulated from market signals.42 Evidence of this could be seen in continuing rice surpluses. At the end of the 1997 rice production year (October 1997)43 after four years of good harvests, the total amount of rice in stock in government and Nokyo warehouses amounted to 3.7 million tonnes (of this 400,000 was imported MA rice), creating what was widely condemned as the third rice surplus.44 The cause

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was directly attributed to residual government controls over the rice market and the predisposition of Food Agency officials to exclude market principles.45 This was despite the fact that the New Food Law recognised a third route through which farmers could market their rice called ‘non-orderly marketed rice’ (keikakugai ryutsumai). This channel permitted farmers to market rice in any manner providing the volume was declared to the Food Agency. Based on this provision, producers could sell their entire rice crop freely as non-orderly marketed rice. The New Food Law thus abolished the compulsory acquisition system imposed by the FC Law. The reform released farmers from the requirement to sell all rice except that for self-consumption to the government (and that declared as voluntarily marketed rice).46 Opening up the third route of ‘non-orderly marketed rice’ meant that rice producers could bypass the only two previously available legal distribution routes – seifumai and jishu ryutsumai – and sell directly to wholesalers, retailers and consumers. However, this act of the MAFF merely legitimised the black market in rice.47 As Godo comments, the New Food Law ‘was nothing more than ratification of the actual situation’,48 an observation supported by the figures for the relative proportions of rice passing through each of the respective marketing channels. These hardly altered with the implementation of the new law. In 1992, for example, seifumai represented 17.1 per cent of the total quantity of rice distributed, whilst jishu ryutsumai was 49.5 per cent, and free rice 33.4 per cent. In 1995, seifumai was 17.5 per cent, jishu ryutsumai 46.6 per cent and keikakugai ryutsumai 35.9 per cent.49 In fact the relative proportions did not change significantly until 1998, when the MAFF implemented the New Rice Policy50, which abolished the restrictions on price fluctuations at the price formation centre, and the Food Agency officially abandoned its function of rice purchasing for price maintenance purposes. A long-standing problem for the MAFF was that black market rice undermined the gentan because more efficient producers of better quality rice that could command a premium in the market were treated under the gentan in the same fashion as small-scale, high-cost farms growing lower quality rice. This state of affairs encouraged the better farmers to flout the gentan and sell their rice illegally. Moreover, because of the existence of unofficial rice distribution channels, the number of farmers who were reluctant to participate in the gentan continued to increase.51 Production adjustment was, therefore, legislated into the New Food Law in order to give the Food Agency a direct role in rice-supply control as well as to strengthen the function of the gentan in this regard. The Food Agency was not prepared to allow a competitive rice market to do this job. Making rice production adjustment a legal provision of the New Food Law and legitimising black market rice were complementary policies as well as being necessary for demand–supply (i.e. price) stabilisation.52 If the MAFF’s production adjustment policies were to work, all the rice traded in Japan had to be brought within the framework of the New Food Law and its ‘Basic Plan for Stabilisation of Supply–Demand and Price of Rice’ prepared each year by the MAFF Minister. The basic plan coordinated

The three pillars of MAFF agricultural policy 175 the implementation of rice production adjustment, the management of rice stockpiles by the Food Agency and MA rice import operations.53 Production adjustment therefore had a key role in the law as an important measure aiming at equilibrium between demand and supply of rice. The Food Agency’s vision of the changes under the New Food Law did not extend to a dramatic contraction of its overall regulatory and supervisory role in relation to rice distribution and sales because of what this potentially implied for its own functional rationale as well as for its vested rights and powers. Indeed, the agency showed its true colours when under threat from private sector entrepreneurs endeavouring to exploit some of the more liberalised channels under the new distribution system and aiming to realise some of the self-proclaimed objectives of the agency relating to market determination of prices and transparency of pricing. In 1996–97, Okuhara Masaaki, Chief of the Planning Section of the Planned Distribution Division of the Food Agency, which monitored the demand and supply of rice, tried everything he could to block rice wholesalers from establishing a private-sector rice wholesaling company called the Japan Rice Market Co. Inc. (Nihon Kome Shijo Kabushiki Gaisha). Exploiting the category of keikakugaimai, this company began operations in Tokyo in October 1996.54 The company aimed to concentrate purchases and sales of keikakugaimai from all over Japan, focus on supply and demand as the primary determinant of prices, and introduce transparency and fairness into the determination of the wholesale rice price.55 In other words, its modus operandi was the complete opposite of the MAFF-sponsored centre, and in fact if it had developed to its full potential, would have exposed the lack of transparency in centre pricing. The Food Agency feared that if the private company became popular and successful as a rice trader, the way the centre really operated (i.e. as an administratively ‘managed’ market) would be publicly revealed and its existence would become redundant.56 The new company would also have helped to make keikakugaimai the major form of rice trade, competing with the centre for market share and ultimately undermining the centre’s raison d’être.57 The Food Agency was, therefore, unhappy with the establishment of the company because it might actually promote the use of market principles in the wholesale rice industry. According to Japanese media reports, the Food Agency was covertly opposed to non-orderly marketed rice because it did not want this marketing channel capturing a larger share of the wholesale rice trade. If rice distribution outside official channels increased rapidly, rice trade through the price formation centre would not increase significantly. This would limit the government’s control of rice and Nokyo’s share of the market would decline. It would also be difficult for Nokyo to compete with experienced private distributors.58 Such a development would transfer rice to a market economy, finally rendering the rice bureaucracy and Nokyo superfluous.59 Not surprisingly, Okuhara expressed his dislike at the prospect of non-orderly marketed rice distribution growing larger.60 The Food Agency’s overall vision centred around maintaining an ‘orderly’ market under its overall administrative supervision and control. Whilst trumpeting the dismantling of the FC system and the introduction of market principles,

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the agency opposed the only attempted, full-scale ‘marketisation’ of rice distribution by the private sector. In the meantime, it continued to intervene in the market, purchasing, importing and selling rice as an STE, with the MAFF Minister responsible for drawing up a basic plan for carrying out these operations.61 It also supervised the operations of the price formation centre and monitored prices and production levels. In reality, market factors were restricted to the margins of price determination, whilst the Food Agency operated two very powerful volume control systems: restricted market access for foreign rice and the gentan over which it was given complete control. Despite the greater observance of market principles and the principle of voluntarism in the new rice distribution system, what Japan ended up with was, therefore, well short of a free market. As Yayama comments: ‘Despite all the rhetoric calling for “deregulation” and “the introduction of market principles” . . . a detailed reading of the laws and government ordinances reveals that the government has taken the teeth out of the lofty goal of liberalization.’62 Whichever way the New Food Law was evaluated, the Food Agency was the last to lose from the new arrangements.63

Expenditure on budgetary subsidies The MAFF has a vested interest in high-cost agriculture because it wants to maximise allocatory intervention. The ministry’s agricultural policy priorities should be seen as derivative of this ‘global’ spending objective. The fallout from the MAFF’s allocatory intervention can be seen throughout Japan’s agricultural policy system. Policies are predicated on expenditure goals – not the other way around. Agricultural policies originate in the compulsion to spend. Agricultural policy is budget- and subsidy-driven, and agricultural policy is really agricultural budget policy. As one commentator puts it, ‘agricultural policy . . . [is] soaked with subsidies’,64 which distorts agricultural policy and perpetuates the cycle of inefficiency, over-protection and excessive dependence on government in the agricultural sector. The drive to maximise allocatory intervention shapes the process of policy formulation within the MAFF. It is the principle that underpins all MAFF policymaking. Officials devise schemes to allocate subsidies and then policies are crafted around these schemes. Alternatively, they see a problem and think up spending policies to meet it. MAFF bureaucrats spend their time creating policies to consume budgetary subsidies. It is imperative for them to keep the momentum of budgetary expenditure going through so-called ‘new works’ (shinki jigyo), which they can present to the MOF each year during the budget compilation process. Each ‘new’ policy initiative is substantially a proposal for expenditure and is accompanied by a package of subsidies and expenditure justifications. If a programme becomes defunct, another replaces it. In the aggregate, old, current and new programmes always add up to the same outcome – maximising allocatory intervention. Many of these funding proposals are little more than revamped versions of old ones. The option of finding non- or cheaper-spending alternatives,

The three pillars of MAFF agricultural policy 177 or voluntarily reducing budget allocations, or working towards the day when the agricultural sector might be largely self-supporting, is not countenanced. The MAFF wants a weak, dependent sector that requires government financial support to survive. The MAFF was, for example, very cool towards the type of land improvement that took place in the Kakurai area of Chiba Prefecture devised by a local farmer. As the local farmer argued, this was because the scheme involved low construction cost (lower than the MAFF subsidy for land improvement) and imposed no burden on local farmers. The local farmer was reported to have said: ‘The MAFF asks me not to say that we can integrate land at low cost. It seems that the MAFF is afraid of budgetary cuts.’65 Within the ministry, bureaucratic practice places pressure on individual officials to come up with schemes that will consume budgetary expenditure. This entrenched spending dynamic infects staff members in all the bureaus and divisions of the MAFF. As one MAFF advisor explains, Subsidies are allocated on a bureau basis, with each unit offering a range of subsidies concerned with their specific area of administration. If these units do not spend, they will have their budget taken away from them. MAFF officials have to complete projects just before the end of the financial year and use up the allocated funds otherwise their budget will be cut in the following year.66 The individual bureaus therefore compete with each other to get farmers to agree to subsidised projects. Each lavishes ‘baits’ or ‘inducements’ in order to provide incentives to farmers to undertake projects that will consume their particular subsidies.67 Within this framework, local government plays a key role in reaching farmers. The MAFF tries hard to create the impression that a process propelled by supply-push is really demand-driven: In the case of public works projects, a questionnaire may be sent out to farmers asking them if they want a particular farm road or land improvement project. If a majority answer ‘yes’, then permission is granted by the divisional boss for the particular project. The questionnaire is conducted by the regional agricultural administration bureaus that ask local government staff to implement it. If the project is useful to the local government, they fully cooperate with the questionnaire. Sometimes a lot of effort has to be expended in persuading farmers to answer the questionnaire. Local government officials ask farmers to meet and listen to explanations about the purpose of the questionnaire and the real meaning of the questions. The whole exercise is designed to persuade farmers to answer the questionnaire (and therefore take up the project proposal). Most projects are top-down in this fashion.68 The agricultural policy departments (noseibu) of prefectural offices even compile subsidy guidebooks that encourage farmers to apply for subsidies and thus

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The pursuit of MAFF interests in intervention

support the supply push from the MAFF. The guidebooks advise farmers about what kind of subsidies are available and what is the best way to go about getting them. As a quote from the 1980 Hyogo Prefecture Agriculture, Forestry and Fisheries Department’s guidebook goes, If you intend to construct a big greenhouse and grow vegetables, you can choose from 13 ‘works’ ( jigyo), such as the ‘Regional Agricultural Policy Special Countermeasures Works’, the ‘Mountain Village Regions Agriculture, Forestry and Fishing Industries Special Countermeasures Works’, the ‘New Agriculture Structural Improvement Works’, the ‘Vegetable New Production Regions Development and Cultivation Works’, the ‘Vegetable Collective Production Regions Cultivation Works’, the ‘Facilities Vegetables Ministry Energy Model Production Complex Establishment Works’ and so on . . . If you decide to undertake the project with a group, then you can apply for the ‘Vegetable Collective Production Regions Cultivation Works’. In this case, you will get 50 per cent from the national government, 15 per cent from the prefectural government, and the remaining 35 per cent from municipal governments and yourselves. The subsidy includes not only the construction cost of the greenhouse but also the cost of supplying water and drainage as well as heating. If your town is regarded as a ‘mountain village’ under the Mountain Village Development Law, then you had better not apply as part of a group. It would be better to construct the greenhouse by applying for a subsidy under the ‘Mountain Village Regions Agriculture, Forestry and Fishing Industries Special Countermeasures Works’. In this case the national government will pay half the cost, your prefecture 20 per cent, and you and your municipal government 30 per cent. If you take up the ‘energy model works’ option then, although the cost of facilities is a bit high, the national government will subsidise half the cost. For your portion, a low interest loan is also available. If you are a highly motivated farmer, then this option is recommended.69 The ‘Index of Works’ in the same guidebook listed (in addition to those above) 21 types of land improvement works, 16 types of farm road development works, 15 types of irrigation development works, 15 types of seed-raising facility establishment works, 19 types of agricultural machinery introduction works and 16 types of cattle shed construction works. As Hirose points out, If a farmer gives up growing rice and starts producing soya beans and wheat, then he can get an ‘Incentive Subsidy for Changing Crops’ and a ‘Price Differential Supplementary Payment’. If a farmer switches to raising cattle, then he can get subsidies for cattle sheds, feed crops and storage facilities. If he starts producing fruit and vegetables, there are various kinds of horticultural subsidies. In other words, the subsidy net is cast very wide. Whatever a farmer wants to do, there are subsidies attached. Subsidies, in a word, are the ‘starting point’.70

The three pillars of MAFF agricultural policy 179 The agricultural cooperatives are also big players in the MAFF’s subsidy system. For example, subsidies are allocated to the local nokyo, who then push them on to farmers by recommending that they purchase unnecessary goods with government money.71 Indeed, the MAFF cultivates and defends the subsidy nexus with the agricultural cooperatives in order to keep farmers bound tightly to them. The nexus encourages farmers’ dependence on the MAFF and its proxy organisations in the countryside rather than independence, which, according to commentators, would make MAFF and the agricultural cooperatives redundant. As one ‘motivated’ farmer commented: ‘MAFF, which sees Japan’s agriculture only through the agricultural cooperatives, has in a sense obstructed farmers from developing their independent mindedness.’72 The Basic Law The Basic Law partly originated in the MAFF’s desire to create a new project in order to secure funding that had been previously allocated to the ‘New Agricultural, Mountain and Fishing Village Construction Comprehensive Policy’ or ‘New Village Plan’ (Shin Nosangyoson Kensetsu Jigyo), a subsidy programme for agricultural infrastructure development (nogyo kiban seibi) due to conclude in 1960.73 The MAFF was searching for a new justification for subsidy expenditure, because the old rubric of production expansion had lost its punch after a series of bountiful rice harvests. It found the justification it was seeking in the notion of the ‘structural improvement of agriculture’ based on Western European agricultural structural improvement theory. This nascent ideology of agricultural support and protection argued, first, that while non-agricultural industries could advance under their own power, agriculture could not, because it operated under various constraints. Second, the government should intervene in order to guarantee the nation’s food supply and the social position of farmers on an equal level with other industries. Third, it was necessary to emphasise policy to improve small agricultural structure and raise the productivity of agriculture.74 For the MAFF (and the LDP) who had been searching for a new rationale for supporting agriculture, this was an opportune theory because it argued that if agriculture were a basically weak industry, then it was natural for the state to support it, and so detailed justification for any expenditure was not necessary.75 The ideological precepts of structural improvement theory all found their way into ‘Basic Law agricultural policy’ (Kihonho nosei), which provided the fundamental legal sanction for MAFF spending on the farm sector.76 As Hirose comments, having entered the era of the Agricultural Basic Law, subsidies rapidly extended.77 Between 1961 and 1970, average annual hikes in the agricultural budget amounted to just under 20 per cent per annum (see Table 8.1). The increases in expenditure were all linked to the major policy precepts expounded by the law: ●

agricultural infrastructure development (i.e. agricultural public works aiming to lift agricultural productivity)

Table 8.1 Trends in the agricultural budget, selected years, 1960–99a (Unit: ¥ billion) 1960 I. Total production countermeasures, of whichb 1 Selective expansion, of which Promotion of Livestock production Rationalisation of rice and wheat production 2 Agricultural productivity improvement and development of the rural environment, of which agricultural and rural development 3 Disaster countermeasures II. Improvement of agricultural structure, of which Countermeasures to promote improvement of agricultural structure Agriculture, Forestry and Fisheries Finance Corporation Subsidy etc. Farmers’ pension system III. Price, distribution and income countermeasures, of which 1 Stabilisation of agricultural product prices and prices and rationalisation of distribution, of which (1) Price stabilisation, of which Management of rice and wheat control systemc Stabilisation of livestock prices (2) Rationalisation of distribution of agricultural and livestock products IV. Improving the welfare of the agriculturally employed V. Agricultural groups VI. Other Total budget expenditure on agriculture General budget total Share of agricultural budget (%)

%

1965

%

1970

84.5

60.9

162.2

3.3 1.9

(2.4) (1.2)

7.9 5.5

(2.3) 101.3 (11.4) (1.6) 13.8 (1.6)

0.7

(0.5)

1.0

(0.3)

46.2

(33.3)

106.3

(30.7) 212.2 (24.0)

38.8

(28.0)

90.2

(26.1) 181.3 (20.1)

35.1 4.7

(25.3) 2.7

48.0 21.8

(13.9) 6.3

62.8 47.2

(7.1) 5.3

–

–

16.0

(4.6)

22.2

(2.5)

0.7

(0.5)

1.7

(0.5)

12.8

(1.4)

– 36.2

– 26.1

– 139.6

– 40.3

31.7

(22.9)

128.6

(37.2) 394.3 (44.5)

31.2 29.0

(22.5) (20.9)

128.2 120.5

(37.1) 393.3 (44.4) (34.8) 374.6 (42.3)

–

–

0.3

(0.1)

15.6

(1.8)

0.5

(0.4)

0.3

(0.1)

1.1

(0.1)

0.5

0.4

1.4

0.4

5.7

0.6

1.9 11.5

1.4 8.3

2.3 20.3

0.7 5.9

4.6 46.8

0.5 5.3

138.6

100.0

345.9

100.0

1,765.2 7.9

3,744.7 9.2

46.9

%

376.7 42.6

83.2

(9.4)

3.6 (0.4) 416.9 47.1

885.1 100.0 8,213.1 10.8

1975

%

1980

%

795.9

39.8 1,792.7

183.9 40.0

(9.2) (2.0)

459.3 (14.8) 84.3 (2.7)

126.3

(6.3)

454.4

1985

%

%

1991

%

56.5

1,621.36

64.4

337.9 67.1

(12.4) (2.5)

261.9 56.2

(10.4) (2.2)

344.0 (11.1)

252.5

(9.3)

183.5

(7.3)

(22.7)

951.0 (30.6)

930.3

(34.2) 1,082.7

(43.0)

1,127.6 (43.8)

394.0

(19.9)

862.1 (27.7)

842.2

(31.0)

993.4

(39.4)

1,037.3 (40.3)

157.6 102.2

(7.9) 5.1

382.5 (12.3) 271.2 6.2

268.0 314.4

(9.9) 11.6

276.7 287.7

(11.0) 11.4

– 291.3

– 11.3

40.7

(2.0)

83.0

(2.7)

58.6

(2.2)

43.9

(1.7)

43.3

(1.7)

25.1

(1.3)

86.2

(2.8)

139.8

(5.1)

119.8

(4.8)

120.9

(4.7)

11.7 981.8

(0.6) 49.1

54.9 850.6

(1.8) 27.4

89.0 633.9

(3.3) 23.3

105.1 364.2

(4.2) 14.5

108.5 364.2

(4.2) 14.2

861.7

(43.1)

780.8 (25.1)

586.7

(21.6)

314.1

(12.5)

326.0 (12.7)

857.6 811.4

(42.9) (40.6)

773.2 (24.9) 652.1 (21.0)

582.4 456.1

(21.4) (16.8)

311.5 232.0

(12.4) (9.2)

323.5 (12.6) 210.0 (8.2)

29.6

(1.5)

49.4

(1.6)

50.6

(1.9)

29.1

(1.2)

72.6

(2.8)

4.1

(0.2)

7.6

(0.2)

4.4

(0.2)

2.7

(0.1)

2.6

(0.1)

19.1

0.9

46.5

1.5

40.4

1.5

31.0

1.2

31.7

1.2

16.2 109.9

0.8 5.5

31.7 201.6

1.0 6.5

41.6 150.9

1.5 5.6

55.6 159.0

2.2 6.3

58.0 155.4

2.3 6.0

100.0 3,108.1 100.0 2,717.4 100.0

2,518.8

100.0

2,000.0 20,837.2 9.6

43,681.4 7.1

57.7 1,536.2

1990

53,222.9 5.1

69,651.2 3.6

1,671.0

65.0

298.1 (11.6) 93.7 (3.6) 182.2

(7.1)

2,571.6 100.0 70,613.5 3.6 (Table 8.1 continued )

Table 8.1 Continued 1992

%

1993

I. Total production 1,838.0 66.1 1,838.0 countermeasures, of which 1 Selective expansion, of which 273.9 (9.9) 247.1 Promotion of livestock 98.9 (3.6) 98.0 production Rationalisation of Rice and 156.7 (5.6) 123.8 wheat production 2 Agricultural productivity 1,352.2 (48.6) 1,476.7 improvement and development of the rural environment, of which agricultural and rural 1,255.2 (45.1) 1,362.1 development 3 Disaster countermeasures II. Improvement of agricultural 307.6 11.1 371.3 structure, of which Countermeasures to promote 58.1 (2.1) 90.0 improvement of agricultural structure Agriculture, Forestry and Fisheries 188.3 (6.8) 138.1 Finance Corporation Subsidy etc. Farmers’ pension system 112.2 (4.0) 112.4 III. Price, distribution and income 368.1 13.2 363.4 countermeasures, of which 1 Stabilisation of agricultural 316.3 (11.8) 318.0 product prices and rationalisation of distribution, of which (1) Price Stabilisation, of which 313.7 (11.9) 315.0 Management of the rice 207.0 (7.4) 210.0 and wheat control systemc Stabilisation of livestock 69.0 (2.5) 70.4 prices (2) Rationalisation of 2.6 (0.9) 3.0 distribution of agricultural and livestock products IV. Improving the welfare of the 37.2 1.3 51.5 agriculturally employed V. Agricultural groups 62.6 2.3 63.6 VI. Other 166.3 6.0 156.9 Total GA Budget Expenditure on agriculture General Account budget total Share of agricultural budget (%)

%

1994

%

64.5 2,013.4 66.3 (8.7) (3.4)

221.1 103.2

(7.3) (3.4)

(4.4)

89.9

(3.0)

(51.9) 1,555.8 (51.3)

(44.8) 1,457.7 (48.0)

13.1

378.9 12.5

(3.2)

81.2

(2.7)

(4.9)

154.8

(5.1)

(4.0) 12.8

115.2 (3.8) 334.5 11.0

(11.2)

290.7

(9.6)

(11.1) (7.4)

287.7 190.0

(9.5) (6.3)

(2.5)

69.7

(2.3)

(0.1)

3.0

(0.1)

1.8

51.8

1.7

2.3 5.5

65.8 191.3

2.2 6.3

2,779.8 100.0 3,038.7 100.0 3,035.7 100.0 71,489.7 3.9

75,252.2 4.0

73,430.5 4.1

Sources: Shokuryo, Noson, Nogyo Hakusho Fuzoku Tokeihyo, 1999, pp. 176–177; Shokuryo, Nogyo, Noson Hakusho Sanko Tokeihyo 2002, pp. 130–131. Notes a All figures are for the revised budget. b Budget headings are those that applied in 2003. c These figures are the same as those in Table 6.1 identifying the amount transferred from the GA budget to the Food Control Special Account.

1995

%

2,396.2

1996

%

1997

%

1998

%

1999

%

70.0 2,144.3

69.3 1,977.0

67.6

2,229.4

68.0

1,932.3

65.7

268.8 129.7

[7.9] [3.8]

295.2 113.5

(9.5) (3.7)

296.4 114.0

(10.1) (3.9)

226.5 126.8

(6.9) (3.9)

194.8 106.4

(6.6) (3.6)

105.0

[3.1]

156.1

(5.0)

157.4

(5.4)

59.6

(1.8)

54.9

(1.9)

1,841.3

[53.8] 1,642.7 (53.1) 1,448.0

(49.5) 1,751.4

(53.4)

1,496.0 (50.9)

1,717.4

(50.2) 1,540.3 (49.8) 1,345.1

(46.0) 1,625.3

(49.6)

1,378.9 (46.9)

286.1 376.8

(8.4) 11.0

206.3 308.6

(6.7) 10.0

232.6 298.5

(8.0) 10.2

251.5 306.6

(7.7) 9.4

241.6 274.5

(8.2) 9.3

101.1

[3.0]

63.0

(2.0)

64.8

(2.2)

78.5

(2.4)

54.9

(1.9)

126.0

[3.7]

121.2

(3.9)

113.0

(3.9)

99.5

(3.0)

97.7

(3.3)

117.6 347.0

[3.4] 10.1

98.4 347.6

(3.1) 11.2

91.0 353.8

(3.1) 12.1

84.9 436.0

(2.6) 13.3

85.4 431.7

(2.9) 14.7

288.5

[8.4]

300.3

(9.7)

304.4

(10.4)

371.4

(11.3)

374.0 (12.7)

284.1 183.0

[8.3] [5.3]

292.0 177.0

(9.4) (5.7)

297.1 176.0

(10.2) (6.0)

364.2 243.4

(11.1) (7.4)

366.9 (12.5) 243.3 (8.3)

72.1

[2.1]

85.4

(2.8)

90.8

(3.1)

88.4

(2.7)

88.3

(3.0)

4.3

[0.1]

8.3

(0.3)

7.3

(0.2)

7.2

(0.2)

7.1

(0.2)

59.2

1.7

44.5

1.4

44.3

1.5

51.4

1.6

40.8

1.4

70.6 160.1

2.1 4.7

71.8 167.1

2.3 5.4

70.9 167.7

2.4 5.7

69.9 171.9

2.1 5.2

71.4 171.2

2.4 5.8

100.0 3,094.7 100.0 2,922.6 100.0

3,277.1

100.0

3,423.0 78,034.0 4.4

77,771.2 4.0

78,533.1 3.7

87,991.4 3.7

2,939.1 100.0 89,018.9 3.3

184 ●

●

The pursuit of MAFF interests in intervention the pursuit of positive production measures for commodities in higher demand accompanying so-called ‘selective expansion’ policies the fundamental precept of income equilibrium for agriculture with nonagricultural industries effected by dramatic rises in the producer rice price.78

As Table 8.1 shows, in 1960, price, distribution and income measures (the bulk of which were directed to management of rice and wheat control i.e. the FC system) consumed 26.1 per cent of the agricultural budget; by 1970, it was absorbing 47.1 per cent. Within this broad category, management of the rice and wheat control system consumed 20.9 per cent of expenditure in 1960 but by 1970 this figure had climbed to 34.8, or more than a third of the total agricultural budget. This was a direct result of the income equity objectives of the Basic Law. In fact the agricultural budget was structured according to the main articles in the Basic Law. As shown in Table 8.1, the agricultural budget had six major categories: ● ● ● ● ● ●

‘Production countermeasures’ ‘Improvement of agricultural structure’ ‘Price, distribution and income countermeasures’ ‘Improving the welfare of the agriculturally employed’ ‘Agricultural groups’ ‘Other’.79

These almost exactly corresponded to the chapters of the Basic Law: ● ● ● ●

‘Agricultural Production’ ‘Improvement of Agricultural Structure’ ‘Price and Distribution of Agricultural Commodities’ ‘Agricultural Administrative Machinery and Agricultural Organisations’.

The various clauses listed in the summary of measures to be undertaken by the State (Article 2) also referred to specific categories of the budget, such as ‘selective expansion’ (Clause 1) and ‘improving the welfare of those engaged in agriculture’ (Clause 8). Budgetary headings also recur throughout the law in individual articles. The ‘production countermeasures’ category, for example, subdivides into ‘selective expansion’, ‘agricultural productivity improvement and development of the rural environment’, and ‘disaster countermeasures’. The corresponding article in the Basic Law is Article 9 (‘measures concerning agricultural production’) which affirms that the State shall, for the purpose of promoting selective expansion of agricultural production, improvement in agricultural productivity, and increase in gross agricultural output, take necessary measures including development and consolidation of the agricultural production base, elevation of agricultural technology, increase in capital equipment, adjustment of agricultural production and so forth.80

The three pillars of MAFF agricultural policy 185 Article 10, on the other hand, refers to ‘measures against agricultural disasters’. It commits the government to providing reasonable compensation for losses accruing from disasters in order to ensure the stability of farm management. The second budgetary category of ‘price, distribution and income countermeasures’ corresponds to Articles 11–14 of the law in which policies relating to the distribution and price of agricultural products are laid out. Article 11 refers to the ‘stabilisation of agricultural prices’, Article 12 to the ‘rationalisation of agricultural commodity distribution’, Article 13 to the ‘adjustment of agricultural products in relation to imports’ and Article 14 to the ‘development of agricultural commodity exports’. Articles 15–22 of the Basic Law describe measures to be taken to improve agricultural structure on which the same category of expenditure in the agricultural budget is based. Article 15 refers to ‘developing family agricultural management and fostering independent management’, Article 16 to ‘preventing the subdivision of agricultural management in cases of inheritance’, Article 17 to the ‘furtherance of cooperation in the process of production’, Article 18 to the ‘smooth establishment and transfer of rights to farmland’, Article 19 to the ‘expansion and betterment of educational’ programmes, Article 20 to the ‘increasing employment opportunities’ and Article 21 to ‘assisting agricultural structural improvement works’.81 The ‘comprehensive agricultural policy’ The MAFF’s drive to maximise budgetary and subsidy expenditure was a major factor accounting for the metamorphosis in the structural improvement objective of the Basic Law into general rural promotion measures.82 The trend was formalised in the sogo nosei that overlaid Basic Law agricultural policy from about 1970 onwards.83 The policy was a response to the first rice surplus and the subsequent introduction of the gentan and management of rice surpluses.84 The MAFF wanted to divert expenditure away from the bottomless pit of producer rice price subsidies (which were under pressure from fiscal authorities) to the much more lucrative area of public works, which spanned not only farming but also the rural sector as whole. The latter in particular offered multiple opportunities for public works projects. MAFF objectives thus helped to restructure the focus in agricultural policy. The sogo nosei was designed to switch the emphasis from assisting rice production to improving the living environment (seikatsu kankyo) of rural areas.85 One of its major tenets was providing ‘physical improvement of rural areas including non-agricultural infrastructure and community development’.86 As explained by observers, an agricultural policy that had previously only concentrated on farming shifted to a policy concentrating on the factors surrounding agricultural activities, that is, regional development and the living environment in rural

186

The pursuit of MAFF interests in intervention areas. The goal was to construct a new rural society by developing the living environment and production base of rural regions.87

With its promulgation, the attention in agricultural policies shifted from agriculture per se to rural affairs in general . . . the Ministry of Agriculture assumed the leading role in upgrading standards of living in rural areas. Through various subsidy schemes for structural improvement of agricultural, forestry, and fisheries communities, a significant sum of taxpayers’ money . . . was directed to non-agricultural aspects of rural infrastructure such as roads, sewage, drinking water, community halls, children’s parks, and sports grounds. In this regard, Ministry of Rural Affairs would be a better title than Ministry of Agriculture, Forestry, and Fisheries.88 Between 1971 and 1975, the sogo nosei enabled the MAFF to inflate the agricultural budget inflated at an equivalent pace of just under 20 per cent in average annual increases.89 Rice production adjustment The perennial problem of rice surpluses in Japan has been a direct result of price supports that acted as an incentive to farmers to produce. The MAFF moved to deal with this problem by devising a policy that not only helped to keep the FC system viable but also justified large quantities of budgetary expenditure. The programme of subsidies to farmers for taking their land out of rice and switching to other crops proved to be a large consumer of MAFF subsidies over the years. As Hirose points out, the third turning point [in the process of increasing agricultural subsidies] was from 1970 onwards . . . [R]ice production rose, and because there was a need for new subsidies to reduce production and to convert production from rice to other crops, agricultural subsidies began to be extended with a force not seen before.90 Payments to rice farmers for production adjustment almost doubled from ¥32,185 per 10 a in 1971–75, to a peak of ¥60,477 in 1978–80, falling to a low point of ¥11,294 in 1993–95, and rising again to ¥19,401 in 1996–97.91 In 2000 they began to rise again. In fact farmers could potentially receive ¥70,000 per 10 a as subsidies for rice production adjustment as a result of the maintenance of an assistance system of ¥50,000 per 10 a plus an expansion in so-called cooperative subsides of up to ¥20,000 per 10 a.92 The financial costs of rice diversion payments rose precipitously in the late 1970s, boosted by both the rice surplus and the MAFF’s desire to reduce outlays to producer rice price subsidies. The gross budgetary outlay for the gentan quadrupled from ¥81.8 billion in 1970 to a peak of ¥365.2 billion in 1982, after which it

The three pillars of MAFF agricultural policy 187 declined only slowly to a low point of ¥24.2 billion in 1998 (see Table 6.1). Variations in the annual costs of the programme were due not only to total acreage targeted by the policy but also to changes in the actual objectives of the production adjustment countermeasures, whether, for example, they focussed mainly on subsidies for rice acreage reduction (or using rice paddy for crops other than rice), or whether they also grafted on other objectives such as reforming farming practices and so on.93 As a general trend, MAFF outlays for production adjustment only started to fall substantially in the 1990s, slipping from ¥101.2 billion in 1993 to ¥74.8 billion in 1994 in association with poor rice harvests and the consequent rice shortage (see Table 6.1). In total, however, between the introduction of the gentan policy in 1970 and 2002, MAFF expenditure on rice production adjustment amounted to ¥5.7 trillion.94 Moreover, under some schemes, the MAFF chose to replace rice with crops whose diversionary support payments often ended up being far more costly than the rice they replaced. One of the reasons for the exorbitant costs of the programme was that the MAFF paid out the highest incentives to Japanese farmers to produce more land-intensive crops, such as wheat and soybeans, where Japan’s comparative disadvantage was greatest.95 And because producer rice prices were so high, farmers had to be induced to switch to other crops that provided rates of return at comparable levels. As Hillman and Rothenburg comment, If there had been no programme and rice production had been allowed to reach its potential, the budgetary cost of purchasing the additional rice output at the fixed producer price and selling it at the fixed wholesale price would have been 140 billion yen. Diversion payments were the most costly alternative. Similarly, subsidies for the alternative crops were of the order of 550,000 yen per hectare, while the Food Agency losses in rice trading in 1979 amounted to 375,000 yen for every hectare of rice.96 The gentan went through eight name changes in the period 1969–2002 and justified expenditure in the name of a variety of policy objectives linked to rice acreage reduction. It was known ● ● ●

●

●

in 1969 as ‘rice cultivation conversion countermeasures’ in 1970 as ‘rice production adjustment countermeasures’ in 1971–75 as ‘rice cultivation conversion countermeasures’ which stressed the production adjustment of rice and the conversion of rice cultivation to other crops in 1976–77 as ‘paddy field comprehensive utilisation countermeasures’ which highlighted the planned production of rice and raising the self-sufficiency rates of crops other than rice in 1978–86 as ‘paddy field utilisation reorganisation countermeasures’ which ran over three terms and which, in addition emphasising the planned production of rice and raising the self-sufficiency rates of crops other than

188

●

●

●

●

●

The pursuit of MAFF interests in intervention rice, focussed on reorganising agricultural production structure in conformity with demand and supply trends in 1987–92 as the ‘paddy field farming establishment countermeasures’ which in their first term featured the planned production of rice in response to demand and supply trends and which also aimed to raise the productivity of crops that were produced utilising paddy fields, to establish a regional crop rotation agricultural method and to promote a unified approach between the administration and producers/producer groups, and in their second term, aimed to develop diverse paddy field agriculture and paddy field agriculture that resuscitated regional conditions, to improve productivity through the formation of efficient production units, and to improve qualitatively and expand the area of the regional crop rotation agricultural method by promoting the formation of regional agreements in 1993–95 as ‘paddy field farm management activisation countermeasures’ which put the spotlight on establishing high productivity rice paddy agricultural management, the promotion of rice production in response to the diverse demand and supply of rice, and the independence of producers and producer groups in tackling the gentan in 1996–97 as the ‘new production adjustment promotion countermeasures’ which accentuated the preservation of the efficacy of production adjustment, respect for producer and regional autonomy and the realisation of desirable agricultural management in 1998–99 as the ‘emergency production adjustment promotion countermeasures’ which highlighted the early recovery of rice demand and supply equilibrium through the positive execution of production adjustment and the establishment of desirable rice paddy agricultural management with rice cultivation and alternative cropping as a block in 2000–02 as the ‘paddy field farm management establishment countermeasures’ which stressed the planned production of rice in response to demand and the regular production of wheat, soybeans and feed crops in rice paddies.97

The way in which these policies evolved under successive name changes graphically illustrates how the MAFF repackages and relabels policy measures in order to justify requests to the MOF Budget Bureau for ‘new’ expenditure on what is, in reality, an unchanging policy goal. Although the stated objectives of each of these sets of countermeasures changed, their overriding goal remained the same – reducing rice acreage by means of incentive payments to induce farmers to grow other crops or to leave rice paddies fallow. Moreover, the gentan subsidies were consistently characterised by supply-push from the MAFF. As one farmer remarked, It is a strange thing to say, but even if we do not want subsidies, we are obligated to have them. It is our obligation to the ministry. The MAFF from 1980 instituted jimuhi hojo (assistance for office expenses) as part of its ‘paddy

The three pillars of MAFF agricultural policy 189 field utilisation reorganisation countermeasures’. If we had said we did not need it, we would have been scolded by the prefectural agricultural and forestry department. To return a new subsidy would mean that the MAFF would lose face.98 Promoting jishu ryutsumai In a similar fashion to the gentan, the various subsidies to propel rice through the jishu ryutsumai system stopped and started under different subsidy headings. This enabled budgetary expenditure to be rerouted but effectively remain at existing if not higher levels. For example, the ‘planned marketing promotion subsidy’ was replaced by the ‘voluntarily marketed rice planned marketing countermeasures’ in 1996; and the ‘voluntarily marketing countermeasures’ were also replaced with the ‘voluntarily marketed rice planned distribution countermeasures’ in 1996. The newer subsidies were introduced at lower rates than the ones they replaced and one was abolished altogether – the distribution subsidy for rice for ‘other uses’.99 The MAFF was able to boost the subsidies subsequently, however, with the introduction of the New Rice Policy in 1998, which directed significantly increased funds through this channel for direct income subsidies for farmers producing jishu ryutsumai.100 The financial bottom line for all the subsidies associated with the operation of the jishu ryutsumai system never altered significantly under the FC system. In 1976 they amounted to ¥114.2 billion; and in 1995 they were ¥118.5 billion.101 It was only with the introduction of fully-fledged operations by the new rice exchange under the New Food Law in 1996 that they dropped significantly. Public works spending The drive to maximise budgetary and subsidy expenditure is a key factor explaining the large proportion of MAFF budget allocations for agricultural and rural public works. The ministry is widely regarded as having a budget that is excessively orientated towards public works (kokyo jigyo hencho no norinsuisan yosan).102 Indeed, the Agricultural Structure Improvement (now Rural Development) Bureau represents a ‘castle’ of vested interest in agricultural and rural public works. It has been cynically called the ‘second construction ministry’103 while the MAFF as a whole was known as one of the ‘public works big three’ (kokyo jigyo gosanke) along with the former Ministry of Construction and the former Ministry of Transport.104 Even after the MAFF was restructured, its predilection for public works spending remained unchanged.105 The extent of the MAFF’s vested interest in public works spending was revealed in 1996 when the MAFF Minister vehemently opposed the Hashimoto’s administration’s plan to cut public works spending by 10 per cent per annum, and in 1999 when the MAFF, more than any other ministry, took a stand against the plan of the Prime Minister Obuchi’s Decentralisation Promotion Committee (Chiho Bunken Suishin Iinkai) to abolish the MAFF’s public works administration

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The pursuit of MAFF interests in intervention

and fund the bulk of projects from general sources of revenue.106 As a Japanese newspaper editorial asked, ‘the question is whether the structural improvement works that are supposed to assist the modernisation of agriculture have become works to protect certain organisations and industries. The Agricultural Structure Improvement Bureau itself needs structural reform.’107 The bulk of public works expenditure by the MAFF is made up of ‘agricultural and rural development works expenses’ (nogyo noson seibi jigyohi) which, according to budget documents, aim to raise productivity and develop the living environment of rural areas.108 ‘Agricultural and rural development works’ are further broken down into expenses for the ‘development of agricultural production infrastructure’ (nogyo seisan kiban seibi ), ‘rural development works’ (noson seibi jigyo) and ‘agricultural and other land preservation control works’ (nochito hozen kanri jigyo).109 Almost all the funding for the development of agricultural production infrastructure goes to expanding the size of rice paddies, developing upland fields, opening up land for agricultural use and installing irrigation facilities. Rural development works are devoted to building agricultural roads, providing sewage in rural communities and improving the living environment in rural areas by providing community infrastructure. Expenditure for land preservation includes funding for disaster prevention and pollution measures as well as for managing land improvement facilities.110 The question raised by the proliferation of these projects is ‘who benefits’? Farmers have suffered financially by contributing to subsidised public works projects and then being left with large debts. If the MAFF were concerned for farmers rather than for maximising its budget, it would have refrained from the tactics it uses to induce farmers to embrace public works projects. In one instance, farmers criticised the MAFF for an irresponsible pilot scheme in Ishikawa in 1989 involving the construction of new agricultural land, with 75 per cent of the costs subsidised. The total amount of land involved was 484 ha. The project began in 1979 with the objective of expanding the scale of farm household management and contributing to regional development. The farmers themselves supplied the mountains for the project, while a prefectural agricultural development corporation outlaid ¥400 million for the purchase of 160 ha of mountain forest. The same company completed the construction of the farmland. The plan was for 158 farm households including those who would buy the corporation’s agricultural land to gain possession of newly created upland fields. A number of farmers pulled out of the deal because the corporation had not listened to local opinion about what kind of farming would be most appropriate on the land, and because the charges each individual had to pay rose two to three times more than they had heard at the start. The agricultural section chief of the town office recalled the fact that at the time of the development application, he was forced to go and collect signatures from farmers to participate in the pilot project. A staff member of the Hokuriku Agricultural Administration Bureau of the MAFF who was staying at the local ryokan brusquely asked him ‘How many agreements did you collect today?’111 Local farmers who faithfully followed the plan expecting an expansion in the scale of farming were disappointed. What is

The three pillars of MAFF agricultural policy 191 more, the financial burden of participation just got heavier for those who had bought land from the corporation, using government programme loans from the Agricultural Modernisation Fund. Of the 77 ha that ended up being redeveloped, there were no buyers for some tens of ha, and they were subsequently leased at no charge for temporary usage by farmers. Not only was this a waste of the subsidies spent on the original construction project, but the feelings of farmers who went heavily into debt to acquire the agricultural land were far from assuaged. The total cost of the project also included the personnel expenses of the Hokuriku Agricultural Administration Bureau that had close to 30 people in the local office on the spot. Other funds were for cars, construction goods, office commodities and so on, which were all considered part of the expenses for agricultural land development works.112 In other words, the major beneficiaries were the dispensers and the implementers of the project, rather than their official target – the farmers. Other projects proceeding in highly dubious circumstances point to similar outcomes. The comprehensive land improvement plan for the Kawabegawa region proceeded without consideration given to local opinion. To make matters worse, it seemed that the agreement to go ahead with the project was made on the basis of signatures from the customary two-thirds of the farmers involved, some of whom, however, were deceased, or too drunk or too old to understand the complicated contract. Furthermore, the construction of a dam, which was part of the project, resulted in a water shortage that affected local agricultural activities.113 Feelings of distrust amongst farmers for MAFF-sponsored agricultural public works were even more deeply rooted in the Tohoku region as the result of cost blowouts on a similar project in the Nanbu region. Construction of the project which should have taken 7 years to complete took 18 years, with costs exceeding the original estimate of ¥3 billion by almost four times (i.e. ¥12 billion). About 560 ha of agricultural land were developed with 500 households participating. Land improvement of 280 ha of paddies and upland fields was completed, including the installation of irrigation facilities. The participating farmers ended up with debts that were 10 per cent more than originally envisaged. Coinciding with rice price declines and rice acreage reductions, continuing repayments on debts over a period of 15 years was not easy for many farmers.114 Some sold their rice paddies of about 2 ha which had undergone land improvement in order to repay their loans. In short, farmers lost their paddy fields because they had participated in the project. Not only the farmers but also the MAFF and prefectural government officials miscalculated the final costs of participating in the project.115 These examples underline the general observation that the drive to allocate subsidies for public works comes from the centre (the MAFF) and often at the expense of the actual farmers themselves. It is a particularly salient feature of the land improvement industry, which for reasons of self-interest, agricultural bureaucrats try to impose on farmers. The MAFF-sponsored agricultural public works ndustry unquestionably illustrates one of the main arguments of this book: that

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agricultural support and protection is in fact just as much bureaucratically supplydriven as it is politically demand-driven. In all cases, farmers who choose to participate in these projects contribute to the cost with the help of government programme loans. Overall, the government subsidisation rate of land improvement projects is high,116 rising from 70–80 per cent in the 1970s and 1980s to 80–90 per cent by the 1990s.117 More precisely, the government’s share of the cost of land improvement works grew from 77.0 per cent of the total in 1960 to 87.0 per cent in 1985, with the central government’s share by and large stable at around 55 per cent, meaning that local government picked up the difference.118 In contrast, the farmers’ share of the cost declined from 23.0 per cent in 1960 to 13.0 per cent in 1985. Within the broad category of land improvement, the government’s share of the cost of field development rose from 45.5 per cent in 1960 to 84.7 per cent in 1985 (with the national government’s share rising from 39.8 per cent to 50.9 per cent), while that for irrigation and drainage works grew marginally from 91.1 per cent to 93.9 per cent (with the national government’s share rising from 63.1 per cent to 65.5 per cent).119 The ever-rising share of the costs borne by the government is to encourage farmers to participate in the projects. Without take up from farmers, these projects will not go ahead. The trend did not necessarily benefit farmers, however. Not only were government-subsidised land improvement works extremely costly, but as the quantity of subsidies and drive for land improvement projects hit their peak, farmers’ total financial burdens also expanded and as a result, their drawings on government programme loans rose (i.e. the Agriculture, Forestry and Fisheries Finance Corporation land improvement funds). Loans to farmers from these funds expanded from ¥68 billion in 1970 to ¥238 billion in 1980 – representing a three-fold growth. The peak was ¥242 billion in 1979, falling to ¥204 billion in 1986. Loans filled the gap between the total cost of land improvement projects and the cost funded by government subsidies. So the farmers’ financial burden grew as subsidies, which were the driving force behind land improvement works from the 1970s onwards, inflated in number and in amounts. As Imamura points out, even though land improvement projects were promoted with a high subsidy rate, farmers’ burdens expanded after the late 1970s as a result of the rise in works expenses and low increases in the rice price.120 In fact, the advent of rice surpluses presented something of a dilemma for the MAFF insofar as the gentan undermined the incentives for farmers to participate in land improvement works. Trends in the agricultural budget are recorded in Table 8.1. The figures reveal that the budget sub-category of ‘agricultural productivity improvement (i.e. agricultural public works) and development of the rural environment’ (i.e. rural public works) – most of which is allocated to agricultural and rural development – has absorbed between one-third and one-half of all budgetary expenditure on agriculture. Over the years, a sustained and increasing emphasis is evident in spending in this budget sub-category. It rose almost continuously from a low of 22.7 per cent of the total agricultural budget in 1975 to a peak of 53.8 per cent in 1995.

The three pillars of MAFF agricultural policy 193 In 2002, ¥1.6 trillion of the ¥3.1 trillion agricultural budget (or 51.6 per cent) was allocated to public works programs.121 Of total government spending on public works, agricultural and rural development consumed 11.7 per cent.122. Not surprisingly, rises in agricultural and rural public works expenditure have come at the expense of other categories. The emphasis in agricultural spending clearly morphed over time from price, income and distribution measures, which contracted from a peak of 49.1 per cent of total agricultural spending in 1975 to a low of 10.1 per cent in 1995. The trends reflect a fundamental shift in the priority accorded to the different targets of agricultural expenditure. In fact, they underscore the over-weighting in MAFF spending on public works rather than on price subsidies. Furthermore, as Table 8.1 indicates, apart from rice, the budget costs of supporting other agricultural prices were relatively small.123 For example, stabilisation of livestock prices absorbed between 0.1 per cent and 3.1 per cent of agricultural expenditure between 1960 and 1999. Rice, on the other hand, consumed between 6.0 per cent and 42.3 per cent. In fact, these two categories appropriated almost all the funds (consistently more than 80 per cent) of price stabilisation expenditure. Without rice, however, funding of price subsidies was relatively low and, therefore, the cost savings were tremendous by cutting transfers to the FCSA to cover rice price support.124 Such a move enabled gross expenditure on price stabilisation to fall from 44.4 per cent of total expenditure in 1970 to 8.3 per cent in 1995 – from nearly half to less than 10 per cent. It amounted to a massive cut and accommodated the large increases in other areas – chiefly agricultural and rural public works. The trend partly reflects the fact that the MAFF was more concerned to maximise its allocatory intervention by building its public works portfolio rather than to support farmers’ incomes with subsidised prices. If anything, the MAFF preferred consumers rather than taxpayers to support agricultural prices.125 As Yuize comments, ‘the lack of budget was made up for by raising consumer prices of food’.126 Trends in agricultural subsidy allocations (as opposed to budgetary expenditure) also underline the MAFF’s emphasis on public works rather than price supports. Table 8.2 reveals the pattern of subsidy allocation in 1998. Price policies absorbed minimal amounts of agricultural subsidies. The really big-ticket items were clearly ‘rural development’ and ‘development of agricultural production infrastructure’. These categories encompassed rural and agricultural public works respectively. Furthermore, subsidy expenditure under the headings of ‘rural development’ and ‘agricultural road development’ absorbed almost one-third, or 31.8 per cent of total subsidy expenditure in the GA budget in 1998. Under ‘rural development’, subsidies were allocated to projects such as sewage works in agricultural communities.127 On the other hand, subsidies for agricultural public works under ‘development of agricultural production infrastructure’, ‘agricultural land preservation management’ and ‘beef tariff revenue sourced agricultural production infrastructure development’ captured almost one-third, or 28.7 per cent of the total subsidy allocation. Some of the ‘agricultural promotion’ subsidies that

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The pursuit of MAFF interests in intervention

Table 8.2 Categories of subsidy expenditure in the MAFF fiscal 1998 General Account budget

Subsidy

Subsidy category title

category no. 001 002 003 004 006 008 009 013 016 018 019 022 023 024 025 026 027 028 030 031 035 038

Amount

% of total

(¥ billion) MAFF main ministry Wholesale market facilities development Agriculture, forestry and fisheries finance Agricultural insurance Agricultural promotion Structural Improvement Agricultural Improvement dissemination Livestock promotion Promotion of agriculture, sericulture and horticulture Sugar Price Stabilisation Agricultural production infrastructure development sourced from beef tariff revenue Coastal works Development of agricultural production infrastructure Agricultural land preservation management Rural development Agricultural road development Agricultural facilities disaster compensation Agricultural facilities disaster-related works Farmers’ pensions Livestock promotion sourced from beef tariff revenue Food distribution policy Rice paddy agricultural management activisation Total subsidy expenditure

1.8 8.9 17.3 0.7 177.4 37.3 3.0 11.5 46.3

0.2 0.8 1.6 0.1 16.4 3.5 0.3 1.1 4.3

1.6 8.5

0.1 0.8

5.5 220.8 80.1 309.4 33.3 9.0 1.3 57.3 8.9

0.5 20.5 7.4 28.7 3.1 0.8 0.1 5.3 0.8

13.6 25.6

1.3 2.4

1,079.3

100.0

Source: Calculated from figures in Hojokin Soran, 1999, pp. 188–281.

consumed 16.4 per cent of the total subsidy allocation were also directed towards agricultural public works.128 As Table 8.2 graphically illustrates, agricultural and rural public works not only comprise the most impressive individual sub-categories of subsidy expenditure, but between them (and taking into account another explicitly public works category of ‘coastal works’),129 they consumed close to two-thirds or 61 per cent of the total subsidy allocation from the GA budget in 1998. This is an extremely large slice of the total amount and provides some indication of the priority; such expenditure receives in subsidies distributed by the MAFF. Indeed, the figures point to a transition in the MAFF from a ministry of agriculture to a ministry of public works. Moreover, the figures underline the fact that the MAFF is more a ministry of rural public works than a ministry of agricultural public works. Expenditure relating to development of agricultural production infrastructure has patently been one of

The three pillars of MAFF agricultural policy 195 the main pillars of the agricultural budget.130 However, one of the most striking aspects of the subsidy figures in Table 8.2 is that the proportion of total subsidies allocated to rural public works (the category of rural development) exceeds the proportion for agricultural public works (development of agricultural production infrastructure). In practice, rural public works offer a much more diverse array of potential projects than agricultural public works. In the drive to maximise budgetary and public works expenditure, and as agricultural public works projects reached saturation point, the MAFF pursued all kinds of non-agricultural projects such as road and bridge building, the installation of sewage facilities in rural communities and even the construction of social and tourist-type developments that often ended up being under-patronised and a waste of money such as ‘cycling terminals’. As Hirose points out, in agriculture proper (hontai ), the subsidy system was established a long time ago. This system covered subsidies for land improvement, agricultural facilities, the introduction of machinery and assistance for crops. However, newly added subsidies are for the agricultural periphery or for projects completely outside agriculture altogether, such as ‘women’s house works’ for rural women and ‘health model area works’ as well as ‘work activity facilities’ and ‘beef raising works’ for the elderly. These are welfare assistance works. Why is the MAFF extending its hand into the welfare field? In rural village community building under headings such as ‘rural comprehensive development model works’ and ‘rural areas permanent residence promotion policy works’ and so on, 10 types of works are provided for (the core are roads, meeting facilities and sports facilities). However, community building was originally the business of local government and the Ministry of Health and Welfare. Why is the MAFF, which is outside this speciality, advancing into this field?131 I suggest that the answer to Hirose’s questions lie in the MAFF compulsion to spend. Over the years, this compulsion has produced a number of negative consequences that have done little to change the ministry’s intervention maximising. On the contrary, the gargantuan sums available have led to a squandering of public money. A good example is the ‘Refresh Village’ scheme, a recreation and accommodation facility concept established as one of the new public works projects by the MAFF in 1995. The ministry planned to construct 100 Refresh Villages in Japan. The concept was dreamt up by Sato Masato, an Assistant Director of the Structural Improvement Division of the Structural Reform Bureau, even though he admitted that the idea was not thoroughly thought through. According to MAFF officials, the main objective of the project was to revitalise hilly and mountainous regions (mountain villages and nearby agricultural villages), although in one instance a Refresh Village was located in a city that already had an airport as well as amusement parks. Starting in 1994, Refresh Villages were constructed in 10 municipalities at a total sum of around ¥100 billion.

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The pursuit of MAFF interests in intervention

Around 40–50 per cent of the cost was allocated from the national budget courtesy of the surfeit of funds made available from the UR countermeasures package. This five-year budget lavished spending on the agricultural and rural sector mainly for public works.132 In fact, one of the problems the MAFF faced was in devising a sufficient number of projects to soak up the available funds.133 The drive to maximise allocatory intervention thus leads to massive wastage as many projects are undertaken without considering their real necessity or their contribution to the farm and rural sectors. If the latter were paramount concerns for the MAFF, then such projects would fail to qualify for funds. The ministry’s mindset leads to distortions in the original policy intentions of expenditure, which have become more and more distant from the fundamental objective of a flourishing farm industry. In some cases, the MAFF officials who furnish subsidies do not even understand what they are paying for as with the Refresh Village concept. Even in the early 1950s, the Administrative Control Agency (one of the Management and Coordination Agency’s forerunners) charged that ‘an extremely high proportion of these grants in actual operation fall short of their intended effects’.134 Almost five decades later in 1999, a similar phenomenon was noted by the Board of Audit (Kaikei Kensain), which established that the MAFF had overpaid JA Zenno ¥450 million in commission on structural improvement projects during 1996–97,135 suggesting sloppy monitoring of expenditure and vast amounts of surplus funds sloshing around.136 No clear standard or appropriate checking system for the allocation of the commission had been put in place despite about ¥25 billion being allocated to these works every year. Clearly the drive for allocatory intervention almost indiscriminately gives rise to an appalling level of ‘looseness’ and wastage in the implementation of MAFF-funded projects. The effects are also felt in the unnecessarily high costs of agricultural production, which reduces the competitiveness of Japanese agriculture. This is a prime example where, if the MAFF were motivated by concern for developing Japanese agriculture as an internationally competitive industry, it would act to eliminate such inefficiencies. In fact, the way in which the MAFF administers public works projects is acknowledged to be one of the causes of the high costs of Japanese agriculture.137 A study of the difference in the price of milk between Hokkaido and Wisconsin revealed that the high costs in Japan were due to the difference in the costs of materials (namely cowsheds and machinery), which were extraordinarily high.138 These high costs were attributed directly to the subsidy system because the projects had high unit costs. For example, the cost of constructing subsidised livestock sheds was 2 to 3 times the cost of projects funded by loans, and 10 times higher than the cost of construction that was self-funded.139 In other words, the generous subsidies paid out to promote beef production were often used to build unnecessarily expensive facilities, thus actually increasing costs.140 Investigative analysis done by the Nikkei also revealed that ‘public works cost on average 20–30 per cent more than comparable private-sector projects. That translates into ¥8–12 trillion ($70–104 billion) of the recent annual ¥40 trillion that may have been wasted’.141 As it elaborated: ‘Besides being accused of paying too much for public works, the government is also widely viewed as financing the wrong projects.’142

The three pillars of MAFF agricultural policy 197 In other cases, MAFF-sponsored public works create negative outcomes for the environment. The Isahaya Bay project in Nagasaki Prefecture into which the MAFF has poured more than ¥200 billion and which involves the construction of agricultural land through reclamation has damaged the ecological system of the bay and contributed to poor seaweed harvests in the Ariake Sea. The planned area of reclamation has had to be reduced by 50 per cent and has forced the MAFF to reopen the gates on the dike to the bay.143 The New Basic Law Like the Basic Law, the 1999 New Basic Law was designed by the MAFF as a comprehensive policy blueprint for legitimising the continuing flow of government funds into agriculture.144 The new law functions like an open chequebook for agricultural spending. In incorporating spending programmes into legislation as fundamental policy principles, the MAFF acquired a strengthened statutory basis on which to justify a whole range of subsidies to achieve goals that could only be accomplished with government financial assistance. Subsidies for increasing the production of commodities in which Japan has a distinct comparative disadvantage (wheat, barley, soybeans and feed crops) are a good example. In the name of securing a stable food supply, the new law justifies an emphasis on expenditure for boosting food self-sufficiency, centring on the push for greater production of wheat, soybeans and forage crops. Similarly, rural ‘revitalisation’ policies that had become omnipresent as a theme in agricultural policies over the years were given official blessing in the law under the principle of rural development. It underpinned whole new areas of allocatory intervention such as ‘comprehensive development works’ for hilly and mountainous areas, and justified the concentration of administrative effort on developing the production environment in disadvantaged regions.145 The 2000 Special Measures Law to Promote the Independence of Depopulated Regions, which took its cue from the law, expounded what proportion of the costs of implementing the various projects under the law would be borne by the central government. In announcing the New Basic Law’s passage, the MAFF Minister remarked that the government would steadily advance the realisation of measures based on the new law including a radical review of the agricultural budget.146 The New Basic Law justified a whole new raft of expenditures dedicated to meeting its objectives from 2000 onwards. This budget was the first following the enactment of the law. Expenditure rose by 0.7 per cent to ¥3,428.1 trillion. Table 8.3 elaborates in detail the major spending objectives in the budget explicitly linked to the New Basic Law. It reveals a direct connection between expenditure programmes and the basic policy principles expounded by the law, namely, securing stable supplies of food, the sustainable development of agriculture and the promotion of rural areas. Under each of these three headings, various policy initiatives and expenditure programmes were listed. As the MAFF itself commented, one of the key objectives of the 2000 budget was to promote the

1 Securing stable supplies of food

principle

New Basic Law policy

Agricultural policy programme (where relevant)

Expenditure targets and amount

1 Land Utilisation-Type Agricultural Rice paddy agricultural management establishment Activation Countermeasures Outline countermeasures (¥143.8 billion). Centring on Paddy Fields Expanded from 2000 as an emergency measure. 2 Rice Cultivation Management Wheat cultivation management stabilisation fund ( ¥79.7 billion). Stabilisation Countermeasures Soybean cultivation management stabilisation 3 New Wheat Policy Outline countermeasures ( ¥15.7 billion). 4 New Soybean Policy Outline Promoting efficient works for making common measures covering all products (i.e. management stabilisation) ( ¥28.1 billion). Promoting efficient works for implementing support for the motivated undertaking of increased production through new techniques which strengthen increased food production countermeasures ( ¥14.9 billion). Strengthening food Healthy Food Livelihood Promotion Comprehensive policies that countermeasures Works ( ¥1.1 billion). emphasise the Research into Food Domestic and Commercial Food Wastage consumers’ ( ¥100 million). standpoint Strengthening the Private Industry Subsidy for Technical Development of New competitive power Food Using Biotechnology ( ¥400 million). of the food Food Distribution Activation Comprehensive Countermeasures industry Works ( ¥900 million). Promotion of Expenditure for information on emergency food control strategic systems; analysis of the multifunctionality of agriculture in international developed countries; funding for FAO dissemination of food policies production techniques in Asia; developing a system for promoting the strategic unification of the ODA budget.

Strengthening the system for maintaining and increasing domestic agricultural production

objective

Implementation

Table 8.3 Budgetary programmes in 2000 predicated on the New Basic Law

Promotion of efficient management countermeasures to mobilise regional innovation

2 The New deployment sustainable of agricultural development production of agriculture infrastructure development

(Table 8.3 continued )

Advancing the collectivisation of the cultivation of wheat and soybeans through field development; providing aid for land improvement of rice paddies for use as fields; raising the land utilisation rate ( ¥1.1 billion). Drainage countermeasures and land construction countermeasures for promoting the production of land utilisation-type crops such as wheat and soybeans ( ¥29.9 billion). Introduction and implementation of development methods in line with actual conditions in hilly and mountainous regions in relation to farm field development ( ¥64.3 billion). Promoting the development of a control system for land improvement districts undertaking control of facilities from the standpoint of advancing the appropriate undertaking of multifunctionality by state-managed facilities ( ¥8 billion). Implementing the renewal of agricultural irrigation facilities for water conservation as part of the promotion of environmental preservation-type agriculture ( ¥1.8 billion). Implementing water quality purification, the development of green spaces plus the development of compost facilities for farm waste in order to promote the utilisation of organic resources (¥300 million). Hard and soft works for fostering and developing diverse bearers in response to the actual conditions of regional agriculture (soft works involving the establishment of the necessary targets; hard works involving production and processing facilities and management diversification facilities – soft works ¥800 million and hard works ¥21.7 billion). Establishing management countermeasures promotion councils in each prefecture and municipality (¥400 million).

principle

New Basic Law policy

objective

Implementation

Table 8.3 Continued

Agricultural policy programme (where relevant)

Support measures for new entrants into agriculture to assist with the introduction of machinery and the establishment of facilities to assist with newly employed farmers’ management (establishing no interest financing from the Entering Agriculture Support Fund, developing a framework for comprehensive financing together with the Agricultural, Forestry and Fisheries Finance Corporation and the Agricultural Modernisation Fund, and drawing up measures to utilise the agricultural trust indemnification system including no interest financing – Entering Agriculture Support Fund ¥15 billion, Agriculture, Forestry and Fisheries Finance Corporation ¥2 billion, and the Agricultural Modernisation Fund ¥10 billion). Supplying information concerning agricultural production corporations to those wanting to enter agriculture in order to foster agricultural managers with a good sense of management ( ¥200 million). Implementing the necessary works to link dairy farm helpers with aspirations to enter agriculture and livestock management without successors ( ¥1 billion). Promoting aged persons activities and social participation of women in rural areas ( ¥200 million). Suppport for the independent activities of aged persons undertaking agricultural production, processing and agricultural technical guidance ( ¥200 million).

Expenditure targets and amount

Promoting the maintenance of the natural environmental functions of agriculture

Priority promotion of technological developments Revision of agricultural price policies

3 New Soybean Policy Outline

1 Land Utilisation-Type Agricultural Activation Countermeasures Outline Centring on Paddy Fields 2 New Wheat Policy Outline

(Table 8.3 continued )

Undertaking revision of agricultural price policies from the standpoint of implementing management stabilisation countermeasures accompanying the realisation of price formation that puts emphasis on market principles in relation to products such as rice, wheat, soybeans etc. As temporary emergency measures for rice, implementing expansion countermeasures for raising the deficit portion for authorised farm units mainly cultivating rice. Establishing a wheat cultivation management stabilisation fund in order to achieve the management stabilisation of producers at the time of transfer to the private distribution of wheat. Establishing soybean cultivation management stabilisation countermeasures for achieving the management stabilisation of producers when prices fall. Promoting organic farming through establishing systems of production standards by amending the JAS, and promoting the continuing development of the necessary facilities of agricultural management groups that introducing agricultural production methods that strive for the sustainable development of agriculture ( ¥4.1 billion).

As countermeasures for the effective use of agricultural land, establishing goals for mobilising agricultural land at municipal level and constructing a system for clarifying the distribution of roles of related persons and the implementation period and matching up of each works where related persons cooperate to achieve these goals ( ¥2.5 billion). Implementing comprehensively the development of land conditions and ‘soft’ activities for the use and dissolution of unused agricultural land ( ¥700 million). Promoting research developing relating to biotechnology (¥5.4 billion).

objective

Implementation

Source: Nihon Nogyo Nenkan, 2001, pp. 72–75.

3 Promotion of rural areas

principle

New Basic Law policy

Table 8.3 Continued

Legislation Relating to the Promotion of the Utilisation and Proper Management of Livestock Waste

Agricultural policy programme (where relevant)

Implementing a direct payment system in hilly and mountainous areas in line with the principles of the URAA in order to secure the multifunctionality of agriculture, prevent the abandonment of cultivation in these regions ( ¥33.0 billion). Promoting the creation of vigorous rural areas by contructing a green tourism system and a food information network with emphasis on consumers (¥1.6 billion). Promoting green tourism through urban-rural population exchange in order to enhance the understanding of agriculture and rural areas amongst urban dwellers (¥600 million). Implementing the furnishing of reports to promote ‘village building’ ( ¥100 million).

Development of disposal facilities and the recycling of resources (¥5.1 billion). Establishing model units for promoting new techniques and recycling systems for organic resources ( ¥7 billion). Research into dioxin residues in agricultural products ( ¥1.7 billion).

Expenditure targets and amount

The three pillars of MAFF agricultural policy 203 maintenance of a stable food supply, which translated into measures for establishing a new support system for the production of wheat, soybeans and feed crops in paddy fields (that is, those products in which Japan’s self-sufficiency rate is very low which have received new emphasis under the food supply provisions of the New Agricultural Basic Law and the food self-sufficiency provisions of the Basic Plan), the ‘systematic’ production of rice, and the ‘effective use of paddy fields’, in line with the New Agricultural Basic Law.147 The New Basic Law’s general provisions were subsequently converted into a practical set of policy goals outlined in a so-called ‘Basic Plan’, which was announced in March 2000 (the formulation of which was mandated under the new law).148 The MAFF’s 2001 draft budget (gaisan yokyu) was decided after mid-year 2000. It was the first after the promulgation of the Basic Plan. The Budget Division of the Minister’s Secretariat emphasised three points to each of the MAFF divisions: first, show muscle to realise the Basic Plan over a period of 10 years; second, consider expenditure proposals from the prefectures; and third, formulate demands in line with the aims of the Basic Plan. It was decided that each MAFF division would compile expenditure proposals for inclusion in the gaisan yokyu to the Budget Division. Fiscal opportunism149 The MAFF is fiscally opportunistic in striving to align itself with programmes conferred with priority status in the general government budget. In periods of fiscal restraint, this has usually meant those expenditure targets exempted from budgetary strictures of various kinds. In periods of fiscal expansion, the MAFF has focussed on programmes selected for additional funding allocations. For example, the Obuchi administration in 1999–2001 adopted recession-fighting fiscal stimulus policies. For the 2000 budget, it announced new expenditure targets under the heading of ‘millennium projects’ such as quality-of-life programmes, information technology development, telecommunications projects and improved distribution networks – all expenditures designed to contribute to economic revival. Accordingly, the MAFF’s 2000 budget draft included some ‘millennium projects’: ● ●

●

research into rice genes the promotion of the recycling of organic resources such as household garbage and animal wastes for use as fertiliser promoting the strengthening of countermeasures for dealing with dioxin and other materials affecting the endocrine system.150

Despite a certain innovative gloss, these projects were merely an excuse for the ministry to bid for new money by rejigging its requests in line with the administration’s new expenditure goals. The same fiscal stimulus policies continued under the Mori administration, which came up with new fiscal rhetoric to disguise old-fashioned pork barrel

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spending. In keeping with the basic thrust of the Mori administration’s fiscal policy, the MAFF’s 2001 gaisan yokyu proposed a 7.6 per cent increase in public works expenditure (to ¥1,898 billion), with 5.4 per cent of the total (¥103.3 billion) included under the rubric of ‘Special Fund for Japan’s Renewal’ (Nihon Shinsei Tokubetsu Waku), also called the ‘Japan Rebirth Plan’, an Orwellian concept encompassing ¥700 billion in discretionary prime ministerial spending (shusho waku) for projects related to information technology, environmental protection, urban infrastructure and the aging society. The MAFF bid for a further ¥161.3 billion (8.5 per cent of the total) from the ruling party’s own discretionary expenditure category (yoto waku) amounting to ¥300 billion. This was labelled the ‘Special Fund for Prioritising Public Works Relating to People’s Lives Etc’ (Seikatsu Kanrento Kokyo Jigyo Jutenka Waku).151 Even in the non-public works category, the MAFF’s 2001 draft budget opportunistically linked expenditure plans to new, high priority public spending targets. It included a bid for ¥75.9 billion worth of expenditure from prime minister’s discretionary fund for agricultural, forestry and fisheries information technology (IT) under the section of the ‘Japan Rebirth Plan’ targeting the IT revolution (IT kakumei taio waku). The MAFF’s proposed expenditure was specifically for reducing the information gap between city and rural areas.152 Encouraging farmers to use information technology (including computerised accounting and marketing methods) by means of extension programmes concentrating on farmer education was argued by the MAFF as one of the means of making the farm sector more efficient.153 The reality, however, was rather more self-interested: the MAFF was aiming to jump on the IT expenditure gravy train. As a result of these bids, the MAFF successfully obtained ¥50.5 billion (12.6 per cent of the total) and ¥52.5 billion (17.5 per cent of the total) from the prime minister’s ‘Japan Rebirth Plan’ and ruling party’s discretionary funds respectively. The expenditure under the ‘Japan Rebirth Plan’ was for ●

● ●

the development of IT infrastructure in farming, mountainous and fishing villages environmental measures such as recycling social infrastructure construction specifically for aged persons in farming, mountainous and fishing villages.

From the LDP’s ‘Special Fund for Public Works etc.’, the MAFF obtained funds for ●

● ●

livelihood infrastructure development such as sewage schemes and roads in rural communities (i.e. for standard public works schemes) disaster prevention and land preservation measures production infrastructure development aiming at raising the food selfsufficiency rate such as flexible cultivation of rice paddies.154

Likewise, under the Koizumi administration’s structural reform (kozo kaikaku) programme, which tackled wasteful public expenditure with a special emphasis

The three pillars of MAFF agricultural policy 205 on reducing public works allocations,155 the MAFF pursued old-fashioned public works programmes hidden under reform-oriented banners such as ‘urban revitalisation’ and ‘maintenance of the environment’.156 At the same time, because the private sector members of the administration’s Council on Economic and Fiscal Policy were explicitly calling for agriculture, forestry and fisheries public works expenditure to be restrained, the MAFF moved funds from public works into the non-public works category of agricultural management reform. This so-called ‘structural improvement’ expenditure concentrated on support measures for agricultural ‘bearers’, with both the 2002 and 2003 budgets including special allocations for ‘management bodies with motivation and ability’ (¥115.1 billion in 2002 and ¥117.9 billion in 2003).157 As one informed source commented, ‘MAFF’s fixation on getting as large a budget as possible was so strong that it was a tough job for the Finance Ministry to tame it’.158

Maintaining import barriers The MAFF, which is responsible for formulating and negotiating Japan’s agricultural trade negotiating position,159 has stuck to a highly defensive position on the question of agricultural trade liberalisation. This position once earned it the description of ‘a virtual kamikaze squad protecting the free world’s most heavily subsidized farmers from any form of foreign competition’.160 The ministry ‘has built a policy wall that is hard to consider regulatory; by any normal definition it virtually forbids imports’.161 The MAFF opposes agricultural trade liberalisation for two main reasons. It cannot allow liberalisation of the domestic market at a pace that threatens the viability of the dominant, small-scale, farm household economy. Import restrictions are integral to complex systems of volume control that help to ‘stabilise’ the domestic prices of particular commodities. Indeed, price support ‘depends on market access limitation’.162 If foreign competition were to overwhelm inefficient domestic producers, their number would decline quickly and thus the MAFF’s core jurisdictional constituency would shrink. Import barriers are also the external face of domestic intervention in the agricultural sector. Unimpeded access to the Japanese market for agricultural products presupposes liberalisation of these same markets within Japan itself. This could spell the end of the MAFF’s direct market participation as well as its regulatory and allocatory intervention. In particular, agricultural trade liberalisation might bring about the destruction of major farm industries such as rice production where small-scale farming is concentrated and in which the MAFF’s interventionist interests are most deeply entwined. A MAFF spokesperson justified agricultural protection in the following terms: In Japan, the cultivated area is small and most farmers are marginal in scale. If the big foreign farmers should start exporting their low-cost products to Japan in large volume, the marginal Japanese farmers would be helpless. Because agriculture has a long tradition and is linked to land, it is not possible

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The pursuit of MAFF interests in intervention to change Japanese farmers overnight into large-scale projects. It is necessary to protect our agriculture until such time as farmers build up their strength to be able to compete with overseas farmers.163

The import of this argument is that, first, Japanese agriculture needs even greater government support to become efficient. Pressure for agricultural trade liberalisation therefore justifies more spending and more intervention to meet these ostensible goals. Second, market opening cannot be contemplated any time soon because it will take a long time to restructure Japanese agriculture. The MAFF has to achieve the necessary domestic changes first in order to prepare the domestic ground for liberalisation by putting in place various policies (and expenditures) that would encourage Japanese farmers to become more efficient and internationally competitive. Because reducing production costs is the most important countermeasure to liberalisation, it dictates a market-opening timetable that is considerably slower than that demanded by Japan’s overseas trading partners. From the MAFF’s perspective, the process of liberalisation should be determined by the pace of structural adjustment in agriculture at home, which at the glacial pace it is proceeding, poses no risk to the agricultural support and protection regime in the short to medium (or even longer) term.164 The MAFF takes exactly the opposite view to the market liberalisationists who claim that abolishing agricultural protection is a prerequisite for structural adjustment in the agricultural sector. The proliberalisationists want shock therapy to be applied to the agricultural sector with structural reform advancing under pressure of liberalisation.165 The MAFF would adopt the same market-liberal posture on access if it were concerned to promote an efficient, competitive sector. In the late 1970s and early 1980s, the MAFF mounted a spirited defence of Japan’s border protection for agriculture. However, in the face of inexorable pressures for market opening it sought first and foremost to protect its own interventionist interests and, if possible, turn adversity to fiscal advantage. For example, it argued for the need for greater budgetary expenditure on structural improvement of agriculture as a form of preparation for market opening. It also accepted incremental expansion in import quotas166 for certain goods because these left intact the regulatory basis of import protection. The MAFF’s more important objective was the retention of ultimate control over import quantities and arrangements through quota and state trading systems as well as the financial benefits that flowed from the latter with respect to commodities such as beef. So, while it accepted a limited expansion in import volumes, the MAFF made sure that its institutional self-interests were secured. As agricultural trade liberalisation pressures intensified in the late 1980s, the MAFF came round to the view that if the pace of market opening were irresistible, then more explicit and generous compensating measures were in order. Thus, it diverted its energies away from what it increasingly realised was the lost cause of blocking liberalisation into ‘measures for ameliorating the radical influence on domestic agriculture of market opening . . . [and] agricultural policies to

The three pillars of MAFF agricultural policy 207 cope with new competitive conditions’.167 These statements signified its intention to extract the best compensation deals it could from market opening agreements, principally to protect or even advantage its own interests in allocatory intervention. As Imamura points out, during the 1980s, the agricultural budget continued to contract both in absolute and relative terms. However, a special feature of the 1989 budget was the increase in expenses for agricultural import liberalisation countermeasures as a result of the decisions in 1988 to liberalise beef, oranges and citrus juice as well as 8 miscellaneous agricultural product items out of 12 under IQ entry. As emergency countermeasures, ¥104.6 billion was appropriated in the 1988 supplementary budget and ¥14.8 billion in the 1989 initial budget. The countermeasures covered policies for livestock and citrus and for the eight miscellaneous items. In the livestock category, the most important item was financing to cover the establishment in 1990 of the new system for beef calf price stabilisation.168 Furthermore, from 1991, as already noted in Chapter 7, the scheme was able to draw on the revenue generated by the tariffs on liberalised beef imports.169 The second feature of the 1989 budget was the introduction of two new government programme loans. One was a low-interest loan for specific processors of farm products that were the target of liberalisation. The second was a relief fund for ‘smoothing’ repayment of existing debt. Core farm households with prospects of management reconstruction were specifically targeted by the fund.170 The MAFF also ensured that it extracted maximum benefits from actual market opening arrangements by channelling the funds raised from import tariffs into its own budget. Under the deal worked out as part of the 1988 beef liberalisation agreement, the tariff revenue from beef imports was channelled into the MAFF. This was the only condition on which the ministry was prepared to accede to market opening. The revenue funded several new subsidy schemes in the MAFF budget from 1991 onwards. The two general categories of subsidy expenditure sourced from beef import tariff revenue (for agricultural public works and for livestock promotion) produced total GA budgetary supplementation to the MAFF of ¥112.7 billion in fiscal 1995. Considering the source of finance (import levies), it was a respectable proportion (7 per cent) of the total GA subsidy budget for the MAFF in that year of ¥1,615.6 billion.171 Throughout the course of the UR agricultural trade negotiations, the MAFF compiled a number of defensive position papers against both the abolition of import barriers for farm products and reform of domestic support systems for agriculture. In particular, the ministry exhibited very strong opposition to the blanket conversion of quantitative import restrictions to tariffs. Tariffication meant the end of agricultural exceptionalism, meaning exempting agriculture from GATT general trading rules. It also had specific implications for rice. The MAFF feared that tariffication would result in an influx of low-priced foreign rice into the country, which would pose a threat to domestic rice producers by potentially driving inefficient rice farmers off the land, and, given the predominance of rice farming in Japan’s agricultural production profile, pose a threat to the

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The pursuit of MAFF interests in intervention

agricultural sector as a whole. At the time, more than 90 per cent of Japanese rice farming households were part-time, while 70 per cent of part-time rice farm households earned the bulk of their income from non-agricultural pursuits. For the majority of part-time rice farming households, rice cultivation was nothing but a way of preserving capital in agricultural land. However, if rice prices were to fall dramatically, many of these farmers would decide it was a waste of time producing rice. Having given up rice cultivation, the number of part-time farm households leaving agriculture altogether would increase, and farm population would fall.172 On top of this, the MAFF (and Food Agency) wanted to protect their own vested interests in rice market intervention. If rice were tariffied, the Food Agency’s official task of rice control would become unnecessary, and the Food Agency’s structure and powers would potentially shrink enormously. This was the most significant reason why the MAFF opposed rice tariffication.173 Tariffication also raised doubts about the ability of the Food Agency to keep total control of the domestic rice trade. The FC system in which the Food Agency theoretically controlled all rice circulating in the domestic market, and tariffication, which allowed anyone to import rice as long as they paid TEs, appeared to be incompatible, raising the possibility that liberalisation of rice might precipitate abolition of the FC system. As Saeki observes, ‘since tariffication did not admit the state control of trade, the need for such things as the FC system would also die (naku naru)’.174 Right from the beginning of the UR negotiations, the MAFF’s stance was to accept market opening only on condition that it could maintain the FC system, and that option precluded tariffication.175 The MAFF was concerned that distribution regulations under which only approved traders could handle rice, could not be maintained under tariffication. The MAFF agreed to the MA arrangement for rice that was permitted under the URAA176 on condition that domestic rice controls were retained. Because tariffication was avoided, the Food Agency’s monopoly of the rice import trade was preserved and marginal profits made by buying cheap foreign rice and selling it at high prices on the domestic market could be used by the Food Agency for the gentan and other purposes.177 Tariffication would have allowed private companies to import rice as they wished and the profits to the Food Agency through the state trading system would have been lost.178 The Food Agency was only prepared to concede on rice market access if the profits from imports could be channelled into its own coffers. According to an estimate done by the Fuji Research Institute, total profits from this trade over the period 1995–2000 were anticipated to amount to ¥390 billion.179 Preventing tariffication and acceding to a MA arrangement for six years was, therefore, a joint MAFF and Food Agency strategy to preserve the FC system as far as possible as well as the gains from intervention. As Domon observes, this was the most important reason why the MAFF resisted tariffication.180 In his view, all policies supported by the Food Agency are explicable in terms of its vested rights and interests.181 As Domon points out, under the MA arrangement, the Food Agency continued to provide employment for its 11,000 staff and the monopoly

The three pillars of MAFF agricultural policy 209 rights and interests of Nokyo and rice wholesalers under the FC system continued to be protected. All the pain accompanying market opening could be pushed on to honest producers and consumers. In short, ministry interests took precedence (shoeki yusen).182 As Godo also observes, the real objective of the government was not to protect rice farming but to work for the benefit of the Food Agency and the related rice traders . . . since anyone would be able to import rice so long as they paid the tariffs, the regulatory power of the Food Agency and monopolistic power of the related rice traders would be lost.183 Thus, ‘the Food Agency, which should have been the object of restructuring with the opening of the rice market, sabotaged this restructuring’.184 Moreover, the MAFF acceded to the URAA not only because it won on the issue of MA for rice, but also because the remaining provisions of the agreement were relatively painless and were even compatible with the maintenance of formidable trade barriers. Accession to the agreement required the Japanese government to ●

●

●

●

grant expanded market access by tariffying import quotas on all agricultural products except rice185 lower tariffs and TEs on agricultural imports by a minimum of 15 per cent on each product and on all agricultural imports by a simple average of 36 per cent over the six years of the agreement reduce the value of trade-distorting agricultural production support policies as measured by the Aggregate Measurement of Support (AMS)186 by 20 per cent over the six years of the agreement187 establish international rules and standards of quarantine.

For a number of reasons, it became clear that the enforcement of the URAA would be unlikely to lead to a rapid increase in the importation of agricultural commodities under existing import control or to a substantial decrease in domestic agricultural support in Japan. Indeed, the MAFF was content with all the shortcomings of the URAA as a trade liberalisation and agricultural support reduction agreement. First, although the URAA theoretically made price supports subject to reduction according to the agreed AMS formula (price supports accounted for 93.6 per cent of Japan’s AMS), because the base period for calculating the initial level of agricultural support was 1986–88, Japan had already cleared its AMS reduction commitments by 1995 as a result of reductions in price supports by the mid-1990s.188 Japan’s ability to meet this requirement was also made easier by the fact that the 20 per cent reduction in the AMS ‘by product’ advocated in the Dunkel draft trade agreement plan presented during the GATT negotiations was changed in the Blair House Agreement to an average across the agricultural sector as a whole.

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The reduction in domestic support for agriculture was to be measured as the total support for agricultural commodities in aggregate, thus mitigating the pressure on specific commodities where production subsidies and price supports were high like dairy products. Second, the URAA contained the potential to alter support arrangements from trade distorting to non-trade distorting forms of support (the so-called ‘Green Box’),189 which ‘in essence, are totally decoupled from the level of production and are therefore deemed to have no trade-distorting effects’.190 The box is inclusive of publicly funded support for basic infrastructure, pest and disease control, food security and food aid, direct payments to producers not designed to promote production, certain forms of direct income support, subsidised income insurance and safety nets, structural adjustment programmes targeting the abandonment or conversion of activities and direct payments under environmental or regional assistance programmes.191 These measures were exempt from reduction commitments and in fact could be increased without any financial limitation.192 Such an exemption allowed the MAFF flexibility to reorientate support in order to minimise reductions in support. Third, since the differential between international and domestic prices (domestic wholesale prices minus the c.i.f.193 price) was so marked in the base period (1986–88 average), even if the applied tariff rates were reduced by 15 per cent per product over the course of the agreement, the prices of imported agricultural products in the final year of the URAA would still be higher than domestic prices in 1992.194 Moreover, because the overall tariff cut was expressed as a simple average (36 per cent) across a broad range of products, ‘cuts to tariffs on items traded little were given as much weight as cuts to tariffs on items traded heavily, allowing countries to reduce support on sensitive sectors by less’.195 Fourth, it was possible to set fairly high over-quota tariffs within tariff rate quotas, or TRQs (kanzei wariate).196 These effectively discouraged imports over and above the levels that previously applied.197 Fifth, the state trades in wheat, barley, some dairy products and silk could be preserved. This enabled the Food Agency and the LIPC/ALIC to continue their direct market participation and thus their functions of volume control and price maintenance, and to divert the profits they made on buying and selling imported goods to support other interventionist enterprises in agriculture and related sectors. Lastly, safeguard measures (special emergency import control measures) could be established to prevent a rapid increase in agricultural imports.198 Under the Special Safeguard (SSG) Provision of the URAA (Article 5),199 safeguards were available to countries that tariffied in the Uruguay Round, and on the products they tariffied.200 After the URAA of December 1993, the cause of agricultural trade liberalisation involving Japan and other Asia-Pacific countries was pursued through the multilateral channels of APEC.201 However, in the MAFF’s view, the final word on agricultural trade liberalisation was the URAA, and it was not prepared to contemplate any additional concessions under another organisational umbrella.

The three pillars of MAFF agricultural policy 211 As the minister stated, special considerations are necessary for agriculture. Further, as far as lowering tariffs is concerned, special considerations are necessary for areas that have a strong relationship with the inner aspects of each country such as agriculture. Even if tariff reduction proceeds more quickly, the most we are prepared to do is the faithful implementation of the URAA. Whilst supporting the principle of comprehensiveness, flexibility in dealing with difficult issues like agriculture, forestry and fisheries should be recognised.202 A new round of WTO negotiations was launched in Doha in November 2001 (the so-called ‘second phase’ of the new WTO round) at which members clarified their agricultural trade negotiating proposals. The MAFF representatives demonstrated quite clearly that they remained strongly on their well-trodden protectionist path. In the Japanese position paper, the MAFF asserted a beefed-up defence of domestic agriculture. It argued that food security for net-food importing countries demanded a policy mix of domestic production, importation and stockholding, with trade rules sanctioning domestic agricultural production as the basis of food supply and a new international framework for international food stockholding aiming at ensuring food security for developing countries.203 Whilst acknowledging the global trend towards agricultural policy reform which included reducing the degree of intervention in agricultural markets, the MAFF argued that tariffs and access opportunities should be determined by taking into account considerations such as multifunctionality, food security and the current situation of production and consumption for each product. The ministry stressed the various public goods that agriculture provided, including its place in rural development and in protecting the environment. The MAFF was aiming to maintain or even expand the ‘Green Box’ that the United States and the Cairns Group were arguing should be limited to policies that did not have a negative impact on trade. The MAFF’s specific proposal was for a relaxation of the application conditions for direct payments to farmers and income insurance,204 and guarantees from the standpoint of promoting agricultural policy reform whilst reflecting the ‘realities’ of agriculture.205 The MAFF also called for a new safeguard mechanism to deal with perishable products such as unprocessed agricultural products under which the requirement for demonstrating damage to the domestic industry would be waived and safeguards could be applied automatically based on a pre-set trigger level for quantity and/or price of imports. This proposal specifically reflected the experience of surging vegetable imports from China when provisional safeguards were activated.206 The MAFF’s bias towards protecting inefficient, food-importing agricultural producers was rounded out with calls for more rigorous disciplines to be applied to export-enhancing measures and export STEs.207 All in all, the MAFF aimed to build a stronger and more consolidated case against trade liberalisation and reduced domestic support for agriculture.208

9

Conclusion

Few dispute that the state intervenes widely and deeply in Japan’s agricultural sector. Agriculture in Japan is uniformly seen as a state-controlled, guided, managed, funded and supervised industry. This book documents the nature of this intervention in the agricultural economy. It characterises intervention as taking one of three principal forms: direct market participation, regulatory intervention and allocatory intervention. The principal agent of this intervention is the MAFF. The ministry relies on an extensive architecture of laws and ordinances, financial support structures, institutional adjuncts and administrative practices to conduct its interventionist roles. Not only is there a vast interventionist infrastructure, both public and quasi-public, fanning out from the MAFF, but numerous mechanisms exist for eliciting the cooperation of targeted actors with interventionist policies. Moreover, the entire superstructure of agricultural support and protection is solidly grounded in legislation administered by the MAFF. This book seeks to understand not only how the MAFF intervenes, but also why it intervenes. The book underpins its analysis of state intervention with a theory of bureaucratic self-interest. It explains Japanese agricultural support and protection in the context of a broader theory about bureaucrats as intervention-maximisers. It argues that MAFF bureaucrats seek to maximise intervention in the agricultural sector because intervention serves their collective institutional interests as well as their personal, private interests. Moreover, in seeking to promote and perpetuate collective and individual gains from intervention, the MAFF operates in the agricultural policymaking process as a political actor and domestic interest group in its own right, pursuing its autonomous interests and preferences in policy outcomes. While formally part of the governmental machinery of agricultural administration, the MAFF represents an independent set of interests in the political market for agricultural support and protection. One of the major propositions of the book is that, given the incentives for MAFF bureaucrats to maximise intervention, agricultural support and protection is as much supply-driven by the agricultural bureaucracy as it is demand-driven by agricultural politicians and farmers’ organisations. Agricultural support and protection exist independently of both the political demand for it and considerations relating to the economic and social needs of the farming community. This

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is because the MAFF has a stake in agricultural support and protection which is distinct and separate from that of Nokyo and the farmers. MAFF interests inspire policy preferences that are quite detached from the pressures and demands of agricultural interest groups. In many instances, of course, the self-interest of the agricultural bureaucracy coincides with societal demands, but it is important to emphasise that the agricultural support and protection regime in Japan is not simply a reflection of the power of the farm lobby and allied politicians. It is also a function of the ministry pursuing its own interests in intervention. For this reason, agricultural support and protection are likely to be sustained even if the political leverage of the farmers substantially diminishes. A comprehensive explanation of Japanese agricultural support and protection must, therefore, include the bureaucratic dimension and the role of vested bureaucratic interest in agricultural support and protection. The book examines the major components of the agricultural policy regime in the postwar period with a view to identifying how MAFF interests in maximising intervention have impacted on some of its key policy choices in the agricultural sector. Policy transformation has moved in ways and at a pace consistent with the maintenance of the MAFF’s powers and prerogatives rather than the long-term interests of Japanese agriculture as a viable, flourishing industry. In the examples given in the book, the MAFF has consistently preferred the intervention-maximising option over other considerations. Other alternative motivations for MAFF policy choice are not entirely ruled out, but, for the most part, the MAFF’s behaviour is most easily explained by the assumption of self-interest in maximising intervention. When faced with a range of policy choices, the MAFF chose the option that maximised its intervention. The ministry resisted reform that would wind back agricultural intervention not because such reform would be bad for Japan and bad for the farmers, but because it would be bad for the MAFF. The central theoretical hypothesis of the book – that bureaucrats seek to maximise intervention – is therefore, confirmed in the case of the MAFF. Whether or not this hypothesis can be confirmed in relation to other ministries is a question for further research. However, the findings of the book suggest that in Japan’s ‘interventionist state’, bureaucrats as intervention-maximisers will not be prepared to countenance change that amounts to a fundamental transformation of the existing order. In fact their incentives are to preserve and defend this order from which they derive collective and individual benefits. For the ministries, the importance of intervention is that it generates the core elements of bureaucratic power, which derive from a mixture of administrative controls and ministerial expenditure. Bureaucrats rely on interventionist regimes to provide and preserve existing systems of bureaucratic privilege. Given the collective and individual benefits that intervention generates, the incentives for bureaucrats will be to maximise intervention. They will have a vested interest in supplying intervention irrespective of demand. Truly competitive markets without the visible hand of administrators would not make bureaucrats redundant but they would change their function and reduce their numbers and thereby reduce their power. In interventionist systems

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Conclusion

bureaucrats are regulators, market players and sources of government funds. In non-interventionist systems they are none of these. They are merely policy advisors and supervisor–administrators in the narrow sense. Eliminating intervention would amount to a considerable truncation of bureaucratic function and prerogatives. In the absence of intervention, bureaucrats would become true regulators in market-based systems: interventionist regulation would be replaced by supervisory regulation. The implications of this study for understanding the nature of policy change in Japan is that vested bureaucratic interest in intervention will impede change and will remain one of the primary causes of policy immobilism within the Japanese policy process. When presented with pressures for fundamental change to policy frameworks, bureaucrats will resist any alterations that threaten the benefits they gain from intervention and they will mould innovation in ways that best advantage their own interests. As any study of the politics of vested interest will show, it is much harder to unravel a system of intervention and regulation than it is to introduce it in the first place. Once interventionist systems are up and running, they have a selfperpetuating quality arising from their institutionalisation in the very fabric of the state – in its legal, institutional and administrative structures and practices. In short, the architecture of intervention becomes entrenched. Dismantling it is not possible merely by changing policies but requires the abolition of numerous laws, the disestablishment of a host of organisations and the elimination of entrenched bureaucratic practices. It is always assumed that the major beneficiaries of government intervention in the agricultural sector are the farmers. However, as this book points out, groups with a stake in Japan’s agricultural support and protection regime extend well beyond agricultural producers. Indeed, farmers’ interests at times get lost in the web of advantage drawn from the system by other interests. These include agricultural organisations like Nokyo which extends its cartel-like operations over the entire agricultural economy, agricultural politicians who harness the side-benefits of intervention as political goods, private sector businesses in fields such as farm input supply, marketing, distribution, processing and trading which make statesanctioned profits from regulated markets and public sector enterprises involved in agriculture-related businesses. Finally, beyond economic benefits are the less easily definable and quantifiable benefits accruing to the public institutions of agricultural intervention as well as personal and private benefits to individual bureaucratic officials. The MAFF, alongside other groups whose interests are served by agricultural support and protection, represents a powerful nexus of institutional elements and vested interests that help to explain why this regime is so entrenched and so difficult to change. To put it plainly, too many organisations are living off the agricultural support and protection industry for radical liberalisation of the agricultural sector to be a feasible prospect. The history of Japanese agricultural policy over the postwar period has been a process of cumulative intervention. When a problem arose, the government stepped in to meet it; new problems

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generated further intervention and so on. Meanwhile, none of the earlier interventionist policies were removed because they were, ‘locked in the vested interests that they themselves have produced’.1 Agricultural support and protection, like all other interventionist systems, breeds vested interests of various kinds, interests that feed off the benefits that intervention provides. The MAFF will remain at the core of these vested interests in agricultural intervention, complicating the outlook for reform.

Appendix Agriculture and agriculture-related organisations and their Japanese titles

Agricultural and Fishery Industries Cooperative Unions Deposit Insurance Organisation (Nosui Sangyo Kyodo Kumiai Chokin Hoken Kiko) Agricultural committee ( N ogyo iinkai ) Agricultural cooperative union, or agricultural cooperative (Nogyo kyodo kumiai) Agricultural credit fund association (Nogyo kyosai kikin kyokai ) Agricultural Engineering Industry Association (Nogyo Doboku Jigyo Kyokai) Agricultural housing association (Noju kumiai ) Agricultural Improvement Fund (Nogyo Kairyo Shikin) Agricultural incorporated entity (Nogyo seisan hojin) Agricultural Land Development Corporation (Noyochi Seibi Kodan) Agricultural land-holding rationalisation corporation (Nochi hoyu gorika hojin) Agricultural Mechanisation Research Institute (Nogyo Kikaika Kenkyujo) Agricultural Modernisation Fund (Nogyo Kindaika Shikin) Agricultural Mutual Aid Fund (Nogyo Kyosai Kikin) Agriculture mutual aid association (Nogyo kyosai kumiai) Agricultural Policy Research Committee (Nosei Chosa Iinkai) Agricultural Technology Research Corporation (Nogyo Gijutsu Kenkyu Kiko) Agriculture and Fishery Industry Cooperative Unions Deposit Insurance Organisation (Nosuisangyo Kyodo Kumiai Chokin Hoken Kiko) Agriculture and Livestock Industries Corporation, or ALIC (Nochikusangyo Shinko Jigyodan) Agriculture, Forestry and Fisheries Aviation Association (Norinsuisan Koku Kyokai) Agriculture, Forestry and Fisheries Credit Fund (Nogyo Kyosai Kikin) Agriculture, Forestry and Fisheries Finance Corporation (Noringyogyo Kinyu Koko, or Norin Koko) Agriculture, Forestry and Fisheries Policy Information Centre (Norinsuisan Seisaku Joho Senta¯ ) Agriculture, Forestry and Fisheries Promotion Association (Norinsuisan Shoreikai) Agriculture, Forestry and Fisheries Technical Council (Norinsuisan Gijutsu Kaigi) Agriculture, Forestry and Fisheries Technical Information Association (Norinsuisan Gijutsu Joho Kyokai)

Appendix

217

Agriculture, Forestry and Fishery Groups Personnel Mutual Aid Association (Noringyogyo Dantai Shokuin Kyosai Kumiai, or Norin Nenkin) Agriculture, Forestry and Fishing Industries Trust Fund (Noringyogyo Shinyo Kikin) Bio-oriented Technology Research Advancement Institution, or BRAIN (Seibutsukei Tokutei Sangyo Gijutsu Kenkyu Suishin Kiko, or Seikyu Kiko) Central Association of Fishing Boats Insurance (Gyosen Hoken Chuokai) Central Bank for Agriculture and Forestry (Norin Chuo Kinko, or Norinchukin) Central Dairy Council (Chuo Rakuno Kaigi) Central Fruit Production and Delivery Stabilisation Fund Association (Chuo Kajitsu Seisan Shukka Antei Kikin Kyokai) Central Livestock Association (Chuo Chikusankai) City and Agricultural, Mountain and Fishing Village Exchange Revitalisation Organisation (Toshi Nosangyoson Kasseika Kiko) Compound Feed Supply Stabilisation Organisation (Haigo Shiryo Kyokyu Antei Kiko) Cooperative Union Japan Feed Industry Association (Kyodo Kumiai Nihon Shiryo Kogyokai) Country Elevator Association (Kantorı¯ Erebe¯ta¯ Kyokai) Dairy Farmers’ Political Federation of Japan (Nihon Rakuno Seiji Renmei, or Rakuseiren) Disaster Fund (Saigai Shikin) Farmers Pension Fund (Nogyosha Nenkin Kikin) Fertiliser Science Research Institute (Hiryo Kagaku Kenkyujo) Flour Millers Association (Seifun Kyokai) Food and Agriculture Policy Research Centre (Shokuryo Nogyo Seisaku Kenkyu Senta¯ ) Food Distribution Structural Improvement Promotion Organisation (Shokuhin Ryutsu Kozo Kaizen Sokushin Kiko) Food Industry Centre (Shokuhin Sangyo Senta¯ ) Food Livelihood Information Service Centre (Shoku Seikatsu Joho Sa¯ bisu Senta¯ ) Forests Development Corporation (Shinrin Kaihatsu Kodan) Fukuoka Commodities Exchange (Fukuoka Shohin Torihikisho) Hometown Information Centre (Furusato Joho Senta¯ ) Independent Administrative Corporation Green Resources Organisation (Dokuritsu Gyosei Hojin Midori Shigen Kiko) Japan Agricultural Community Drainage Association (Nihon Nogyo Shuraku Haisui Kyokai) Japan Agriculture and Forestry Standards Association (Nihon Norin Kikaku Kyokai) Japan Bread Industry Association (Nihon Pan Kogyokai) Japan Central Racing Association, or JRA (Nihon Chuo Keibakai) Japan Drinking Milk Cooperative Association (Nihon Inyo Gyunyu Kyodo Kumiai)

218

Appendix

Japan Flower Wholesale Markets Association (Nihon Kaki Oroshiuri Shijo Kyokai) Japan Food Association (Nihon Shokuryo Kyokai) Japan Fruit Juice Association (Nihon Kaju Kyokai) Japan Grain Inspection Association (Nihon Kokumotsu Kentei Kyokai) Japan Green Resources Corporation (Midori Shigen Kodan) Japan Ham Sausage Manufacturing Cooperative Association (Nihon Hamu Sose¯ ji Kogyo Kyodo Kumiai) Japan Horse Association (Nihon Baji Kyokai) Japan International Agricultural Council, or JIAC (Nihon Kokusai Nogyo Kaigi) Japan International Cooperation Agency, or JICA (Kokusai Kyoryoku Jigyodan) Japan Meat Consumption General Centre (Nihon Shokuniku Shohi Sogo Senta-) Japan Meat Council (Nihon Shokuniku Kyogikai) Japan Meat Grading Association (Nihon Shokuniku Kakuzuke Kyokai) Japan Meat Processors Association (Nihon Shokuniku Kako Kyokai) Japan Oilseed Processors Association (Nihon Shokubutsuyu Kyokai, or Nichiyukyo) Japan Plywood Inspection Association (Nihon Gohan Kensakai) Japan Refrigerated Foods Association (Nihon Reito Shokuhin Kyokai) Japan Rural Information Systems Association (Nihon Noson Joho Shisutemu Kyokai) Japan School Lunch Association (Nihon Gakko Kyushokukai) Japan Silk and Cocoon Corporation (Nihon Sanken Jigyodan) Japan Silk Industry Association (Nihon Kengyo Kyokai) Japan Whaling Association (Nihon Hogei Kyokai) Joint farming cooperatives (Noji kumiai hojin) Kansai Commodities Exchange (Kansai Shohin Torihikisho) Land improvement district (Tochi kairyoku) Livestock Industry Promotion Corporation, or LIPC (Chikusan Shinko Jigyodan) Marine and Fisheries Resource Development Centre (Kaiyo Suisan Shigen Kaihatsu Senta¯ ) Marine Bio-Environment Research Institute (Kaiyo Seibutsu Kankyo Kenkyujo) Milk Transportation Facilities Lease Association (Gyunyu Yuso Shisetsu Rı¯su Kyokai) National Agricultural Chemical Cooperative Association (Zenkoku Noyaku Kyodo Kumiai) National Agricultural Engineering Technical League (Zenkoku Nogyo Doboku Gijutsu Renmei) National Agricultural Research Centre (Nogyo Kenkyu Senta-) National Agricultural Structural Improvement Association (Zenkoku Nogyo Kozo Kaizen Kyokai) National Agricultural Technology Research Organisation (Zenkoku Nogyo Gijutsu Kenkyu Kiko) National Association for the Structural Reform of Agriculture (Zenkoku Nogyo Kozo Kaizen Kyokai)

Appendix

219

National Association of Regional Horse Racing (Chiho Keiba Zenkoku Kyokai) National Central Markets Vegetable and Fruit Wholesalers’ Association (Zenkoku Chuo Shijo Seika Oroshiuri Kyokai) National Central Union of Agricultural Cooperative Unions (Zenkoku Nogyo Kyodo Kumiai Chuokai, or Zenchu, or JA Zenchu) National Chamber of Agriculture (Zenkoku Nogyo Kaigisho) National Colonisation Nokyo Federation (Zenkoku Takushoku Nogyo Kyodo Kumiai Rengokai, or Zentakuren) National Dairy Nokyo Federation (Zenkoku Rakuno Nogyo Kyodo Kumiai Rengokai, or Zenrakuren) National Dried Cocoon Marketing Nokyo Federation (Zenkoku Kanken Hanbai Nogyo Kyodo Kumiai Rengokai, or Zenkanren) National Federation of Agricultural Cooperative Unions (Zenkoku Nogyo Kyodo Kumiai Rengokai, or Zenno, or JA-Zenno) National Federation of Agricultural Machinery Business Cooperative Associations (Zenkoku Nogyo Kikai Shogyo Kyodo Kumiai Rengokai) National Federation of Food Industry Cooperative Associations (Zenkoku Shokuryo Jigyo Kyodo Kumiai Rengokai, or Zenshokuren) National Federation of Grain Merchants’ Cooperative Associations (Zenkoku Kokumotsusho Kyodo Kumiai Rengokai) National Federation of Meat Industry Cooperative Associations (Zenkoku Shokuniku Jigyo Kyodo Kumiai Rengokai) National Federation of Rice Trade Cooperative Associations (Zenkoku Beisho Kyodo Kumiai Rengokai, or Zenbeishoren) National Federation of Staple Food Collection Cooperative Associations (Zenkoku Shushoku Shuka Kyodo Kumiai Rengokai, or Zenshuren) National Federation of Wheat Polishing Industry Cooperative Associations (Zenkoku Seibaku Kogyo Kyodo Kumiai Rengokai) National Fertiliser Dealers’ Federation (Zenkoku Hiryosho Rengokai) National Food Inspection Association (Zenkoku Shokuryo Kensa Kyokai) National Food Storage Association (Zenkoku Shokuryo Hokan Kyokai) National Margarine Manufacturers’ Cooperative Association (Zenkoku Ma¯ garin Seizo Kyodo Kumiai) National Rice and Wheat Improvement Association (Zenkoku Beibaku Kairyo Kyokai) Okinawa Promotion and Development Financial Corporation (Okinawa Shinko Kaihatsu Kinyu Koko) Prefectural Nokyo economic federation (keizairen) Rural Development Planning Committee (Noson Kaihatsu Kikaku Iinkai) Rural Environmental Infrastructure Centre (Noson Kankyo Seibi Senta¯ ) Rural Regions Industry Introduction Promotion Centre (Noson Chiiki Kogyo Donyu Sokushin Senta¯ ) Silk and Sugar Price Stabilisation Corporation, or SSPSC (Sanshi Satorui Kakaku Antei Jigyodan) Social Security Pension System (Kosei Nenkin Hoken) Society of Japan Food Industry Executives (Shokuhin Sangyo Chuo Kyogikai)

220

Appendix

Sugar Price Stabilisation Corporation (Toka Antei Jigyodan) Sugar Refining Industry Association (Seito Kogyokai) The 21st Century Village Creation School (21 Seiki Mura Zukuri Juku) Tokyo Grain Commodities Exchange (Tokyo Kokumotsu Shohin Torihikisho) Vegetable Supply Stabilisation Fund (Yasai Kyokyu Antei Kikin) Voluntarily Marketed Rice Price Formation Centre ( Jishu Ryutsumai Kakaku Keisei Senta¯ ) Water Resources Development Corporation (Mizu Shigen Kaihatsu Kodan)

Notes

1 Introduction 1 T. J. Pempel, ‘Japan’s Creative Conservatism: Continuity under Challenge’, in Francis G. Castles (ed.), The Comparative History of Public Policy, Cambridge, Polity Press, 1989, p. 159. 2 Organisation for Economic Co-operation and Development, Agricultural Policies in OECD Countries: Monitoring and Evaluation 2003, Paris, OECD, 2003, p. 10. 3 The producer support estimate is an OECD measure of ‘the annual monetary value of gross transfers from consumers and taxpayers to support agricultural producers’. Agricultural Policies in OECD Countries, p. 291. The %PSE ‘is the ratio of the PSE to the value of total gross farm receipts, measured by the total value of production (at farm gate prices) plus budgetary support’ (p. 292). 4 Agricultural Policies in OECD Countries, p. 169. 5 Agricultural Policies in OECD Countries, p. 42. 6 Agricultural Policies in OECD Countries, p. 169. 7 In 2002 agriculture’s share of GDP was 1.1 per cent, while total transfers to agriculture comprised as much as 1.4 per cent of GDP. Devinda Sharma, ‘Protecting Agriculture: “Zero-Tolerance” on Farm Subsidies’, http://www.farmedia.org/bulletins/bulletin%2036. html. By 2002, agriculture’s share of GDP had fallen to 1.0 per cent where it remained in 2003. Keiji Ohga, ‘Japan’, Pacific Food System Outlook 2002–2003, p. 24. 8 Aurelia George Mulgan, The Politics of Agriculture in Japan, London and New York, Routledge, 2000. 9 Gerald Curtis, The Logic of Japanese Politics: Leaders, Institutions, and the Limits of Change, New York, Columbia University Press, 1999, p. 10. 10 In 1978 the Ministry of Agriculture and Fisheries, MAF (Norinsho) altered its title to Ministry of Agriculture, Forestry and Fisheries. The MAF was originally established in 1881 as the Ministry of Agricultural and Commercial Affairs, or MACA (Noshomusho), changed its name to Ministry of Agriculture and Forestry, or MAF (Norinsho) in 1925, became the Ministry of Agriculture and Commerce, or MAC (Noshosho) in 1943 then reverted back to the Ministry of Agriculture and Forestry again in 1945. 11 See, for example, Adam Sheingate, The Rise of the Agricultural Welfare State, Princeton, N J, Princeton University Press, 2001. 12 David Orden, Robert Paarlberg and Terry Roe, Policy Reform in American Agriculture: Analysis and Prognosis, Chicago, IL, Chicago University Press, 1999, p. 3. 13 See, for example, Kym Anderson, Yujiro Hayami and Aurelia George Mulgan (eds), The Political Economy of Agricultural Protection: East Asia in International Perspective, Sydney, Allen and Unwin, 1986. 14 The value of gross agricultural production in Japan fell from ¥11.5 trillion in 1990 to ¥8.9 trillion in 2001. Norin Tokei Kyokai (ed.), Shokuryo, Nogyo, Noson Hakusho Sanko Tokeihyo [The Food, Agriculture and Rural Areas White Paper Statistical Reference Tables], 2002, Tokyo, Norin Tokei Kyokai, 2003, p. 30.

222

Notes to pp. 3–12

15 In 1990, there were 3.8 million farm households in Japan; by 2002, this figure had fallen to 3 million; the figures for commercial farm households (hanbai noka) over the same period were 3.0 million in 1990 and 2.2 million in 2002. Norinsuisansho, Tokei Johobu, Norinsuisansho, Tokeihyo [Statistical Yearbook of Ministry of Agriculture, Forestry and Fisheries], 2000–1, Tokyo, Norin Tokei Kyokai, 2003, p. 4. In 2002, farm households earned an average of only 12.7 per cent of their income from agriculture, as opposed to 13.8 per cent in 1990. Shokuryocho, Beika ni kansuru Shiryo [Materials Concerning the Rice Price], December 2002, pp. 75, 102; Shokuryo, Nogyo, Noson Hakusho Sanko Tokeihyo, 2002, p. 36. 16 As the Financial Times bemoans: ‘For years, Japanese officials have forecast that the steady decline in the country’s ageing farm population would reduce its power by loosening its hammerlock on the ruling Liberal Democratic party, which has long depended on support from agricultural constituencies. The number of farmers has dwindled and today they account for fewer than 5 per cent of the total labour force.’ 11 July 2001. 17 Kawakita Takao and Onoue Yukio, Norinsuisansho [The Ministry of Agriculture, Forestry and Fisheries], Tokyo, Intamedia, 2001, p. 53. 18 ‘Nosuisho no Daizai’ [‘The MAFF’s Deadly Sins’], Shukan Daiyamondo, Special Issue, 20 April 2002, p. 2. 19 Kawakita and Onoue, Norinsuisansho p. 53. 20 For a fuller discussion of the agricultural policymaking process, see Chapter 5 on ‘PartyBureaucratic Government’ in Aurelia George Mulgan, Japan’s Failed Revolution: Koizumi and the Politics of Economic Reform, Canberra, Asia Pacific Press, 2002, pp. 129–176. 21 The exact dimensions of this role are spelled out in Chapter 5 on ‘The Politics of Agricultural Policymaking’ in my forthcoming volume, Agricultural Policymaking in Japan: The Role of the LDP. 22 The term ‘ministries’ is used consistently throughout the book as a collective term to signify bureaucratic ministries and agencies (where relevant). 23 See Chapter 2 on ‘Party Politics’ in my forthcoming volume, Agricultural Policymaking in Japan: The Role of the LDP. 24 It is important to distinguish the two types of regulatory systems. The first involves the standard market-distorting intervention by government in order to protect market players from the full impact of unfettered competition (e.g. agricultural support and protection, the convoy system in the financial sector, price and recession cartels in the manufacturing sector). The second consists of regulation in the form of bureaucratic oversight of private sector activities with the aim of ensuring that market players observe certain rules, such as free and fair competition. This is usually the function of regulatory agencies in liberalised market economies such as the United States and Australia. In these countries the ‘rules’ are usually market conforming and are ultimately designed to protect consumers. It is this second type of regulatory supervision that has been institutionalised in Japan’s Fair Trade Commission and possibly in the Financial Services Agency. The establishment of the latter, for example, was made necessary because what prevailed before was a system of bureaucratic over-regulation of the first type and inadequate bureaucratic regulation (i.e. oversight) of the second type. It was a case of Japan’s financial industries being over-regulated and under-supervised. 2 Modes and means of government intervention 1 Kazuaki Tanaka and Masahiro Horie, ‘Deregulation’, in Toshiyuki Masujima and Minoru Ouchi (eds), The Management and Reform of the Japanese Government, Tokyo, Institute of Administrative Management, 1995, p. 241. 2 Tanaka and Horie, ‘Deregulation’, p. 241. 3 Tanaka and Horie, ‘Deregulation’, p. 243. 4 Tanaka and Horie, ‘Deregulation’, p. 243. They give the examples of regulations ‘aimed at fostering an infant industry, protecting a declining industry, protecting small and medium enterprises’ etc. ( p. 243).

Notes to pp. 12–15

223

5 These are sometimes given the generic label of ‘permissions and approvals’ (kyoninka) which runs together the Japanese words kyoka (permission) and ninka (approval). 6 Tanaka and Horie, ‘Deregulation’, p. 243. 7 Tanaka and Horie point out that many social regulations ‘function, in effect, as economic regulations’. ‘Deregulation’, p. 243. 8 This form of intervention is closest to Miyamoto’s concept of direct economic intervention, which, he argues, occurs through ‘(1) ownership (public ownership in the form of capital, assets and land acquisition, or nationalisation); (2) assistance policies, that is, the provision of economic aid for special policy purposes, including subsidies (furnishing direct monetary payments to the private sector such as private enterprises and private individuals), special tax reductions (tax relief for special groups), fiscal loans and investment (providing long term, low interest funding capital) and assistance for public works and public services (the majority are subsidised works) and (3) surcharges (imposing taxes and similar charges on private individuals as well as enterprises in compliance with special regulations).’ See Miyamoto Kenichi, Hojokin no Seiji Keizaigaku [The Political Economy of Subsidies], Tokyo, Asahi Shinbunsha, 1992 (3rd edn), pp. 7–8. 9 In the view of this author, it is incorrect to label ministries as being either regulatory (i.e. strategic) or compensatory (i.e. distributive). See Richard Katz, Japan: The System That Soured – The Rise and Fall of the Japanese Economic Miracle, New York, M. E. Sharpe, 1998, p. 101 et passim. Each ministry conducts both kinds of intervention, although the extent of each may differ depending on its overall jurisdictional interest. For example, even MLIT, which is a quintessentially distributive ministry, has regulatory functions. 10 Takeuchi Yasuo, ‘Kyoso no Muchi de Kitaenaose’ [‘Competition Is Just What the Economy Needs’], This is Yomiuri, August 1998, p. 54. 11 See also the discussion in Chapter 3 on ‘Theorising Government Intervention and Bureaucratic Self-Interest’. 12 Gerhard Lehmbruch, ‘The Segmentation of Government’, Social Science Japan, No. 3, April 1995, p. 7. 13 Masahiko Aoki, ‘The Japanese Bureaucracy in Economic Administration: A Rational Regulator or Pluralist Agent?’ in J. Shoven (ed.), Government Policy Towards Industry in the United States and Japan, Cambridge, Cambridge University Press, 1988, p. 275. 14 Seizaburo Sato, ‘Perils of Pork-Barrel Politics: The Birth of the Murayama Government’, Asia-Pacific Review, 2, 1, Spring 1995, p. 16. 15 According to Satake, policy systems consist of two fundamental components: laws and ordinances (horei) and budgets ( yosan) in the sense that these are the primary instruments on which bureaucrats rely to administer various sectors of the economy. Satake Goroku, Seisakuron no Saho [The Manners of Policy Debate], Tokyo, Sozo Shobo, 1999, p. 132. 16 Inoguchi Takashi and Iwai Tomoaki, ‘Zoku Giin’ no Kenkyu [Research on ‘Tribe Diet Members’], Tokyo, Nihon Keizai Shinbunsha, 1987, p. 101. 17 As Satake argues, generally bureaucrats have graduated from a school of law and as a result, have too much faith in law. They tend to think that making a law is the best solution to any problem. When they come across a problem, they attempt to solve it by making a new law without analysing the cause of the problem. Because of the increase in the numbers of laws and ordinances, legal processes have become more complicated, and more coordination between regulations is required. Seisakuron, p. 151. 18 Peter Hartcher, The Ministry: How Japan’s Most Powerful Institution Endangers World Markets, Cambridge, MA, Harvard Business School Press, 1998, p. 214. In fact each ministry, including the MAFF, is set up under a separate clause of the 1948 State Administrative Organisation Law (Kokka Gyosei Soshikiho). 19 Yoshihiko Morozumi and Kaoru Moroi, ‘Bureaucrat Bashing is not the Answer’, Economic Eye, 15, 3, Autumn 1994, p. 11. 20 Toshimasa Tsuruta, ‘End of the Road for a Regulatory Tradition’, Economic Eye, 15, 3, Autumn 1994, p. 19.

224

Notes to pp. 15–18

21 See Table 5.1 for the Japanese titles of agricultural laws current in 2003. 22 The difference between government subsidies based on laws and those based on budget decisions is elaborated in Chapter 3 on ‘Patronage Politics’ in my forthcoming volume, Party and Patronage in Japan’s Rural Sector. 23 See the Appendix for the Japanese titles of all agriculture-related organisations referred to in this book. 24 T. J. Pempel and Michio Muramatsu, ‘The Japanese Bureaucracy and Economic Development: Structuring a Proactive Civil Service’, in Hyung-Ki Kim, Michio Muramatsu, T. J. Pempel and Kozo Yamamura, The Japanese Civil Service and Economic Development: Catalysts of Change, Oxford, Clarendon Press, 1995, p. 68. 25 Takeuchi Naokazu, Nihon no Kanryo [ Japan’s Bureaucracy], Tokyo, Shakai Shisosha, 1988, p. 66. 26 Johnson made the point that: ‘The Japanese of course rely on law, but on short and highly generalized laws. They then give concrete meaning to these laws through bureaucratically originated cabinet orders, ordinances, rules, and administrative guidance’. Chalmers Johnson, MITI and the Japanese Miracle: The Growth of Industrial Policy in Japan, 1925–1975, Stanford, CA, Stanford University Press, 1982, p. 319. 27 These are also known as government ordinances and cabinet orders. They are drafted by the ministry concerned but are formally decided by the cabinet, so they have to get the consent of all the ministries. 28 Ministerial ordinances are made by individual ministries. This process does not require any procedures outside the ministry, at least officially. The authority to issue ministerial ordinances is specified in laws and cabinet ordinances (i.e. that the ministry can issue related ministerial ordinances). Ministries also make ministerial ordinances and call them regulations and enforcement regulations. 29 These are a type of cabinet ordinance that determine the details for implementing laws. They are known as both shikorei and sekorei. 30 As noted above Johnson calls them ‘bureaucratically originated’. MITI, p. 319. 31 B. C. Koh, Japan’s Administrative Elite, Berkeley, CA, University of California Press, 1989, p. 207. 32 Ito Osamu, ‘The “Japan Model” Financial System’, Social Science Japan, 5, November 1995, http://web.iss.u-tokyo.ac.jp/newslet/SSJ5/ito.html 33 ‘Deregulation’, p. 242. 34 ‘Deregulation’, p. 242. For a comprehensive listing of the various kinds of licences and permits, certifications and notifications (and the equivalent Japanese terms), see Table 14 in Steven K. Vogel, Freer Markets, More Rules: Regulatory Reform in Advanced Industrial Countries, Ithaca, NY, and London, Cornell University Press, 1996, p. 205. Following the former Management and Coordination Agency, however, Vogel distinguishes between three main types of regulation: those that rely on ministry discretion ( permit, authorisation, licence, approval, designation and consent), those that depend on more objective criteria under the broad heading of certifications (recognition, confirmation, verification, validation, examination, inspection, certification, registration and investigation), and those that simply require the submission of information under the broad heading of notifications (notification, filing, report, submission and statement). In 1995, the category of licenses and permits dependent on the exercise of bureaucratic discretion made up just under 40 per cent of regulations (p. 205). 35 Seisakuron, pp. 15–16. 36 As Sakakibara points out: ‘Continuity in the immediate postwar period with the prewar regime was provided by the economic bureaucracy – such as the MOF, MITI, and the Ministries of Agriculture, Forestry and Fisheries, Transport, and Construction – which were all virtually untouched by GHQ-led reforms.’ Eisuke Sakakibara, ‘The Japanese Politico-Economic System and the Public Sector’, in Samuel Kernell (ed.), Parallel Politics: Economic Policymaking in Japan and the United States,

Notes to pp. 18–20

37

38 39

40 41 42 43

44 45 46 47

48

49 50 51

225

Tokyo, Japan Center for International Exchange, Washington, DC, Brookings Institution, 1991, p. 55. Just under 40 per cent of total local government expenditure is sourced in financial transfers from the central government, either in general or specific purpose grants. This percentage may change under the fiscal decentralisation proposals of the Koizumi administration. For example, one third of total local government expenditure was allocated to public works in 1999. See Okurasho, Zaisei Kinyu Tokei Geppo [Ministry of Finance Statistics Monthly], 565, May 1999, p. 186. Traditionally, around 80 per cent of the funding for the FILP has been sourced directly from the postal savings system, the post office life insurance system and the public pension system (welfare pensions and national pensions). See Zaisei Kinyu Tokei Geppo, May 1999, pp. 180–181. See also note 40. In later years, it has inflated to around two-thirds of the size of the GA budget. Zaisei Kinyu Tokei Geppo, May 1999, pp. 179–181. See note 43 for an elaboration of administrative guidance. In all the definitions of ‘subsidy’ in Japan, local governments feature prominently as agents and recipients carrying out projects decided by the central government. The Local Government Terminology Dictionary defines subsidies as ‘a cash benefit that is paid to local government or to private recipients which has an administrative purpose’, while the Economics Dictionary of Osaka City University Economics Research Institute defines subsidies as ‘a unilateral state money benefit given to local government or private juridical persons or to individuals’. See Hirose Michisada, Hojokin to Seikento [Subsidies and The Ruling Party], Tokyo, Asahi Shinbunsha, 1981, pp. 72–73. Hirose himself defines subsidies as ‘money that the government supplies to local government, private groups and private individuals for specific purposes’ (p. 64). His definition is close to Miyamoto’s, which states that subsidies are ‘the government’s unilateral monetary payments to local government groups, private juridical corporations and private individuals’. Hojokin, p. 7. Miyamoto claims that local government, which coordinates most projects, receives 80 per cent of state subsidies and this in turn accounts for some 20 per cent of the annual revenue of local governments, although this share is gradually decreasing. Hojokin, p. 9. Imamura describes them as the ‘government’s assisting forces’. Imamura Naraomi, Hojokin to Nogyo, Noson [Subsidies, Agriculture and Rural Villages], Tokyo, Ie no Hikari Kyokai, 1978, p. 21. Thomas M. Huber, Strategic Economy in Japan, Boulder, CO, Westview Press, 1994, pp. 28–29. Johnson gives the example of the Milk Transport Equipment Leasing Association that operated in the 1960s. It cost the government several hundred million yen annually but had no record of activity of any sort. Chalmers Johnson, Japan’s Public Policy Companies, Washington, DC, American Enterprise Institute for Public Policy Research, 1978, p. 103. These, in turn, subdivide into various types (in Japanese – koko, kodan ginko, jigyodan, eidan, kiko, kikin, kyokai, senta-, kai, kumiai, kinko). Kodan, for example, are engaged in public works, jigyodan in economic and social policy programs, koko and ginko in financing at policy-oriented rates of interest, kinko for financing cooperatives, and eidan for large and complex projects. Toshiyuki Masujima, ‘Appendix 3: Public Corporations in Japan’, in Masujima and Ouchi (eds), The Management and Reform of the Japanese Government, pp. 295–296. The koeki hojin are also called ‘corporations for public benefit’. These bodies have been targeted for administrative reform by the Koizumi administration, hence the fate of several are in doubt. See George Mulgan, Japan’s Failed Revolution, pp. 30–31 et passim. Masujima, ‘Appendix 3’, p. 294.

226

Notes to pp. 20–24

52 Personal interview, MAFF official, Canberra, October 2002. 53 Yomiuri Shinbun, 28 June 2001. These figures were for 2001 (¥5.3 trillion and ¥24.4 trillion respectively). In early 2000, legislation was passed allowing public corporations to raise funds directly from financial markets. It came into effect on 1 April 2001. 54 This figure is also subject to change as a result of the Koizumi administration’s administrative reform initiatives. 55 Sorifu (ed.), Koeki Hojin Hakusho [White Paper on Public Interest Corporations], 2000, Tokyo, Okurasho Insatsu Kyoku, 2000, p. 5. 56 The national total for public interest corporations is just over 26,000. Prefectural governments established the majority of these (19,570); although 6,879 were attached to the central government. Koeki Hojin Hakusho, 2000, p. 39. 57 Koeki Hojin Hakusho, 2000, p. 1. According to the white paper, the wider definition of a public interest corporation also includes schools, social welfare organisations, religious groups, medical treatment organisations, welfare protection bodies and specific groups that do not undertake activities for private benefit. All are juridical persons established under the relevant law. 58 This requirement can be intrusive (the report must include a budget plan, plan of proposed activities, annual financial report and description of activities) and tends to be rigidly enforced by the supervising ministry. See Frank J. Schwartz, ‘Introduction: Recognizing Civil Society in Japan’, in Frank J. Schwartz and Susan J. Pharr (eds), The State of Civil Society in Japan, p. 11. 59 Personal interview, MAFF official, Canberra, October 2002. 60 Koeki Hojin Hakusho, 2000, p. 102. 61 The Japan Times, 18 November 2000. 62 I make an arbitrary distinction between cooperative unions that have a grass-roots membership of individuals (such as the agricultural, forestry and fisheries cooperatives) and cooperative associations that have a grass-roots membership of companies (such as the cooperative associations of small business). 63 Koeki Hojin Hakusho, 2000, p. 4. 64 See Chapter 2 on ‘Interest Group Politics’ and Chapter 4 on ‘Organisational Politics’ in George Mulgan, The Politics of Agriculture, pp. 39–163; 205–299. 65 The concept of corporatisation requires that interest groups have a mass membership, while gaikaku dantai without such a clientele base are more accurately classed as institutional interest groups. In other words, they merely promote and protect their own organisational interests in government, which chiefly involves the pursuit of subsidies. The concept of ‘institutional interest group’ is developed more fully in Chapter 2 on ‘Interest Group Politics’ in George Mulgan, The Politics of Agriculture, pp. 39–163. 66 The dual public-private face of these organisations is examined extensively in Chapter 2 on ‘Interest Group Politics’ in George Mulgan, The Politics of Agriculture, pp. 39–163. 67 Tanaka and Horie, ‘Deregulation’, p. 242. Elsewhere it is defined as: ‘Recommendation, advice and other acts effected by an administrative agency within the scope of its competence’. Hiroshi Oda, Japanese Law, Oxford, Oxford University Press, 2001, 2nd edn, p. 55. 68 Wright regards administrative guidance as an ‘extra-legal process’. See Maurice Wright, Japan’s Fiscal Crisis: The Ministry of Finance and the Politics of Public Spending, 1975–2000, Oxford, Oxford University Press, 2002, p. 115. 69 The subject of administrative guidance has been extensively analysed in the scholarly literature. See also John O. Haley, Authority Without Power: Law and the Japanese Paradox, New York, Oxford University Press, 1997. 70 Oda translates tsutatsu as ‘circulars’. Japanese Law, p. 54, 71 Ulrike Schaede, ‘The “Old Boy” Network and Government-Business Relationships in Japan’, Journal of Japanese Studies, 21, 2, Summer 1995, p. 301. 72 ‘The “Old Boy” Network’, p. 300. 73 Personal interview, MAFF official, Canberra, October 2002.

Notes to pp. 24–25

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74 ‘Cover Story: Tangled Up in Regulation’, Tokyo Business Today, December 1993, p. 7. 75 Personal interview, MAFF official, Canberra, January 2003. 76 Author unknown, ‘Administrative Guidance’, Paper presented to the Asian Studies Association of Australia Conference, Brisbane, 1981, p. 2. 77 Sugimoto, for example, argues that the practice of administrative guidance is both ‘institutionalized and amorphous . . . [and] takes the form of a ministry giving advice, suggestions, instructions, and warning to business confederations; these are without statutory basis and are frequently made behind closed doors without written records being kept’. Yoshio Sugimoto, An Introduction to Japanese Society, Cambridge, Cambridge University Press, 1997, p. 198. 78 Sometimes laws contain a provision that a government agency can issue administrative guidance. The term ‘administrative guidance’ is not used, but terms such as ‘suggestion’ or ‘recommendation’ and ‘warning’ and some others may be used. Whatever the term, it is tantamount to administrative guidance. 79 Personal communication, Professor Godo Yoshihisa, March 2001. 80 Jimmy W. Wheeler, Merit E. Janow and Thomas Pepper, Japanese Industrial Development Policies in the 1980s: Implications for U.S. Trade and Investment, New York, Hudson Institute, October 1982, p. 78. 81 Nikkei Weekly, 8 April 1996. 82 The term ‘amakudari’ is used here in its broader sense to include the transition of public sector officials into both the private sector and semi-public organisations. The practice is currently under review and there is some evidence of a reduction in the prevalence of this phenomenon in recent years. However, it has yet to undergo widespread change. See, for example, Kenji Suzuki, Effect of Amakudari on Bank Performance in the Post-Bubble Period, Working Paper No. 136, Stockholm School of Economics, November 2001. 83 In July 2003, the Minister of State for Administrative Reform and Regulatory Reform, Ishihara Nobuteru, gave up on the submission of a bill to reform public service employment practices to allow merit-based wage and personnel systems and a crackdown on the practice of amakudari. He claimed that the failure to get the bill enacted by the Diet was due to the lack of agreement within the government on the reform (particularly the lack of agreement of the National Personnel Authority which is responsible for amakudari placements) and the absence of ‘understanding from the relevant Cabinet members and the ruling parties’. The Japan Times, 26 July 2003. 84 Not all amakudari positions serve an interventionist purpose. Although private companies and public groups are the dominant destinations of retired officials, some also retire into national and local politics, and into consultancy, educational, research and advisory positions. See note 82. 85 As Cho observes, ‘the reason civilian business accepts retired civil servants is to mobilize and secure government resources’. Cho Kyu-Cheol, ‘A Case Study of Japanese Ex-Bureaucrats: The Relationship Between MITI and the Retail Market’, http://www.japanstudy.org/html/thesis/thesis8d.htm 86 Approval of the National Personnel Authority is not needed for amakudari posts in public interest corporations. 87 Horiuchi and Shimizu, for example, argue that the Ministry of Finance’s monitoring of private banks using the amakudari mechanism actually prevented the stringent supervision of banks and facilitated the abuse of discretionary power of the regulatory authorities. Horiuchi Akiyoshi and Katsutoshi Shimizu, ‘Did Amakudari Undermine the Effectiveness of Regulator Monitoring in Japan?’, unpublished paper, April 1998. 88 Koh reports, for example, that amakudari ‘enhances[s] the effectiveness of administrative guidance’. Japan’s Administrative Elite, p. 245, citing Chalmers Johnson, ‘The Reemployment of Retired Government Bureaucrats’, Asian Survey, 14, 11, November 1974, p. 964.

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89 Koh describes this as ‘a transfer from the mainstream of the government to its periphery’. Japan’s Administrative Elite, p. 241. 90 The retirement into the semi-administrative organs of government is sometimes described as ‘moving sideways’ ( yokosuberi ) rather than ‘descending from heaven’. 91 For example, approximately three quarters of all executives in special public corporations are retired central government bureaucrats. 92 Yomiuri Shinbun, 2 May 2000. 93 Ellis S. Krauss and Jon Pierre, ‘Targeting Resources for Industrial Change’, in R. Kent Weaver and Bert A. Rockman (eds), Do Institutions Matter? Government Capabilities in the United States and Abroad, Washington, DC, The Brookings Institution, 1993, p. 165. 94 Krauss and Pierre, ‘Targeting Resources’, p. 168. 95 Amyx also cites the importance of informal relational ties between the Ministry of Finance and the banks. For the most part, however, these relational ties are generated via the interventionist modes above, that is, discretionary application of laws and ordinances, administrative guidance and amakudari. See Jennifer A. Amyx, ‘Informality and Institutional Inertia: The Case of Japanese Financial Regulation’, in Japanese Journal of Political Science, 2, 1, 2001, pp. 47–66. 3 Theorising government intervention and bureaucratic self-interest 1 Nihon no Kanryo, p. 184. 2 As Imamura comments, ‘while the allocation of subsidies is done on the basis of detailed principles, actual decisions are dependent on petitions to the ministries’. Imamura Naraomi, ‘Nogyo Hojokin no Tokushitsu’ [‘The Characteristics of Agricultural Subsidies’] in Matsuura Toshiaki and Imamura Naraomi (eds), Nogyo Hogo no Rinen to Genjitsu: Zaisei to Kinyu no Ugoki o Yomu [The Philosophy and Reality of Agricultural Protection: Understanding the Movement of Budget Finance and Loans], Tokyo, Nosangyoson Bunka Kyokai, 1989, p. 121. 3 This is essentially the leap that Johnson took in his book on the Ministry of International Trade and Industry ( MITI) – conflating interventionist power with policymaking power – instead of seeing the former as a source of the latter. 4 Michio Muramatsu, ‘Post-War Politics in Japan: Bureaucracy Versus the Party/Parties in Power’, in Michio Muramatsu and Frieder Naschold, State and Administration in Japan and Germany: A Comparative Perspective on Continuity and Change, Berlin and New York, Walter de Gruyter, 1997, p. 15. 5 This is not to say it is the only determinant. Other determinants include the political weighting of particular sectors or industries in national politics (as measured by the numbers of politicians within the ruling LDP connected to the interests of the ministry and its clients, and the size, powers of political mobilisation and influence of organised interest groups within ministries’ administrative domains); and the level of control that the ministries exert over total government expenditure (such as the MOF who exercises power over other ministries with respect to budgetmaking). See also the discussion on the MAFF in Chapter 6 on ‘Agricultural Intervention and Bureaucratic Self-Interest’. 6 The term ‘stocks’ is used by Aoki in ‘The Japanese Bureaucracy’, pp. 265–300. 7 The Ministry, p. 213. 8 Hartcher, The Ministry, p. 213. 9 The administrative restructuring of 2001 included the creation of the new Cabinet Office (Naikakufu) and a supra-ministry national strategy staff culled from across all government ministries and agencies. It remains to be seen how effective these and other measures will be in reducing vertical competition amongst the various ministries and agencies of government. 10 An Introduction to Japanese Society, p. 195, 196.

Notes to pp. 29–36

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11 Muramatsu, ‘Post-War Politics in Japan’, p. 13. 12 Japan’s Fiscal Crisis, p. 118. 13 Stephen Wilks and Maurice, Wright, ‘The Comparative Context of Japanese Political Economy’, in Stephen Wilks and Maurice Wright (eds), The Promotion and Regulation of Industry in Japan, Basingstoke, Macmillan, 1991, p. 26. 14 In 1998, the MOF’s Banking and Securities Bureaus were abolished and their functions transferred to a new Financial Supervisory Agency (Kinyu Kantokucho). This later metamorphosed into the Financial Services Agency (Kinyucho). 15 Japan’s Fiscal Crisis, p. 118. 16 Nihon no Kanryo, pp. 188–190. 17 Japan’s Fiscal Crisis, p. 118. 18 Susan Carpenter, Special Corporations and the Bureaucracy: Why Japan Can’t Reform, Basingstoke, Macmillan, 2003, p. 1. 19 Muramatsu, ‘Post-War Politics in Japan’, p. 13. 20 Schwartz, ‘Introduction: Recognizing Civil Society in Japan’, p. 8. 21 The Japan Times, 16 July 2001. 22 Kawakita and Onoue, Norinsuisansho, p. 111. 23 Nikkei Weekly, 25 March 1996. 24 Nikkei Weekly, 25 March 1996. 25 Nikkei Weekly, 25 March 1996. 26 Kawakita and Onoue, Norinsuisansho, p. 111. 27 Kawakita and Onoue, Norinsuisansho, p. 126. 28 Yomiuri Shinbun, 2 May 2000. 29 Jun Fukuda, Shigeki Kakinuma and Hiroshi Fukunaga, ‘When in Doubt, Cut it Out: Trimming Useless Organs of the Bureaucracy’, Tokyo Business Today, June 1994, pp. 4, 5. 30 Koh, Japan’s Administrative Elite, p. 241. 31 Nikkei Weekly, 25 March 1996. 32 Daily Yomiuri, 3 August 2001. 33 Robert Uriu, Troubled Industries: Confronting Economic Change in Japan, Ithaca, NY, and London, Cornell University Press, 1996, p. 5. 34 For a definition of ‘political goods’ see Chapter 3 on ‘Patronage Politics’ in my forthcoming volume, Party and Patronage in Japan’s Rural Sector. 35 ‘The OECD Review of Regulatory Reform in Japan, April 1999’, as reported in The Economist, 27 November 1999. 36 George Friedman, ‘Mori’s Political Woes Pale Next to Japan’s Systematic Trouble’, http://www.stratfor.com/asia/commentary/0103081900 37 Testimony to the latter, for example, is the proliferation of public and quasi-public bodies that have multiplied under bureaucratic sponsorship. In fact, as one agricultural bureaucrat observed, the numbers of auxiliary agencies attached to a ministry or agency are limited by a long-term gentleman’s agreement in each case. An informal ‘scrap and build’ rule operates. Ultimately numbers are controlled by the Administrative Control Bureau (Gyosei Kanri Kyoku) of the Prime Minister’s Office (now Cabinet Office). Personal interview, Tokyo, June 2001. 38 Vogel, Freer Markets, p. 193. As he observed of ministries subject to deregulation pressures, they manipulated ‘the reform process to create new sources of authority or to replace lost powers with new ones’ (p. 210). He also observed that ‘they have made the generation of new sources of authority a major goal of reform. They have been particularly zealous in defending and extending their own power because regulatory reform presents the very real threat that this authority could be usurped’ (p. 210). 39 Vogel, Freer Markets, p. 193. See in particular his analysis of MOF financial system reform. 40 The Japanese phrase ‘refers to the discovery of placer deposits of gold after strong winds have blown away and exposed them to view’. Fumitoshi Takahashi, ‘Relaxing the Mandarins’ Grip’, Economic Eye, 15, 3, Autumn 1994, p. 3.

230

Notes to pp. 36–39

41 Takahashi, ‘Relaxing the Mandarins’ Grip’, p. 3. 42 As Vogel observed of the ministries involved in deregulation processes, they ‘abandoned specific policies but not overarching policy goals’. Freer Markets, p. 212. 43 Vogel notes a similar phenomenon in his reference to regulators’ propensity to cling ‘more tenaciously to their authority to formulate and implement policies than to specific policies themselves’. Freer Markets, p. 212. 44 Hartcher, The Ministry, p. 214. 45 Koh, Japan’s Administrative Elite, p. 246. 46 Porter and Takeuchi characterise this as consisting of a composite of views: that ‘no corporation can have the proper perspective and information to guide the economy. Some industries should be targeted because their growth prospects and opportunities to support a higher standard of living are inherently better than others; other industries should be sheltered to gain scale to compete internationally. Intervention in general avoids the wasteful and destructive aspects of competition and allows a country to conserve its resources’. Michael E. Porter and Hirotaka Takeuchi, ‘Fixing What Really Ails Japan’, Foreign Affairs, 78, 3, May/June 1999, p. 68. Katz argues that the fundamental cause of the souring of the Japanese miracle is ‘neither a power-hungry bureaucracy nor vested interests. The ultimate cause was that too many of Japan’s practical men remained the slave of defunct ideas’. Japan, p. 17. He does concede, however, that ‘much of Japan’s policymaking can be explained by pure bureaucratic inertia and long-standing political ties between Ministries and their industry clients’. ( p. 166) In his conclusion Katz argues that two factors are preventing reform in Japan: the vested interests in inefficient industries supporting the LDP and the bureaucracy, and the ‘webs of mutual support’ in Japan’s political economy. (p. 343) 47 ‘Nosanbutsu Shohi to Kakaku – Nosanbutsu Kakaku Keisei: Nosanbutsu Kakaku Seisaku no Tenkai’ [‘Consumption and Prices of Agricultural Products – Agricultural Product Price Formation: The Development of Price Policy for Agricultural Products’], Nogyo to Keizai, 66, 8, July 2000, p. 230. 48 Freer Markets, p. 20. 49 Koitabashi Jiro, ‘ “Sengo Umare” Erı¯to Kanryo no Sugao’ [‘The Real Faces of Elite Bureaucrats Who Were “Born After the War’’ ’], cited in Koh, Japan’s Administrative Elite, p. 6. 50 Hartcher, The Ministry, p. 3. Johnson also depicts the bureaucracy as ‘a super-rational bureaucracy single-mindedly pursuing Japan’s national economic interests’. See Katz, Japan, p. 302, quoting Johnson’s argument. 51 Inoguchi Takashi, ‘Shin-Zoku Giin Taiboron’ [‘The Long-Awaited New Tribe Diet Member View’], Chuo Koron, February 1994, p. 106. 52 Shigeko N. Fukai, ‘The Missing Leader: The Structure and Traits of Political Leadership in Japan’, in Ofer Feldman (ed.), Political Psychology in Japan: Behind the Nails that Sometimes Stuck Out (And Get Hammered Down), New York, Nova Science Publishers Inc., 1999, pp. 183–184. Takahashi also argues that bureaucrats are not held accountable because ‘public officials believe their measures are aimed not at helping private enterprise but at the noble cause of benefiting the whole Japanese nation’. ‘Relaxing the Mandarins’ Grip’, p. 2. 53 Japan’s Administrative Elite, p. 219. 54 Cited in Koh, Japan’s Administrative Elite, p. 6. 55 Uriu, Troubled Industries, p. 24. 56 ‘The Japanese Bureaucracy’, p. 267. 57 ‘The Japanese Bureaucracy’, p. 265. 58 However, in accordance with Aoki’s rational choice approach, ministries only adopt the rational regulator role in order to maintain ministry ‘stocks’ on which the selfinterests of individual ministry officials rest. 59 See also Chapter 2 on ‘Ideological Politics’, in my forthcoming volume, Japan’s Agricultural Trade Policy Strategies.

Notes to pp. 39–43

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60 Taichi Sakaiya, ‘The Myth of Able and Trustworthy Bureaucrats’, Economic Eye, 15, 3, Autumn 1994, p. 6. Sakaiya is a former MITI official who entered in 1960 and quit while division chief. 61 Sakaiya Taichi, ‘The Myth of the Competent Bureaucrat’, Japan Echo, 25, 1, February 1998, p. 5. 62 Glen S. Fukushima, ‘Gaiatsu Revisited’, Tokyo Business Today, December 1993, p. 60. 63 Mikuriya Takashi, ‘Reforming the Bureaucracy’, Japan Echo, 23, 3, Autumn, 1996, p. 7 (referring to an observation by Matsubara Ryuichiro, in ‘Why Bureaucrats Don’t Serve the Public Interest’ in the same volume). 64 In a nationwide Asahi poll taken in 1994, only 14 per cent of respondents thought that bureaucrats worked for the people, while 31 per cent said they worked for the interests of their ministries. New Zealand Herald, 24 May 1994. 65 Kato makes the general point, for example, that ‘bureaucrats make the social welfare considerations of a policy compatible with their organizational interests’. Junko Kato, The Problem of Bureaucratic Rationality: Tax Politics in Japan, Princeton, NJ, Princeton University Press, 1994, p. 15. 66 This aspect of bureaucratic behaviour is explored more fully in Chapter 1 of Aurelia George Mulgan, Japan’s Agricultural Policy Regime, New York and London, RoutledgeCurzon, forthcoming 2005. I develop the argument that bureaucratic intervention maximising is subject to external constraints and voluntary tactical concessions. 67 ‘The Myth of Able and Trustworthy Bureaucrats’, p. 6. 68 The Ministry, p. 5. A commentator writing in the Japanese economic press made a similar point, claiming: ‘It is no secret that bureaucrats put the interests of their particular ministries above that of the nation.’ Nikkei Weekly, 18 November 1996. 69 Hartcher, The Ministry, p. 215. 70 Yaguchi Yoshio, ‘Nogyo Hogo o Kangaeru’ [‘Considering Agricultural Protection’], Keizai Zemina¯ ru, December 1993, p. 12. 71 ‘Nosuisho no Daizai’, p. 5. 72 As noted earlier, see my forthcoming volume, Japan’s Agricultural Policy Regime. 73 Aoki, ‘The Japanese Bureaucracy’, p. 272. 74 Wilks and Wright explain the ‘obsessive defence and expansion of a ministry’s sphere of responsibility . . . [as] structural and rationalist in that it derives from single ministry careers and from maximisation of chances for promotion; but it is also cultural and hence a norm that has become an unquestioned, automatic and predictable response to any problem, virtually regardless of the particular circumstances.’ ‘The Comparative Context’, p. 26. 75 Fukai, ‘The Missing Leader’, p. 183. 76 Loyalty to the ministry is entrenched by the practice of officials remaining in a single ministry throughout their bureaucratic careers. 77 John Campbell, for example, ‘comments on the way ministries devote an “intense effort of socialisation into ministry values and norms.” ’ Quoted in Wilks and Wright, ‘The Comparative Context’, p. 24. 78 As Pempel and Muramatsu comment: ‘Throughout all of this [the bureaucrat’s career], loyalty to one’s agency is inculcated and takes priority. . . . The Japanese system . . . is geared toward encouraging . . . “the process of inculcating points of view, fundamental attitudes, [and] loyalties, to the organization . . . that will result in subordinating individual interest . . . to the good of the cooperative whole.” ’ ‘The Japanese Bureaucracy’, p. 49. 79 Nikkei Weekly, 11 March 1996. 80 The main argument of his book is that bureaucrats benefit individually from budgetmaximising behaviour. W. Niskanen, Bureaucracy and Representative Government, Chicago, IL, Rand McNally, 1971. 81 Patrick Dunleavy, Democracy, Bureaucracy and Public Choice, Brighton, Harvester Wheatsheaf, 1990.

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Notes to pp. 43–48

82 See, for example, Aurelia George Mulgan, ‘Japan’s “Un-Westminster” System: Impediments to Reform in a Crisis Economy’, Government and Opposition, 38, 1, Winter 2003, pp. 73–91. 83 George Mulgan, ‘Japan’s “Un-Westminster” System’, pp. 73–91. 84 Kawakita Takao and Onoue Yukio, Norinsuisansho [Ministry of Agriculture, Forestry and Fisheries], Tokyo, Intamedia, 2001, p. 27. 85 This is sometimes known as the traditional Whitehall approach to the bureaucrats’ role in relation to the executive in parliamentary cabinet systems. 86 See George Mulgan, ‘Japan’s “Un-Westminster” System’, pp. 73–91. 87 See, for example, J. Mark Ramseyer and Frances McCall Rosenbluth, Japan’s Political Marketplace, Cambridge, MA, Harvard University Press, 1993. 88 Interestingly, those who have assumed this approach in the Western literature do not argue from a rational choice standpoint. 89 See Leonard J. Schoppa, ‘Zoku Power and LDP Power: A Case Study of the Zoku Role in Education Policy’, Journal of Japanese Studies, 17, 1, 1991, p. 102. 90 Mitsukawa Motochika, Nogyo Dantai Hattenshi [A History of the Development of Agricultural Groups], Tokyo, Meibun Shobo, 1972, pp. 639–641. 91 Japan, p. 325. 92 Aoki, ‘The Japanese Bureaucracy’, p. 265. 93 Aoki, ‘The Japanese Bureaucracy’, p. 267. Aoki’s ‘two faces’ of the Japanese bureaucracy are as pluralist agent (i.e. as representative of clientele interests within specific policy domains) and as semi-autonomous (i.e. as partially independent of clientele interests) rational regulator. As Aoki explains: ‘Each bureaucratic entity seems to reveal two faces in its operations: one face that of a rational/adversarial public regulator over private activities in its jurisdictional sphere, and the other face that of an agent representing the interests of its jurisdictional constituents vis-a-vis other interests in the bureaucratic coordinating processes: budgetary, administrative, and planning’ (p. 268). In acting as quasi-agents of their constituents representing specific interests in the economy, bureaucrats are pursuing a stratagem to ensure the reproducibility of the resources ‘that the ministry can mobilize to implement its policy’ (p. 272). 94 Lehmbruch, ‘The Segmentation of Government’, p. 7. 95 ‘The Japanese Bureaucracy’, p. 68. Muramatsu makes a similar claim elsewhere, arguing that: ‘Each ministry of the central government has a tendency to represent certain related interests of society’. ‘Post-War Politics in Japan’, p. 14. 4 The MAFF 1 Kawakita and Onoue, Norinsuisansho, p. 66. See also below. 2 The Forestry Agency and Fisheries Agency will not be included in this analysis. The further restructuring of the MAFF in 2003 consequent upon the BSE-related scandal in the ministry is examined in Chapter 7 on ‘Maintaining the Foundations of MAFF Intervention’. 3 This was in charge of inspecting the management and accounts of the agricultural cooperatives. Prior to the department’s establishment in the mid-1990s, the Agricultural Cooperatives Division (Nogyo Kyodo Kumiaika) in the Economic Affairs Bureau had both the functions of inspecting and promoting the agricultural cooperatives. Because this was considered to increase the risk of collusion (following the bad example of the MOF and the banks), the task of inspecting the cooperatives was taken away from the Agricultural Cooperatives Division. Personal interview, MAFF official, Canberra, October 2002. 4 These are the official translations of bureau titles according to MAFF sources. I have not included the Agriculture, Forestry and Fisheries Research Council (Norinsuisansho Gijutsu Kaigi) in this discussion, or the 49 experimental stations and research institutes as these were concerned with the more technical aspects of agricultural production.

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5 During government discussions concerning financial reform laws in 1998, the MAFF enlisted the support of the so-called ‘agriculture and forestry tribe’ (norin zoku) in the LDP in fighting a rearguard action against losing its supervisory powers over agricultural cooperative finance in the wake of the housing finance companies ( jusen) scandal. Because unification of financial administration was one of the main foci of discussions, the MAFF was concerned that it would lose its authority to supervise agricultural cooperative finance. Officially this was supervised by the MAFF and the Financial Supervisory Agency, but the MAFF was the de facto supervisor. The MAFF Economic Affairs Bureau argued that ‘the supervision of JA finance requires specialist knowledge of agriculture. Unlike the banks, economic rationalism does not apply.’ Nihon Keizai Shinbun, 17 September 1998. 6 In 1960, upland fields comprised 44.3 per cent of cultivated land area, while in 2001 they comprised 45.3 per cent. The balance was made up of paddy fields (55.7 per cent in 1960 and 54.7 per cent in 2001). Japan International Agricultural Council, ‘Basic Statistics on the Japanese Agricultural and Livestock Industries’, Japan Agrinfo Newsletter, Statistical Reference, 2003, p. 2. 7 These were for Tohoku, Kanto, Hokuriku, Tokai, Kinki, Chugoku and Kyushu. 8 One of the most important set of statistics gathered by these branch offices concerned the rice harvest. 9 Kawakita and Onoue, Norinsuisansho, p. 58. 10 This is now the Food Department of the main ministry. See Chapter 7 on ‘Maintaining the Foundations of MAFF Intervention’. 11 In the new MAFF Secretariat, it was strongly asserted, for example, that ‘the MAFF’s title is the same, but its contents (nakami) are different.’ ‘Chuo Shocho Saihen Suta-to’ [‘Reorganisation of the Central Ministries and Agencies Starts’], Nosei Undo Jya-naru, No. 35, February 2001, p. 13. 12 See Chapter 7 on ‘Maintaining the Foundations of MAFF Intervention’. 13 Japan Agrinfo Newsletter, 18, 7, March 2001, p. 2. 14 In the further MAFF reorganisation of 1 July 2003, the General Food Policy Bureau lost the International Affairs Department to the Minister’s Secretariat. See Chapter 7 on ‘Maintaining the Foundations of MAFF Intervention’. 15 It does, however, concern itself with production-related problems of all agricultural commodities, including rice and wheat. 16 Kawakita and Onoue, Norinsuisansho, p. 86. 17 ‘Chuo Shocho Saihen Suta¯ to’, p. 14. 18 See also Chapter 7 on ‘Maintaining the Foundations of MAFF Intervention’. 19 Personal interview, MAFF official, Tokyo, June 2001. 20 Personal interview, MAFF official, Tokyo, June 2001. 21 In 1994, 5,500 out of the total of 11,488 officials in the Food Agency were rice inspectors. Domon Takeshi, Shinshokuryoho de Nihon no Okome wa ko Kawaru [Japanese Rice Changes This Way Under the New Food Law], Tokyo, Toyo Keizai Shinposha, 1995, p. 98. 22 Personal interview, MAFF official, Canberra, October 2002. 23 ‘Norinsuisansho Setchiho’ [‘Ministry of Agriculture, Forestry and Fisheries Establishment Law’], in Norinsuisansho (ed.), Norinsuisan Roppo [A Compendium of Agriculture, Forestry and Fisheries Laws], Tokyo, Gakuyo Shobo, 2003, p. 8. 24 The Food Agency has subsequently been abolished. See Chapter 7 on ‘Maintaining the Foundations of MAFF Intervention’. 25 If the ‘works’ of the Forestry and Fisheries Agencies are included, the total comes to 89. 26 In 2003 it acquired a new Food Department as a result of the abolition of the Food Agency. See Chapter 7 on ‘Maintaining the Foundations of MAFF Intervention’. 27 ‘Norinsuisansho Setchiho’, p. 11. 28 Food Agency, An Outline of the Staple Food Law: The Law for Stabilization of Supply-Demand and Price of Staple Food, January 1995, p. 8. 29 ‘Norinsuisansho Setchiho’, p. 11.

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Notes to pp. 58–67

30 See ‘Norinsuisansho Setchiho’, p. 11. This was originally the Provisional Measures Law for a Deficiency Payment for Soybeans and Rapeseeds (Daizu Natane Kofukin Zantei Sochiho). Rapeseeds were dropped from price support because their production in Japan diminished almost to nothing. Personal communication, MAFF official, January 2003.

5 Modes and means of agricultural intervention 1 See also the sections below on ‘agricultural pricing systems’ and ‘the MAFF’s institutional adjuncts’. 2 The Food Agency has also purchased and sold important foods ( juyo na nosanbutsu) listed as fresh, dried sweet potato strips, sweet potato starch, potato starch, soybeans and imported feed under the 1953 Agricultural Products Price Stabilisation Law, as well as purchasing, storing and selling imported feedstuffs under the 1952 Feedstuffs Demand and Supply Stabilisation Law. Clause 6 of the 1961 Provisional Measures Law for a Deficiency Payment for Soybeans states that soybeans are exempted from the provisions of the 1953 law. This was because of the huge quantities of soybean imports (compared to the other products covered by the 1953 law), which demanded that different measures be applied to compensate domestic producers in the case of soybeans. Imported feed came under the jurisdiction of the Food Agency because it includes grain such as barley as well as soybean husks. The potato products listed under the Agricultural Products Price Stabilisation Law are also used as ingredients for feed as well as for human food. Personal interview, MAFF official, Canberra, October 2002. 3 The MAFF began to extricate itself from direct participation in the wheat, barley etc. market in 2000. See note 4. 4 See note 5 and Chapter 4 on ‘Agricultural Policies from the Late 1980s to the Late 1990s’ in my forthcoming volume, Japan’s Agricultural Policy Regime. 5 This was all rice that farmers did not consume themselves. Black market rice ( yamigome) was also traded in Japan outside Food Agency controls. 6 See Chapter 8 on ‘The Three Pillars of MAFF Agricultural Policy’. 7 Purchases of foreign rice were relatively small in most years except for 1993–94 because of a domestic rice shortage, and from 1995, the MA quantities agreed to under the URAA. In 1960, for example, the Food Agency imported 219,000 tonnes, in 1975, 270,000, in 1985, 300,000 tonnes and so on. The biggest import quantity was 1,052,000 tonnes in 1965. See Beika ni kansuru Shiryo, December 2002, p. 117. 8 Koichiro Oda, Food Control System in Japan, Food Agency, Ministry of Agriculture, Forestry and Fisheries, September 1986, p. 30. 9 See also Chapter 7 on ‘Maintaining the Foundations of MAFF Intervention’. 10 This description of rice distribution under the FC system is generic. For detailed changes to this system, see Chapter 8 on ‘The Three Pillars of MAFF Agricultural Policies’. 11 See also Chapter 8 on ‘The Three Pillars of MAFF Agricultural Policy’. 12 The registration requisites were also deregulated, which made new entry easier. 13 However, there were other requirements imposed which militated against commercial shippers being able to expand their share of the market at the cost of the agricultural cooperatives. See Chapter 2 on ‘Party Politics’ in my forthcoming volume, Agricultural Policymaking in Japan: The Role of the LDP. 14 See also Chapter 8 on ‘The Three Pillars of MAFF Agricultural Policy’. 15 Minato Tetsuro, Shin Nosei no Sozo [The Creation of a New Agricultural Policy], Tokyo, Norin Tokei Kyokai, 1972, p. 135. See also Aoki, ‘The Japanese Bureaucracy’, p. 272. 16 This is defined officially as follows: ‘policy financing that central and local governments undertake whereby they advance financial funds such as providing interest

Notes to pp. 67–68

17

18 19

20

21 22 23

24 25 26 27

28 29

30

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subsidies to the lending of private financial organs in order to implement policy objectives with respect to agriculture on the basis of laws, cabinet ordinances, regulations and rules etc.’ Nihon Nogyo Nenkan Kankokai (ed.), Nihon Nogyo Nenkan [ Japan Agricultural Yearbook], 2000, Tokyo, Ie no Hikari Kyokai, 1999, p. 321. Minato, Shin Nosei, p. 139. As Imamura explains, from the point of view of the recipient, the difference between subsidies and loans is as follows: in the case of loans, not only do borrowers have to repay the principal, but they also have to pay the interest. In the case of subsidies, the central (or local) governments provide funds unilaterally, and the receivers do not have to repay the principal or the interest. Moreover, in the case of loans, the allocation of funds is reportedly based on the market mechanism. The funds go to parties who have the ability to repay the loans with a given interest rate. In contrast, subsidies are allocated artificially, not through the market mechanism. They are provided to parties towards whom the government implements specific policies. ‘Nogyo Hojokin’, pp. 120–121. Imamura, ‘Nogyo Hojokin’, pp. 120–121. ‘Zaisei to Kinyu – Nogyo Kankei Yosan no Suii: Nogyo Yosan no Hiritsu no Teika’ [‘Finance and Loans – Transition in the Agriculture-Related Budget: The Decreasing Ratio of the Agricultural Budget in the National Budget’], Nogyo to Keizai, 66, 8, July 2000, p. 237. ‘Zaisei to Kinyu – Nogyo Kankei Yosan no Suii: Nosanbutsu Kakaku Seisaku no Koshin’ [‘Finance and Loans – Trends in the Agriculture-Related Budget: The Retreat in Agricultural Product Price Policies’], Nogyo to Keizai, 66, 8, July 2000, p. 238. See also Chapter 3 on ‘Patronage Politics’ in my forthcoming volume, Party and Patronage in Japan’s Rural Sector. See also the discussion in Chapter 8 on ‘The Three Pillars of MAFF Agricultural Policy’. Nihon Keizai Shinbun, 5 September 2000. See also Chapter 7 on ‘Maintaining the Foundations of MAFF Intervention’. Yujiro Hayami, Japanese Agriculture Under Siege, London, Macmillan and St Martin’s Press, 1988, pp. 57, 58. Hayami points out that in terms of the ratio of subsidies to agricultural GDP, Japan’s level in 1983 at 9 per cent was more than 60 per cent higher than the European Community (EC) average at 5.4 per cent: ‘Moreover, while this ratio remained stable or slightly declined in the EC, it rose sharply in Japan during the 1975–80 period’ ( p. 59). He also points out that in terms of the ratio of total subsidies to agricultural GDP, Japan’s level at 32.9 per cent was more than double the EC average at 12.5 per cent in 1984. In Japan’s case this was a rise from 14.0 per cent in 1970 and 14.9 per cent in 1975 ( pp. 59–60). See also the discussion in Chapter 8 on ‘The Three Pillars of MAFF Agricultural Policy’. These are the words of Higashibatake Seiichi quoted in Imamura Naraomi and Inuzuka Akiharu, Seifu to Nomin [Government and the Farmers], Shokuryo Nogyo Mondai Zenshu No. 10, Tokyo, Nosangyoson Bunka Kyokai, 1991, p. 71. Imamura, ‘Nogyo Hojokin’, pp. 120–121. Junko Goto and Naraomi Imamura, ‘Japanese Agriculture: Characteristics, Institutions, and Policies’, in Luther Tweeten, Cynthia L. Dishon, Wen S. Chern, Naraomi Imamura and Masaru Morishima (eds), Japanese & American Agriculture: Tradition and Progress in Conflict, Boulder, CO, Westview Press, 1993, p. 26. Hasegawa Hiroshi, ‘Nosuisho o Haishi seyo’ [‘Abolish the Ministry of Agriculture, Forestry and Fisheries’], Aera, 1 April 2002, pp. 35–38. These were the main agricultural subsidy categories (hojokin) in MAFF GA budget expenditure in 1998. They are listed in Zaisei Chosakai (ed.), Hojokin Soran [A Complete Handbook of Subsidies], 1998, Tokyo, Nihon Densan Keikaku Kabushiki Kaisha, 1998, pp. 188–281. For a discussion of these bodies, see Chapter 7 on ‘Maintaining the Foundations of MAFF Intervention’.

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Notes to pp. 68–69

31 See Norinsuisansho Gyosei Handobukku [A Handbook of Ministry of Agriculture, Forestry and Fisheries Administration], Tokyo, Taisei Shuppansha, 1999, pp. 4–193, 216–226. 32 Under the so-called ‘Basic Law agricultural policy’ (Kihonho nosei ), which aimed to raise productivity and to secure farm household incomes on a par with urban households, it was decided that agricultural loan finance would be used as an important policy measure to achieve these goals. The most significant policy objective of government program loans became the fostering of jiritsu keiei noka, namely large-scale, high-productivity, independently managed farm households that were extolled in the law. Imamura Naraomi, ‘Nogyo Kinyu no Seido to Saikin no Doko’ [‘The System of Agricultural Finance and Recent Trends’], in Matsuura and Imamura (eds), Nogyo Hogo, p. 158. See also Chapter 7 on ‘Maintaining the Foundations of MAFF Intervention’. 33 Minato, Shin Nosei, pp. 144 –145. 34 The Agricultural Modernisation Fund Assistance Law established the Agricultural Modernisation Fund 1961. The goal of the fund is to assist farmers’ technological innovation and agricultural management modernisation. Under the scheme, the national and prefectural governments provide an interest subsidy through the Agricultural Modernisation Fund for loans made by Nokyo financial organs, banks and credit unions to those undertaking modernisation of agricultural management (to develop farm facilities, mechanisation, livestock and orchards). Subsidised loans are made available for both jointly operated facilities and private facilities, that is, to farmers, agricultural cooperatives and others. Norinsuisansho Gyosei Handobukku, p. 12. 35 The Natural Disaster Fund System was established by the 1955 Provisional Measures Law Concerning Financing of Funds for Damaged Farmers, Foresters, Fishers and Others Owing to Natural Disasters. It provides farmers suffering from natural disasters with the necessary management funds at low interest to restore production, in order to stabilise management. When local governments subsidise financial organs for the difference in interest rates between the interest rate of the Disaster Fund and their standard interest rate, the central government provides interest indemnification to the prefectural government. The central government also provides prefectural governments with assistance to indemnify local governments when they in turn indemnify financial organs for losses incurred as a result of loan repayments not being completed. Norinsuisansho Gyosei Handobukku, p. 11. 36 This provides funding to alleviate the burden of farmers who are trying positively to promote management improvement after the URAA for the purpose of developing efficient and stable farm management units (keieitai). The central government pays up to the half of the expenses incurred by prefectural governments in indemnifying interest to agricultural cooperatives and private financial organs. Those who wish to apply for this fund are required to submit an agricultural management reform promotion plan and obtain the approval of the prefectural governor. Those who are in this fund are entitled to receive a credit guarantee from an agricultural credit fund association. Norinsuisansho Gyosei Handobukku, p. 14. 37 See Chapter 7 on ‘Maintaining the Foundations of MAFF Intervention’. 38 The Agricultural Improvement Fund includes interest-free loans to farmers who wish to introduce new technology for livelihood improvement purposes and for cultivating agricultural ‘successors’. There are two types of loan: management commencement funds that provide finance for the introduction of machinery and facilities; and funds for management technology innovation which target the introduction of IT tools. It is provided as an incentive to young farmers not to leave rural areas. 39 This system provides all-out financial support to those farmers whose agricultural management improvement plans have been authorised under the 1993 Law to Promote the Strengthening of the Agricultural Management Base in order to develop efficient and stable farm management entities. It comprehensively finances two funds in order to achieve agricultural management improvement plans: a fund to strengthen the basis of agricultural management (Super L) which is financed from the

Notes to pp. 69–70

40 41

42

43

44

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Agriculture, Forestry and Fisheries Finance Corporation and from the Okinawa Promotion and Development Financial Corporation, and which provides the necessary long-term, low-interest funds for achieving scale expansion and other management development in line with agricultural management improvement plans; and a fund to promote agricultural management improvement (Super S) which is something that Nokyo and other private financial organs finance and which provides the necessary low-interest working funds to achieve the management development of ‘authorised farmers’ (nintei nogyosha). Norinsuisansho Gyosei Handobukku, p. 13. See below for a discussion of MAFF special public corporations. Norinsuisansho Gyosei Handobukku, pp. 9–10. Agriculture, Forestry and Fisheries Finance Corporation funds have targeted private management structural improvement since 1963. Until then, the main purpose of the finance corporation was to provide capital for public works centring on land improvement. (See Imamura, ‘Nogyo Kinyu’, p. 157.) As the focus of agricultural policy changed, additional funds were made available for other purposes. Now, for example, the corporation, using its general facilities account, provides low-interest loans to expand the consumption and promote the use of domestically produced agricultural, forestry and fishery products by loaning the necessary funds to entities that undertake the development of new products that use raw materials and for the development of new uses of agricultural, forestry and fisheries products. Those who are involved in industries relating to the processing of agricultural, forestry and fisheries products are eligible to apply for these loans if they use it to cover the necessary costs for R&D (i.e. staff costs, facilities and licenses). Similarly, the finance corporation provides long-term, low-interest loans to promote the development of the food distribution system in order to contribute to realisation of a healthy food livelihood and stable improvement of the people. The funding is for entities that develop facilities that are recognised as contributing to the high quality control, rationalisation and modernisation of food distribution, including shipment, storage, packing, picking, cooking etc. Norinsuisansho Gyosei Handobukku, pp. 174 –175. In contrast to all other corporation accounts that have been contracting, amounts loaned from the general facilities account have been growing exponentially. They doubled between 1995 and 1998, for example. Moreover, the biggest increases were registered in the food distribution improvement category. Norinsuisansho, Tokei Johobu, Poketto Norinsuisan Tokei [Pocket Agriculture, Forestry and Fisheries Statistics], 2000, Tokyo, Norin Tokei Kyokai, 2000 (hereafter Poketto), p. 99. The 1961 Agricultural Credit Guarantee Insurance Law established the agricultural credit guarantee insurance system. Funds guaranteed under this system are those of the Agricultural Modernisation Fund and the Agriculture, Forestry and Fisheries Finance Corporation. Norinsuisansho Gyosei Handobukku, p. 15. Basically, one half of the funds available from the agricultural credit fund associations is subsidised by prefectural governments and the other half is paid for by other members. Moreover, half of the funds subsidised by the prefectural governments, which is a quarter of all the funds, is financed by the central government. Norinsuisansho Gyosei Handobukku, p. 15. This programme guarantees the debt that members (such as Nokyo members) incur when they borrow from the Agricultural Modernisation Fund and other government programme loans. The credit funds are organisations that Nokyo etc. have financed. When they receive funding from prefectural governments to guarantee debts, the prefectural governments receive financial aid from the national government at the same time. ‘Zaisei to Kinyu – Nogyo Kinyu to Nokyo Kinyu: Seido Kinyu’ [‘Finance and Loans – Agricultural Loans and Nokyo Loans: Government Program Loans’], Nogyo to Keizai, 66, 8, July 2000, pp. 244 –245. See Table 4 in ‘Zaisei to Kinyu – Nogyo Kinyu to Nokyo Kinyu’, p. 245. However, the proportion of government programme loans (i.e. policy loans) to total agricultural production loans has fallen in recent years because of very low interest rates on private capital and the decline in agricultural investment ( p. 245).

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Notes to pp. 70–80

45 ‘Zaisei to Kinyu – Nogyo Kinyu to Nokyo Kinyu’, p. 244. 46 Some of these pricing systems have now changed. See Chapter 5 on ‘Agricultural Policies from the Late 1990s Onwards’ in my forthcoming volume, Japan’s Agricultural Policy Regime. 47 See also note 48. 48 ‘Autoputto – Kome to Mugi: Beibaku ni kansuru Keiei Anteika Seisaku no Arikata’ [‘Output – Rice and Wheat: Management Stabilisation Policies Relating to Rice and Wheat’], Nogyo to Keizai, 66, 8, July 2000, p. 161. 49 See also Chapter 8 on ‘The Three Pillars of MAFF Agricultural Policy’ and Chapter 5 on ‘Agricultural Policies from the Late 1990s’ in my forthcoming volume, Japan’s Agricultural Policy Regime. 50 Hayashi Nobuaki, Nogyo wa Nihon no O’nimotsu ka [Is Agriculture a Burden to Japan?], Tokyo, Ie no Hikari Kyokai, 1987, p. 72. 51 Yamaji Susumu, ‘Atsuryoku Dantai Toshite no Nokyo’ [‘Nokyo As A Pressure Group’], in Kondo Yasuo (ed.), Nokyo Nijugonen: Sokatsu to Tenbo [Twenty Five Years of Nokyo: Summary and Outlook], Nihon Nogyo Nenpo 22, Tokyo, Ochanomizu Shobo, 1973, p. 239. 52 These new systems are elaborated in my forthcoming volume, Japan’s Agricultural Policy Regime. 53 Hiroshi Yamauchi, ‘Analytical Institutional Economics of Japanese Agricultural Policy’, Seminar presented to the Research Institute for Asian Development, University of Hawaii, May 1993, p. 18. 54 This is the gist of Article 1 of the MAFF Establishment Law which sets out the purpose of the legislation. ‘Norinsuisansho Setchiho’, p. 8. 55 Personal interview, MAFF official, Canberra, October 2002. 56 Personal interview, MAFF official, Canberra, October 2002. 57 The total number can vary from year to year. In 1993, there were 126. In 1997 there were 122. In 2001, there were 123. When particular laws are taken off the books, others tend to replace them, so the total figure remains remarkably stable over the years. These figures do not include laws administered by the Forestry and Fisheries agencies. The MAFF also jointly administers other laws with other ministries, which are not necessarily listed in the compendium of agricultural, forestry, and fisheries laws. Furthermore, in the MAFF legal compendium, not all laws it administers are listed, particularly those which are not being actively implemented. 58 For example, the laws were previously grouped into the categories of ‘General Provisions’, ‘Economic Affairs’, ‘Agricultural Structure Improvement’, ‘Agricultural Production’, ‘Livestock Industry’, ‘Food and Marketing’, ‘Technical’ (corresponding to the MAFF’s Technical Council), ‘Food’ (corresponding to the Food Agency) and ‘Miscellaneous’. They are now grouped into ‘General Food Policy’, ‘Agricultural Production’, ‘Management Improvement’ and ‘Rural Development’, ‘Technical’, ‘Food’ and ‘Miscellaneous’. When the New Food Law was implemented, the ‘Food Control’ category (corresponding to the Food Control Agency, or Shokuryo Kanricho) became the ‘Food’ category. 59 JICA operates agricultural, forestry and fisheries projects under project-type technical cooperation schemes, which involve the dispatch of experts, acceptance of trainees and provision of equipment funded by Japan’s Official Development Assistance (ODA) budget. 60 This entity was established by the 1999 Green Resources Corporation Law (Midori Shigen Kodanho), which was abolished in 2002. See Chapter 7 on ‘Maintaining the Foundations of MAFF Intervention’. 61 This body used to be organised under the 1974 Agricultural Land Development Corporation Law (Noyochi Seibi Kodanho), which was abolished in 1999. The corporation was merged with another special public corporation in October 1999. See Chapter 7 on ‘Maintaining the Foundations of MAFF Intervention’.

Notes to pp. 80–86

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62 These are established by owners of farmland in urban areas. The role of the associations is to convert farmland into residential land in an ‘orderly’ manner whilst keeping the remaining farmland in good condition for farming. Personal communication, MAFF official, December 2003. 63 The agricultural land-holding rationalisation corporations were originally set up under the Agricultural Land Law. They are non-profit groups that are approved as legal persons by the prefectural governor to undertake agricultural land-holding rationalisation works in order to expand the scale of agricultural management and to undertake the collective use (shu-danka) of agricultural land. Such works include buying and leasing agricultural land, and selling, exchanging and loaning the appropriate agricultural land. In practice they act as farmland brokers with rights to acquire agricultural land. They are mainly involved in leasing land to farmers from other farmers who can no longer farm by themselves because of old age or other employment activities. See also the discussion in Chapter 7 on ‘Maintaining the Foundations of MAFF Intervention’. 64 Norinsuisansho (ed.), Nogyo Roppo [A Compendium of Agricultural Laws], Tokyo, Gakuyo Shobo, 1993, pp. 1130–1137. 65 Norinsuisan Roppo, 1998, pp. 1335–1342. 66 Norinsuisan Roppo, 1998, pp. 589–652. 67 Another off-budgetary source is funding derived from the profits of state trading by the MAFF and its special public corporations. This is discussed in the note 77 here and in Chapter 7 on ‘Maintaining the Foundations of MAFF Intervention’. 68 This is officially defined as the total amount of the GA budget allocated to agriculture, forestry and fisheries not only by the MAFF but also by other ministries which, prior to the administrative restructuring of January 2001, were the Ministry of Construction, the Ministry of Health and Welfare, the MOF, the Ministry of Foreign Affairs and the Prime Minister’s Office, particularly its agencies such as the Hokkaido Development Agency, Okinawa Development Agency and Land Agency. 69 See also note 79. 70 Imamura, ‘Nogyo Hojokin’, pp. 120–121. 71 The Food Control Special Account is managed by the Food Agency. It consists of three sub-accounts: the Domestic Rice Control Account, the Domestic Wheat Control Account, and the Imported Food Control Account. The Domestic Rice Control Account is the largest. 72 See Table I-18 in Imamura, ‘Nogyo Hojokin’, p. 122. 73 Hayami, Japanese Agriculture, p. 57. 74 ‘Zaisei to Kinyu – Nogyo Kankei Yosan no Suii: Nogyo Yosan no Hiritsu no Teika’, p. 236. 75 See Chapter 4 on ‘Agricultural Policies from the Late 1980s to the Late 1990s’ in my forthcoming volume, Japan’s Agricultural Policy Regime. 76 ‘Zaisei to Kinyu – Nogyo Kankei Yosan no Suii: Nogyo Yosan no Hiritsu no Teika’, pp. 236–237. 77 For more details, see Chapter 4 on ‘Budget Politics’ in my forthcoming volume, Party and Patronage in Japan’s Rural Sector. 78 See note 79. 79 See Chapter 8 on ‘The Three Pillars of MAFF Agricultural Policy’. 80 See also Chapter 6 on ‘Agricultural Intervention and Bureaucratic Self-Interest’. 81 Personal interview, MAFF official, Tokyo, June 2001. 82 The functions of this body are to promote private research, to undertake basic research, and to promote agricultural mechanisation. In 1986 it was reorganised from the special public corporation – the Agricultural Mechanisation Research Institute – with a view to linking producer, bureaucratic and academic research on agriculture, forestry and fisheries industries and the food industry. According to its own website, it receives strong demands for new technology such as innovative agricultural machinery and leading technologies such as biotech knowledge. http://www.brain.go.jp.

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83

84 85 86

87 88

89 90

91 92 93 94 95

96

Notes to pp. 86–88 BRAIN has recently been restructured. See Chapter 7 on ‘Maintaining the Foundations of MAFF Intervention’. About half of the corporation’s funds for its loans comes from the FILP. In 2001, this amounted to ¥275 billion, with ¥83 billion sourced from the agriculture, forestry and fisheries GA budget. Norinsuisan Yosan no Setsumei, 2001, p. 15. This is a decline from the ¥97.7 billion provided in 1999 (see Table 8.1). Given the importance of the FILP as a source of funds for the corporation, the changed arrangements for zaito funding is a big issue both for the corporation and the MAFF (the Finance Division of the Management Improvement Bureau). As part of FILP reform, MAFF corporations are under pressure to raise funds by selling their own bonds instead of mainly relying on FILP funds. Personal communication, MAFF official, July 2003. See note 94. The gentan, for example, has been mainly implemented by city-level governments using Nokyo as their main instrument of intervention. Personal communication, Professor Honma Masayoshi, January 2001. See also note 95. The other laws under which local government is delegated functions are the Agricultural Cooperative Union Law, the Law to Promote the Strengthening of the Agricultural Management Base, the Land Improvement Law, the Agricultural Land Law, the 1974 Production Green Land Law, the 1971 Wholesale Markets Law, the 1971 Special Measures Law Concerning the Sale of State-Owned Agricultural Land, the 1971 Law to Promote the Introduction of Industries etc. to Rural Regions, the 1969 Law Concerning the Development of Agricultural Promotion Regions and the 1989 Law for Special Exceptions to the Agricultural Land Law etc. Concerning the Leasing of Specific Agricultural Land. Oda, Food Control System in Japan, p. 18. These are organised by farmers in towns and villages. The districts then make an application for works. If the scale of the enterprise exceeds 200 ha it is regarded as a prefecturally managed project, if it is less than 200 ha, it becomes a group-managed (in many cases local Nokyo) project. Hirose, Hojokin, p. 20. See Table 3.2 in my forthcoming volume, Party and Patronage in Japan’s Rural Sector. In 2001, the so-called ‘supervised’ (shukan) special public corporations were the Agriculture, Forestry and Fisheries Finance Corporation, ALIC, JRA, the Japan Green Resources Corporation, the National Association of Regional Horse Racing, the Farmers Pension Fund and the Agriculture, Foresty and Fishery Groups Mutual Aid Association. Kawakita and Onoue, Norinsuisansho, pp. 107–110. JICA and the Water Resources Development Corporation were jointly (kyokan) special public corporations. See also below and Chapter 7 on ‘Maintaining the Foundations of MAFF Intervention’. The listing of these organisations can be found in Norinsuisansho Meibo [Ministry of Agriculture, Forestry and Fisheries Officials’ Register], 2002, Tokyo, Norin Shuppansha, 2001, pp. 549–688. For an extensive discussion of gaikaku dantai attached to the MAFF, see Chapter 2 on ‘Interest Group Politics’ in George Mulgan, The Politics of Agriculture, pp. 39–163. See Chapter 7 on ‘Maintaining the Foundations of MAFF Intervention’. ALIC resulted from the merger of the LIPC with the Silk and Sugar Price Stabilisation Corporation (also called the Japan Raw Silk and Sugar Price Stabilisation Agency) in October 1996. See also note 103. For additional analysis of the LIPC, see Chapter 6 on ‘Agricultural Intervention and Bureaucratic Self-Interest’, Chapter 7 on ‘Maintaining the Foundations of MAFF Intervention’ and Chapter 2 on ‘Interest Group Politics’ in George Mulgan, The Politics of Agriculture, pp. 39–163. Where markets are run in cooperation with the private sector, the MAFF creates organisations that span the two. The council allocated the private portion of the general beef IQ amongst its members which included the national associations of wholesale and

Notes to pp. 89–91

97 98 99 100 101

102 103 104

105

106

107 108 109 110

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retail meat traders, meat processors and meat importers (i.e. the designated trading companies permitted to actually bring the beef into Japan), Nokyo federations with livestock interests, another MAFF gaikaku dantai, the Central Livestock Association, and a number of wholesale meat market companies. John Longworth, Beef in Japan, St Lucia, University of Queensland Press, 1983, p. 70. See LIPC, Livestock Industry Promotion Corporation: Corporate Profile, n.d., p. 7. See also Chapter 7 on ‘Maintaining the Foundations of MAFF Intervention’. Japan Dairy Council, Japan Dairy Farming for Yesterday, Today, Tomorrow: Supporting a Healthy Japanese Diet, n.d., pp. 14–15. See also Chapter 7 on ‘Maintaining the Foundations of MAFF Intervention’. Under the price support scheme for raw milk for processing, the LIPC paid a subsidy (deficiency payment) to producers to compensate them for the difference between a guaranteed price (hosho kakaku) set by the MAFF Minister and the standard transaction price. Dairy manufacturers were obliged to buy raw milk for processing at the standard transaction price, or at a level higher than that. Government subsidies were based on the difference between the average cost of producing 1 kg of milk for processing (the guaranteed price) and the price dairy farmers received for the same quantity (the standard transaction price), which was the unit price for the deficiency payment. In other words, the price received by dairy farmers for their milk was the total of the standard transaction price paid by the milk processors and subsidies (the deficiency payment) from the government via the LIPC. Livestock Industry Promotion Corporation, p. 4. See also Chapter 3 on ‘Maintaining the Foundations of MAFF Intervention’. See also Chapter 6 on ‘Agricultural Intervention and Bureaucratic Self-Interest’ and Chapter 7 on ‘Maintaining the Foundations of MAFF Intervention’. The SSPSC stabilised the prices of silk and sugar through purchasing and sales as well as paying subsidies to farmers. The corporation was the monopoly purchaser of silk imports. Textile companies were required to pay a commission on the import price to the corporation plus an extra ¥1,510 per kg as a sericulture farm household’s countermeasures fee. After the tariffication system came into effect on 1 April 1995, textile companies were scheduled to pay the corporation a fee decided by the MAFF in addition to the 7.5 per cent import tariff. Asahi Shinbun, 31 January 1995. See also Chapter 7 on ‘Maintaining the Foundations of MAFF Intervention’ and Chapter 4 on ‘Agricultural Policies from the Late 1980s to the Late 1990s’ in my forthcoming volume, Japan’s Agricultural Policy Regime. Under the silk price stabilisation system, the SSPSC bought up the entire production of silk thread in Japan at prices set to ensure the continued production of silk thread. It also bought silk imports. As a result, the SSPSC ran up inventories that were the equivalent of about one year’s production. Accumulated losses amounted to about ¥200 billion by 1985. http://www.japanlaw.com/lawletter/june85/dyl.htm Under the 1965 Sugar Price Stabilisation Law (Satorui Kakaku Anteiho), a minimum price guarantee system operated for sugar cane and sugar beets. When the market price dropped below a certain predetermined level, the MAFF guaranteed the minimum price through buying operations by its special public corporation (originally the Sugar Price Stabilisation Corporation). ALIC, Agriculture & Livestock Industries Corporation: Corporate Profile, n.d., p. 3. See also note 116. Amongst MAFF gaikaku dantai are the Tokyo Grain Commodities Exchange, the Fukuoka Commodities Exchange, the Kansai Commodities Exchange and the Voluntarily Marketed Rice Price Formation Centre. Takeuchi, Nihon no Kanryo, pp. 188–190. This percentage includes the special public corporations, approved corporations, public interest corporations and intermediate corporations, including the national, prefectural and local groups of Nokyo, the agricultural committee system, the agricultural mutual

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112 113 114 115 116 117 118 119 120 121 122 123 124 125 126 127 128 129 130 131 132 133

134 135 136 137 138

139

Notes to pp. 91–94 aid associations and the land improvement industry groups. See Table 3.2 in my forthcoming volume, Party and Patronage in Japan’s Rural Sector. This contrasts with European nations, for example, which expend considerable amounts of subsidies on agriculture, but they are mainly directed to individual farmers. The amount of direct subsidies to farmers is, however, increasing with changes in agricultural policy. See Chapter 5 on ‘Agricultural Policies from the Late 1990s’ in my forthcoming volume, Japan’s Agricultural Policy Regime. Imamura, ‘Nogyo Hojokin’, p. 128. Imamura, ‘Nogyo Hojokin’, pp. 124 –127. Hayashi, Nogyo, p. 74. See Chapter 6 on ‘Agricultural Intervention and Bureaucratic Self-Interest’, and Chapter 7 on ‘Maintaining the Foundations of MAFF Intervention’. ‘ “Okawara Jimusho” no Seitai’ [‘The Living Body of “Okawara’s Office’’ ’], Aera, 20 March 2000, p. 19. ‘ “Okawara Jimusho” ’, p. 19. See also Chapter 7 on ‘Maintaining the Foundations of MAFF Intervention’. For details of this organisation, see George Mulgan, The Politics of Agriculture, pp. 122–123. The MAFF provides 50 per cent of the costs of these works. Mainichi Shinbun, 5 August 1999. Mainichi Shinbun, 8 May 1999. Mainichi Shinbun, 5 August 1999. The association received orders to construct plans for 3,000 sewage treatment facilities, which amounted to 85 per cent of the total of 3,500 facilities. Mainichi Shinbun, 5 August 1999. Mainichi Shinbun, 9 May 1999. Mainichi Shinbun, 5 August 1999. Mainichi Shinbun, 8 May 1999. Mainichi Shinbun, 8 May 1999. Mainichi Shinbun, 8 May 1999. Mainichi Shinbun, 8 May 1999. Mainichi Shinbun, 5 August 1999. Imamura, ‘Nogyo Kinyu’, p. 157. Poketto, 2000, p. 98. Poketto, 2000, p. 98. In the agricultural production loan market, the shares are somewhat different. In 1970, the Agriculture, Forestry and Fisheries Finance Corporation share of the agricultural loan balance was 31 per cent, while Nokyo’s was 60 per cent and private financial institutions 9 per cent. By 1995, their shares had altered to 40 per cent, 38 per cent and 22 per cent respectively, showing a decline in Nokyo’s share and a rise in the share of private financial institutions. ‘Zaisei to Kinyu – Nogyo Kinyu to Nokyo Kinyu: Seido Kinyu’, p. 245. ‘Zaisei to Kinyu – Nogyo Kinyu to Nokyo Kinyu: Seido Kinyu’, p. 244. ‘Zaisei to Kinyu – Nogyo Kinyu to Nokyo Kinyu: Seido Kinyu’, p. 244. For details of the balance of power between bureaucratic authority and interest group independence between the MAFF and statutory interest groups in the agricultural sector, see George Mulgan, The Politics of Agriculture, pp. 39–163. Pempel and Muramatsu, ‘The Japanese Bureaucracy’, p. 68. ‘Toron’ [‘Discussion’], in Saito Makoto, ‘Shimeikan no Henshitsu wa Tozen’ [‘it is Natural that the Nature of the Mission Has Changed’], in Nosei Jya- narisuto no Kai (ed.), Norin Kanryo o Kaibo Suru [Dissecting the Agriculture and Forestry Bureaucracy], Nihon Nogyo no Ugoki 11, Tokyo, Nihon Norin Keikaku Kyokai, January 1968, p. 44. See also Chapter 4 on ‘Organisational Politics’ in George Mulgan, The Politics of Agriculture, pp. 205–299.

Notes to pp. 95–97

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140 Godo calls it a ‘government-led rice-production cartel.’ Yoshihisa Godo, ‘Reforming Japan’s Agricultural Policies’, in Robert Stern (ed.), Issues and Options for U.S. – Japan Trade Policies, Ann Arbor, MI, University of Michigan Press, 2002, p. 80. 141 See also Chapter 8 on ‘The Three Pillars of MAFF Agricultural Policy’ and Chapter 5 on ‘Agricultural Policies from the Late 1990s’ in my forthcoming volume, Japan’s Agricultural Policy Regime for the latest developments in the organisation of the gentan. 142 See, for example, the Sugar Refining Industry Association, the National Margarine Manufacturers Cooperative Association, the Japan Meat Processors Association and the Japan Oilseed Processors Association. 143 See, for example, the Japan Refrigerated Foods Association and the Country Elevator Association. 144 See, for example, the National Federation of Grain Merchants Cooperative Associations and the Japan Flower Wholesale Markets Association. 145 See, for example, the Agriculture, Forestry and Fisheries Aviation Association. 146 See, for example, the National Federation of Agricultural Machinery Business Cooperative Associations. 147 See, for example, the National Fertiliser Dealers’ Federation. 148 See, for example, the Cooperative Union Japan Feed Industry Association. 149 See, for example, the National Agricultural Chemical Cooperative Association. 150 See, for example, the Agricultural Engineering Industry Association. 151 Nokyo (and the forestry and fishery cooperative organisations) are not industry associations even though some gyokai at the national level take the form of federations of cooperative unions (kyodo kumiai rengokai ) as do many industry associations. A major difference between the primary industry cooperatives and the industry associations is their respective membership structures. Members of the agricultural (and forestry and fishery cooperatives) are individuals (or groups of individuals engaged in collective farming), not companies, even though they have cooperative union/association status in common. 152 The Society of Japan Food Industry Executives Handbook, 2001–2, p. 2. 153 Personal interview, MAFF official, Tokyo, June 2001. 154 The MAFF has a list of agriculture, forestry and fisheries-related enterprises categorised according to type: fertiliser companies (28), agricultural chemicals (33), agricultural machinery (18), fuel companies (10), paper, bag and wrapping materials (19), corrugated cardboard (12), hemp bags (3), feed (18), construction and facilities materials (97), livestock (9), food (63), daily necessities (4), clothing (6), rice and agricultural production (2), horticulture (4), distribution (6), fisheries (9), forestry (1), trading companies (7), car (10), electrical machinery (16), and others (15). Sangyo Seisaku Kenkyujo, Norinsuisansho: Sono Yakuwari to Seisaku [The Ministry of Agriculture, Forestry and Fisheries: Its Role and Policies], Tokyo, Sangyo Seisaku Kenkyujo, 1988, pp. 185–198. 155 Personal interview, MAFF official, Tokyo, June 2001. 156 Mainichi Shinbun, 25 December 1998. 157 Author unknown, ‘Administrative Guidance’, p. 3. 158 Author unknown, ‘Administrative Guidance’, p. 9. 159 Personal interview, MAFF official, Canberra, October 2002. 160 Personal interview, Dairy Farmers’ Political Federation of Japan executives, Tokyo, July 1995. 161 Personal interview, MAFF official, Tokyo, June 2001. 162 See Chapter 8 on ‘The Three Pillars of MAFF Agricultural Policy’. 163 Personal communication, Professor Godo Yoshihisa, March 2001. See also Chapter 8 on ‘The Three Pillars of MAFF Agricultural Policy’. 164 Of this total, 230 were not mandated by law. In June 1998, the MAFF announced that it would abolish most of its administrative directives and instructions to agricultural and fishery financial institutions that month in order to make the ministry’s supervision more transparent. Nikkei Weekly, 15 June 1998.

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Notes to pp. 97–100

165 Personal communication, Professor Godo Yoshihisa, March 2001. As Godo comments, the MAFF is considering stipulating its criteria of authorisation of teikan explicitly in the Agricultural Cooperative Law which may be amended accordingly. 166 Personal communication, Professor Godo Yoshihisa, March 2001. 167 Mainichi Shinbun, 6 July 1999. 168 The Japan Times, 30 January 2002. The fact that the MAFF used ‘non-binding’ administrative guidance rather than instituting an outright ban on the use of this type of feed is widely regarded as responsible for the outbreak of mad-cow disease in Japan in 2001. See Chapter 7 on ‘Maintaining the Foundations of MAFF Intervention’. 169 Personal interview, MAFF official, Canberra, December 2002. 170 Nikkei Weekly, 13 May 2002. 171 Norinsuisansho Meibo, 1982, pp. 380– 415. 172 This group included two working in Norinchukin. 173 Some individuals hold positions in more than one organisation. The proportion of retired MAFF personnel in gaikaku dantai rose slightly if Nokyo were included, given that four retired jimukan were employed in national agricultural cooperative organisations: a managing director of Zenchu (in 1981, the National Central Union of Agricultural Cooperatives was known simply as Zenchu, not JA Zenchu) and the chairman of four national Nokyo federations that were also public interest corporations. These were the National Dairy Nokyo Federation, the National Colonisation Nokyo Federation and the National Dried Cocoon Marketing Nokyo Federation. In general, the employment of retired MAFF officials in Nokyo organisations is uncommon, particularly at the prefectural and local levels, because managers are career officials and elected executives are chosen from the membership. Furthermore, even national-level executives must simultaneously hold positions in prefectural and local cooperatives. 174 Norinsuisansho Meibo, 2002, pp. 418– 439. 175 This group included five in Norinchukin. 176 As with the 1981 profile, some of these retired MAFF employees held positions in more than one group. 177 See also Chapter 6 on ‘Agricultural Intervention and Bureaucratic Self-Interest’. 178 Former jimukan occupied the posts of chairman of directors, managing director, director (2), auditor, consultant and inquiry council chairman and member. 179 See the discussion of this special public corporation in the following note. 180 They held the posts of chairman, vice-chairman and managing director. 181 Both were vice-presidents. For all these details, see Norinsuisansho Meibo, 2002, pp. 418– 439. 182 It has now been abolished. See Chapter 7 on ‘Maintaining the Foundations of MAFF Intervention’. 183 As at March 1995 members of 10,496 associations were covered by the pension fund including major entities such as Norinchukin and the national agricultural cooperative federations as well as prefectural federations and local agricultural cooperatives. 184 Kyoko Chinone, ‘Parachuting into Paradise’, Tokyo Business Today, June 1994, p. 15. The exact proportion was 82.7 per cent. 185 Norinsuisansho Meibo, 2002, pp. 418– 439. 186 Besides the chairman of directors, a director and auditor were also from the MAFF. 187 The chairman of directors and a director were ex-MAFF jimukan. For all these details, see Norinsuisansho Meibo, pp. 418– 439. 188 Five former jimukan were working respectively as chairman of directors, directors and office chief. 189 Three MAFF retirees were working respectively as chairman of directors, vice-chairman and director. 190 The chairman of directors, managing director and adviser were all ex-MAFF jimukan. 191 The chairman of directors and two advisors were from the ranks of ex-jimukan. For all these details, see Norinsuisansho Meibo, 2002, pp. 418– 439.

Notes to pp. 101–106

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192 Norinsuisansho Meibo, 2002, pp. 418– 439. 193 Norinsuisansho Meibo, 2002, pp. 418– 439. 194 Four had become city mayors and one was the governor of Kagawa Prefecture. The last is virtually a ‘reserved position’ for a retired MAFF bureaucrat. 195 These included international organisations and groups not listed as gaikaku dantai such as the Japan Whaling Association. This was a gaikaku dantai until 1988. 196 See Chapter 6 on ‘Agricultural Intervention and Bureaucratic Self-Interest’. 197 Norinsuisansho Meibo, 1982, pp. 438–543. 198 See also Chapter 6 on ‘Agricultural Intervention and Bureaucratic Self-Interest’. 199 In the 1999 gikan listing for example, construction companies claimed by far the largest proportion of retired MAFF officials (127 out of 66), followed by consultancy companies many of which service the public works industry (98), civil engineering (39) which is similarly related, manufacturing particularly in agriculture-related areas (72) and research and development (46). Norinsuisansho Meibo, 1999, pp. 497–646. Schaede claims that most of the OBs in the construction industry come either from the MOC or the MAFF. In her view, in the latter case, the MAFF connection provided access to land, but in actual fact helped to ensure favoured treatment in the allocation of construction contracts. See ‘The “Old Boy” Network’, p. 309. 200 Mainichi Shinbun, 5 August 1999. 201 Mainichi Shinbun, 8 May 1999. 202 Mainichi Shinbun, 8 May 1999.

6 Agricultural intervention and bureaucratic self-interest 1 As Moore points out, bureaucratic institutions of agricultural protection in Japan (as elsewhere in East Asia) ‘institutionally or as an aggregate of individuals benefit from . . . [this] policy’. Mick Moore, ‘Economic Structure and the Politics of Sectoral Bias: East Asian and Other Cases’, in Ashutosh Varshney (ed.), Beyond Urban Bias, Journal of Development Studies, Special Issue, 29, 4, July 1993, p. 107. 2 Matsuzaka discusses at some length the decline in the MAFF’s intra-bureaucratic power consequent upon the decline in agriculture beginning in the 1960s (measured in terms of agriculture’s position in the national economy), and the resulting ‘complex’ that MAFF bureaucrats acquired towards ministries such as MITI and MOF. He also argued that one of the reasons why the MAFF power base was sinking was because the influence of the agriculture and forestry Diet members was ebbing. Matsuzaka Shojiro, ‘Koritsuka Suru Norin Kanryo’ [‘The Increasingly Isolated Agriculture and Forestry Bureaucracy’], in Nosei Jya-narisuto no Kai (ed.), Norin Kanryo o Kaibo Suru [Dissecting the Agriculture and Forestry Bureaucracy], Nihon Nogyo no Ugoki 11, Tokyo, Nihon Norin Keikaku Kyokai, January 1968, pp. 6–7, 12. 3 Matsuzaka, ‘Koritsuka Suru Norin Kanryo’, p. 11. 4 Chalmers Johnson, ‘MITI and Japanese International Economic Policy’, in Robert A. Scalapino (ed.), The Foreign Policy of Modern Japan, Berkeley, CA, University of California Press, 1977, p. 258. 5 Yomiuri Shinbun, 1 August 1986. Almost the entire complement of MPT personnel was postal workers employed by the Postal Services Agency (until corporatisation took effect on 1 April 2003). In 1986, agency personnel numbered 309,164 (out of the total of 311,839). Gyosei Kikan Soshikizu, July 1986, pp. 12–13. 6 Almost 70 per cent of MOF personnel are staff of taxation bureaus (i.e. tax collectors). They numbered 52,916 out of the total of 75,726 in 1986. In this year, there were 22,810 officials attached to the main ministry. Gyosei Kikan Soshikizu, July 1986, pp. 12–13. 7 Of this figure, 27,552 were attached to the Forestry Agency (26,219 of these were forestry workers employed in state-owned forests), and 16,105 were attached to the Food Agency. Jinjiin, Kanri Kyoku, Shokukaika, Gyosei Kikan Soshikizu, [A Chart of

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8 9 10 11 12 13 14 15 16 17 18 19 20

21 22 23 24 25 26 27 28 29 30 31 32

Notes to pp. 106–110 Administrative System Organisations], July 1986, pp. 12–13. Two decades earlier in 1967, MAFF personnel were one third as large again (108,000). Matsuzaka, ‘Koritsuka Suru Norin Kanryo’, p. 4. Of these, 18,818 were attached to the Maritime Safety Agency. Gyosei Kikan Soshikizu, July 1986, pp. 12–13. Gyosei Kikan Soshikizu, July 1986, pp. 12–13. In 1996, Food Agency officials numbered 10,831 and Forestry Agency staff 10,031. Gyosei Kikan Soshikizu, July 1996, pp. 11–12. Gyosei Kikan Soshikizu, July 1996, pp. 11–12. Including regional offices and its three agencies, MAFF staff numbered 33,040 in 2002. Hasegawa, ‘Nosuisho’, p. 36. These figures are for 2002. See Hasegawa, ‘Nosuisho’, pp. 36–37. Domon, Shinshokuryoho, p. 96. Personal interview, MAFF official, Canberra, December 2002. This reduced MAFF staff size from 42,000 to 33,000. Kawakita and Onoue, Norinsuisansho, p. 35. By 2003, MAFF staff numbers had inched downwards to 31,276. Personal communication with MAFF official, July 2004. These are public interest corporations narrowly defined, that is, either shadan hojin or zaidan hojin organised under Article 34 of the Civil Code. They do not include intermediate corporations. Koeki Hojin Hakusho, 2000, p. 40. Kawakita and Onoue, Norinsuisansho, p. 40. According to one MAFF official, all it does is regulate them from a safety point of view. Similarly, the MAFF only regulates the eating-out industry (gaishoku sangyo) from the point of view of hygiene control. Because the eating-out industry is perceived as a ‘mean’, low-class industry by the MAFF, no division was interested in promoting it. However, the MAFF changed its policy on this in the early 1980s, and decided to promote it. As a result, big restaurant chains came over to the MAFF side from the Ministry of Health and Welfare in 1985. Although ‘they received no subsidy, they appreciated very much that their industry was finally being taken care of by one of the main ministries. Although the MAFF had no right or power to control them, what it did for them was issue many rewards in the form of “honorable medals” for industry performance. They wanted fame, not fortune. The head of the administering division of the MAFF at that time was very clever’. Personal interview, Tokyo, June 2001. See also Chapter 7 on ‘Maintaining the Foundations of MAFF Intervention’. Personal Interview, MAFF official, Tokyo, June 2001. Yokota Hajime, ‘Structured Corruption Involving Local Interests and the Ministry of Agriculture, Forestry and Fisheries: What’s ‘Public’ about Public Works?’. http://www.iwanami.co.jp/jpworld/text/publicworks01.html See Chapter 8 on ‘The Three Pillars of MAFF Agricultural Policy’ and Table 8.1. Mainichi Shinbun, 29 December 1999. The exact figures were ¥1.66 trillion out of a total of ¥3.19 trillion. Hasegawa, ‘Nosuisho’, p. 36. Kaiin Toron, ‘Norin Kanryo Ikigai to Kikikan’ [‘The Agriculture and Forestry Bureaucracy’s Meaning of Life and Sense of Crisis’], in Nosei Jya-narisuto no Kai (ed.), Norin Kanryo o Kaibo Suru, p. 112. Personal communication, MAFF official, July 2001. Hojokin, pp. 20–21. Satake Goroku, Taikenteki Kanryoron [A Discourse on the Bureaucracy Based on Experience], Tokyo, Yuhikaku, 1998, p. 60. See Chapter 8 on ‘The Three Pillars of MAFF Agricultural Policy’. Nihon Keizai Shinbun, 14 January 1999. Nakamura Yasuhiko, Kome Kaiho[Rice Market Opening], Tokyo, NHK Shuppan, 1994, p. 188.

Notes to pp. 111–116

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33 This was reported in Domon, Shinshokuryoho, pp. 86–87. See also Chapter 4 on ‘Agricultural Policies from the Late 1980s to the Late 1990s’ in my forthcoming volume, Japan’s Agricultural Policy Regime. 34 Domon Takeshi, ‘Shoeki ni Hashitta Nosui Kanryo no Hyakunichi’ [‘One Hundred Days of An Agricultural Bureaucrat Pursuing Ministry Interests’], Chuo Koron, 109, 6, June 1994, p. 135. 35 See my forthcoming volumes on Japan’s Agricultural Policy Regime and Party and Patronage in Japan’s Rural Sector. 36 Domon, ‘Shoeki ni Hashitta Nosui Kanryo’, p. 135. 37 ‘Nogyo Kyodo Kumiaiho’, in Norinsuisan Roppo, 1998, p. 160. 38 See Chapter 7 on ‘Maintaining the Foundations of MAFF Intervention’. 39 These include both discretionary and non-discretionary bureaucratic regulations. 40 See Table 13 in Vogel, Freer Markets, p. 202. 41 Kawakita and Onoue, Norinsuisansho, p. 93. 42 See Chapter 8 on ‘The Three Pillars of MAFF Agricultural Policy’. 43 Jung-Sup Choi, Daniel A. Sumner and Joo-Ho Song, ‘Importing STEs in Korea and Japan: Evolution, Operation, and Implications’, paper prepared for the ‘Role of State and Agricultural Trade’ Workshop, organised by the North American Forum, Stanford University and Agricultural Issues Center, University of California, 20–22 November 1998, p. 8. See also note 41 and Chapter 7 on ‘Maintaining the Foundations of MAFF Intervention’. 44 See also the discussion in Chapter 7 on ‘Maintaining the Foundations of MAFF Intervention’ about the abolition of the Food Agency and the transference of its rice-related functions to the main ministry. 45 In 2002, there were 4786 officials employed in the MAFF main ministry (not including regional bureaus), and 9,688 in the Food Agency. Hasegawa, ‘Nosuisho’, pp. 36–37. 46 Hasegawa, ‘Nosuisho’, p. 38. 47 In 1995, the heading ‘Food Control expenses’ was changed to ‘Staple Food-Related Expenses’ in the budget statistics. 48 See Chapter 4 on ‘Organisational Politics’ in George Mulgan, The Politics of Agriculture, pp. 205–299. See also Chapter 7 on ‘Maintaining the Foundations of MAFF Intervention’, which discusses private sector beneficiaries of MAFF intervention. 49 Kawasaki Isonobu, Shokuryocho-dono: Watashi wa Yamigomeya Desu [Mr Food Agency: I Am A Black Market Rice Shop], Tokyo, Gendai Shorin, 1992, p. 129. 50 Shokuryocho-dono, p. 16. See also Chapter 8 on ‘The Three Pillars of MAFF Agricultural Policy’. 51 In fact, as Koh points out, gikan outnumber jimukan by a large margin at the entry point into the civil service; with a marked increase in the proportion of specialists in agriculture (compared with engineers and natural scientists) over the period 1962–80. Japan’s Administrative Elite, p. 34. 52 Kawakita and Onoue, Norinsuisansho, p. 87 53 Norinsuisansho Meibo, 2002, pp. 188–198. 54 Mainichi Shinbun, 29 December 1999. 55 Norinsuisansho Meibo, 2002, pp. 150–171. 56 Sakaguchi Takashi, Kyodai Nokyo no Sugosa [The Power of Massive Nokyo], Tokyo, Ginko Jihyosha, 1987, p. 37. 57 Domon, Shinshokuryoho, p. 98. 58 Yokota Hajime, ‘Nosuisho Kozo Kaizen Kyoku no Kenkyu’ [‘A Study of the Structural Improvement Bureau of the MAFF’], Sekai, June 2000, pp. 160–169. 59 Yokota, ‘Nosuisho’, pp. 160–169. 60 For example, the number of former MAFF officials hired by construction firms totaled 166 between 1991 and 1995. Of the total, 133 had been in charge of agricultural public works projects while at the ministry. Studies confirm that contracts for farm-related public works projects are awarded to companies with former officials as director. In

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61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85

86 87 88 89

Notes to pp. 116–120 1991, 54 former ministry officials were hired by Japan’s enormous construction sector. The number was 35 in 1992, 39 in 1993, 22 in 1994 and 16 in 1995. Looking at it from another angle, an annual 65–88 per cent of ministry public works officials who later found work in the private sector ended up in construction. Nikkei Weekly, 10 March 1997. Kawakita and Onoue, Norinsuisansho, p. 127. It is common for retired MOF officials to step into the post of vice-president of the Agriculture, Forestry ancl Fisheries Finance Corporation and Norinchu-kin. ‘Nosuisho Riken no Naibu Kiretsu’ [‘The Internal Split in the Vested Rights of the MAFF’], Aera, 27 September 1999, p. 16. Tahara Soichiro, Shin Nihon no Kanryo [The New Japan Bureaucracy], Tokyo, Bungei Shunju, 1988, pp. 57. See the discussion on former structural improvement gikan obtaining Diet seats in George Mulgan, The Politics of Agriculture, pp. 514–522. Hojokin, p. 28. See Chapter 7 on ‘Representative Politics’ in George Mulgan, The Politics of Agriculture, pp. 474 –563. Tahara, Shin Nihon no Kanryo, p. 57. US Embassy (Tokyo) translation of Japanese monthlies, 11 August 1988, p. 14. Of the 113 LDP bureaucratic candidates in the 1986 elections, 11 were from the MAFF. Iwamoto Isao, Hachiju Nendai Nihon Seiji to Sekai [ Japanese Politics and the World in the 1980s], Kyoto, Koyo Shobo, 1988, p. 100. Norinsuisansho Meibo, 1982, pp. 380– 415, 438–543. Seikan Yoran, [Handbook of Politicians and Ministry Officials], 1995 Latter Term Issue, Tokyo, Seisaku Jihosha, 1995, pp. 30–501; author’s own card index of farm politicians, 1949–2001. Seikan Yoran, 1997, Special Issue pp. 46–310; author’s own card index of farm politicians, 1949–2001. Norinsuisansho Meibo, 1999, pp. 421– 493. Norinsuisansho Meibo, 2002, pp. 418– 439. See Chapter 3 on ‘Patronage Politics’ in my forthcoming volume Party and Patronage in Japan’s Rural Sector. See note 71 and Chapter 8 on ‘The Three Pillars of MAFF Agricultural Policy’. See George Mulgan, The Politics of Agriculture, pp. 270–274. ‘Nosuisho Riken’, p. 16. As Kawakita and Onoue point out, ‘the MAFF was hardly influenced by the reorganisation of ministries and agencies of January 2001. Basically it did not change from before.’ Norinsuisansho, p. 34. ‘Seisaku – Nogyo Kihonhogo no Nosei: 1990 Nendai no Nosei’ [‘Policy – Agricultural Policy After the Agricultural Basic Law – Agricultural Policies in the 1990s’], Nogyo to Keizai, 66, 8, July 2000, p. 86. Yomiuri Shinbun, 24 October 1997. Yomiuri Shinbun, 24 October 1997. Personal interview, Tokyo, June 2001. ‘ “Okawara Jimusho” ’, p. 18. LDP Diet member Kato Koichi reportedly failed in his bid to get the MAFF’s name changed in a head-to-head clash with Eto Takami, the supreme adviser to the LDP’s Comprehensive Agricultural Policy Investigation Committee. ‘Nosuisho no Daizai’, p. 2. It shared this fate with the Ministry of Justice, the Ministry of Foreign Affairs and the Defence Agency. The MOF and MITI underwent name changes, becoming the Zaimusho and Keizai Sangyosho respectively. Quoted in ‘Nosuisho no Daizai’, p. 3. Personal communication, MAFF official, June 2000. The National Agricultural Research Centre, the Fruit Tree Research Station, the National Research Institute of Vegetables, Ornamental Plants and Tea, the National

Notes to pp. 120–122

90 91 92

93 94 95 96 97 98 99 100 101 102

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Institute of Animal Industry, the National Grassland Research Institute, the National Institute of Animal Health and six national agricultural experiment stations were integrated into an independent legal entity known as the National Agricultural Technology Research Organisation. Japan Agrinfo Newsletter, 17, 6, February 2000, p. 2. All 17 entities came into being in April 2001. Personal interview with Professor Kagatsume Masaru, Canberra, 1999. In 2000, for example, three koeki hojin of the Agricultural Structure Improvement Bureau took advantage of the free labour of 33 workers from 23 companies. The groups were the Hometown Information Centre, the Japan Rural Information Systems Association that develops and promotes information systems in rural areas, and the Twenty-first Century Village Creation School that promotes communication between companies and rural areas. These groups are the recipients of about ¥600 million from the MAFF budget each year and also provide employment for MAFF amakudari officials. The workers were provided by companies contracted to do consultancy work for the three organisations. According to company sources, they did the non-paid work for the koeki hojin in order to ensure that they would get consultancy contracts. A particular consulting company that had been loaning staff to the Hometown Information Centre for eight years received orders worth about ¥70 million from the centre in 1999. An executive of the company said: ‘We responded to the centre’s demand to lend our staff as we expected to receive orders.’ Mainichi Shinbun, 25 January 2000. See Chapter 2 on ‘Interest Group Politics’ in George Mulgan, The Politics of Agriculture, pp. 39–163. Kym Anderson, ‘The Peculiar Rationality of Beef Import Quotas in Japan and Korea’, in Kym Anderson, Yujiro Hayami and Aurelia George Mulgan (eds), The Political Economy of Agricultural Protection, p. 89. For details, see Longworth, Beef in Japan, pp. 180–195. Livestock Industry Promotion Corporation, LIPC, 1979, p. 15. See also Chapter 7 on ‘Maintaining the Foundations of MAFF Intervention’ and Chapter 2 on ‘Interest Group Politics’, in George Mulgan, The Politics of Agriculture, pp. 39–163. See also Chapter 7 on ‘Maintaining the Foundations of MAFF Intervention’. See also Chapter 7 on ‘Maintaining the Foundations of MAFF Intervention’. Moore, ‘Economic Structure’, p. 108. Anderson, ‘The Peculiar Rationality of Beef Import Quotas’, pp. 89–90. See also the discussion on ‘Expanding the Web of Vested Interests in Intervention’ in Chapter 7 on ‘Maintaining the Foundations of MAFF Intervention’. LIPC subsidies were almost all allocated to agricultural cooperative organisations and public interest corporations. A small amount went to meat industry cooperative associations involved in meat processing and an even smaller amount to enterprises such as regional meat distribution public companies. Investments were more evenly allocated between the two categories of public interest corporations and livestock-related enterprises. The latter were almost all regional livestock centres, meat distribution centres and public companies involved in meat and livestock processing and distribution. Many, if not most, were Nokyo-related companies (kanren gaisha). The same subsidy and investment patterns are evident under ALIC. These are undertaken under the provisions of the 1996 Agriculture and Livestock Industries Corporation Law for the purpose of assisting the promotion of the livestock industry in the private sector, including projects that need to be urgently implemented in order to cope with changes in conditions in the livestock industry. They are carried out under the broad umbrella of the ‘Basic Policy for Achieving the Modernisation of the Dairy and Beef Industries’ and ‘Livestock and Poultry Improvement and Expansion Targets’. In 1997, for example, projects focusing on lowering the production costs of livestock commodities, strengthening livestock production infrastructure, strengthening livestock management structure, realising ‘unconstrained’ management, rationalising livestock processing and distribution systems, preserving the livestock environment, promoting hygiene and preventing epidemics, and recovering and expanding the

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103 104 105 106 107 108 109 110 111 112 113 114 115 116 117 118 119 120 121 122 123 124 125 126 127 128 129

Notes to pp. 122–130 demand for livestock products were undertaken. Author unknown, ‘Shitei Josei Taisho Jigyo ni tsuite’ [‘About Designated Assistance Projects’], n.d. Shigeki, Kakinuma and Fukunaga, ‘When in Doubt’, p. 6. ‘Kokuhatsu “Gyuniku Konekushyon” ’, [‘A Denunciation: “The Beef Connection” ’], Aera, 10, 26 July 1988, pp. 10–11. Yokota, ‘Nosuisho Kozo Kaizen Kyoku’, pp. 160–169. See also Chapter 8 on ‘The Three Pillars of MAFF Agricultural Policy’. See also Chapter 8 on ‘The Three Pillars of MAFF Agricultural Policy’. ‘Nosuisho Riken’, pp. 15–17. Mainichi Shinbun, 28 January 2000. Mainichi Shinbun, 28 January 2000. ‘Nosuisho Kyaria Kanryo no Sakenomi Jinsei’ [‘The Alcoholic Life of a Career MAFF Bureaucrat’], Shukan Asahi, 14 April 2000, p. 150. A Yomiuri Shinbun editorial quoted in the Australian Financial Review, 31 March 2000. Quoted in the Australian Financial Review, 31 March 2000. Mainichi Shinbun, 6 July 1999. Mainichi Shinbun, 29 December 1999. According to Yokota, it is unprecedented for the names of civil servants still on active service to be engraved in a public place. Yokota, ‘Structured Corruption’. http://www.iwanami.co.jp/jpworld/text/publicworks01.html Yokota, ‘Structured Corruption’. http://www.iwanami.co.jp/jpworld/text/ publicworks01.html Yokota, ‘Structured Corruption’. http://www.iwanami.co.jp/jpworld/text/ publicworks01.html ‘Nosui Kanryo ni Soncho ga Hyakuman En Sokin no Wake’ [‘The Reason Why the Village Mayor Put ¥1 Million into the Account of the MAFF Bureaucrat’], Aera, 22 May 2000, p. 24. ‘Nosui Kanryo’, p. 24. Yokota, ‘Structured Corruption’. http://www.iwanami.co.jp/jpworld/text/ publicworks01.html ‘Structured Corruption’. http://www.iwanami.co.jp/jpworld/text/publicworks01. html ‘ “Okawara Jimusho” ’, p. 20. Mainichi Shinbun, 29 December 1999. Mainichi Shinbun, Editorial, 29 December 1999. Business Review Weekly, 19 February 1988. Aoyama attended a presentation in Tokyo given by the author and was particularly hostile to the argument that the LIPC was deliberately sourcing greater quantities of beef from the United States to the disadvantage of Australian exporters. Australian Financial Review, 31 August 1988. Asahi News, 2 April 2000.

7 Maintaining the foundations of MAFF intervention 1 Fujitani Chikuji, Nokyo Daikakushin [Revolution in the Nokyo], Tokyo, Ie no Hikari Kyokai, 1994, p. 133. 2 Japan’s self-sufficiency rate (calorie-based) fell from 47 per cent in 1990 to 40 per cent in 1998, where it has remained. Beika ni kansuru Shiryo, December 2002, p. 100. 3 The amount of abandoned farmland in 1985 was 97,000 ha; in 2000 it was 210,000 ha. Ministry of Agriculture, Forestry and Fisheries of Japan, Action Plan for Revitalizing Japanese ‘Food’ and ‘Agriculture’, mimeo, April 2002, p. 4. More than 7 per cent of all farmland in Japan is now abandoned. 4 In 1985, farm workers 65 years and older comprised 19.5 per cent of the total; in 2001, they comprised 52.0 per cent. Action Plan, p. 4.

Notes to pp. 130–132

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5 Article 4 states that ‘the sustainable development of agriculture shall be promoted by securing agricultural facilities including the necessary farmlands’. Norinsuisan Roppo, 2003, p. 3. See also Chapter 5 on ‘Agricultural Policies from the Late 1990s’ in my forthcoming volume, Japan’s Agricultural Policy Regime. 6 This is short for Law Concerning the Development of Agricultural Promotion Regions. 7 Nihon Nogyo Nenkan, 2001, p. 35. However, Godo argues that the MAFF allows small-scale farm households to profit from the sale of farmland for conversion to nonagricultural uses. See Godo Yoshihisa, ‘Suicide of Japan’s Agriculture Under the Name of “Policy Reform”: Why and How JMAFF Demolishes Top-Quality Farmlands’, Paper presented to the Workshop on ‘New Developments and Reform in Japanese Agriculture’, Asia Pacific School of Economics and Government, Australian National University, 8 December 2003. See also the same comments in the following note in another policy context. 8 From the perspective of maximising its political clout within the broader policy community, the MAFF is also mindful of the importance of the size of the rural population as a core LDP support base and a major factor determining the political influence of the agricultural sector. The MAFF harnesses agrarian power both directly and indirectly through the LDP. It engages LDP Diet members (and client agricultural organisations) to provide much of the political momentum behind its intervention-maximising goals, particularly its acquisition of budgets. The MAFF thus indirectly enlists the votes and organisational power of the farmers. See also Chapter 5 on ‘The Politics of Agricultural Policymaking’ in my forthcoming volume, Agricultural Policymaking in Japan: The Role of the LDP. 9 Quoted in ‘Nosuisho no Daizai’, p. 5. 10 Professor Godo Yoshihisa, personal communication, February 2001. He also argues that ‘politicians prefer small-sized farms of around 1 ha per farm household’. The MAFF’s support for small farms was also made in his paper, ‘Suicide of Japan’s Agriculture’. 11 Professor Godo Yoshihisa, personal communication, June 2003. He points out, however, that the MAFF’s desire to support small-size farm incomes has led it to relax regulations on the conversion of farmland (i.e. to non-agricultural purposes), enabling farmers to reap capital gains from land sales, thus endangering Japan’s overall agricultural productivity. ‘Suicide of Japan’s Agriculture’. 12 See Chapter 5 on ‘Agricultural Policies from the Late 1990s’ in my forthcoming volume, Japan’s Agricultural Policy Regime. 13 See Chapter 8 on ‘The Three Pillars of MAFF Agricultural Policy’. 14 See Chapter 8 on ‘The Three Pillars of MAFF Agricultural Policy’. 15 Nogyo Roppo, 1993, p. 444. In 2000, this law was replaced by another, the Special Measures Law to Promote the Independence of Depopulated Regions, after the fixed 10-year term of the previous law expired. 16 See the following note and Chapter 5 on ‘Agricultural Policies from the Late 1990s’ in my forthcoming volume, Japan’s Agricultural Policy Regime. 17 Article 2, Clause 3 of the law sets as one of its goals rationalising land tenure and modernising farm businesses by expanding the scale of management and the regrouping farm land. Norinsuisan Roppo, 1998, p. 3. See also Chapter 5 on ‘Agricultural Policies from the Late 1990s’ in my forthcoming volume, Japan’s Agricultural Policy Regime. 18 These were full-time farms that were not dependent on non-agricultural sources of income. 19 ‘Toron’ [‘Discussion’], in Saito, ‘Shimeikan no Henshitsu’, p. 44. 20 Terayama Yoshio, ‘Norin Jikanron’ [‘A Discussion on MAFF Vice-Ministers’], in Nosei Jya¯ narisuto no Kai (ed.), Norin Kanryo, p. 57. 21 Takekazu B. Ogura, Can Japanese Agriculture Survive?, Tokyo, Agricultural Policy Research Centre, 3rd edn, 1982, p. 469.

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Notes to pp. 132–134

22 Mitsukawa Motochika, Nogyo Dantai Hattenshi [A History of the Development of Agricultural Groups], Tokyo, Meibun Shobo, 1972, p. 612. 23 Can Japanese Agriculture Survive?, p. 447. 24 Can Japanese Agriculture Survive?, p. 466. 25 Norinsuisan Roppo, 1998, p. 3. 26 Norinsuisan Roppo, 1998, p. 4. 27 ‘Toron’ [‘Discussion’], in Saito, ‘Shimeikan no Henshitsu’, pp. 45–46. See also Chapters 3–5 in my forthcoming volume, Japan’s Agricultural Policy Regime. 28 Kaiin Toron, ‘Norin Kanryo Ikigai to Kikikan’, p. 97. 29 Ministry of Agriculture, Forestry and Fisheries, The Basic Direction of New Policies for Food, Agriculture and Rural Areas, Japan’s Agricultural Review, 21, November 1992, p. 18. 30 As Godo observes, ‘the MAFF has employed a lot of policies to prevent the market mechanism from operating in the agricultural sector, for example, the Agricultural Land Law which prevents market trading in land’. Personal communication, February 2001. 31 ‘Inputto – Nochi Ryudoka to Kibo Kakudai: Sengo Nochi Seido no Hatten’, Nogyo to Keizai, 66, 8, July 2000, p. 192. 32 ‘Inputto – Nochi Ryudoka to Kibo Kakudai’, p. 192. 33 These restrictions explain the need for land-holding rationalisation corporations as semi-public bodies and farmland brokers. Personal interview, MAFF official, Canberra, December 2002. 34 According to Article 17, the State would ‘not only take the necessary measures including the establishment of cooperatively utilised facilities [also called joint-use facilities] and development and improvement of schemes for joint farming operations to be carried out by agricultural cooperatives . . . but also, in order to permit those engaged in agriculture to offer their rights to farmland or their labour whereby to carry on their farming on a cooperative basis, take the necessary measures to establish cooperative organisations of those engaged in agriculture, and to smooth the acquisition of rights to farmland’. Norinsuisan Roppo, 1998, p. 4. 35 Article 18 says that: ‘To ensure that the establishment and transfer of rights to farmland may contribute towards improvement of agricultural structure, the State shall enable agricultural cooperatives to undertake trust relating to leases and sales of farmland.’ Norinsuisan Roppo, 1998, p. 4. 36 Terayama, ‘Norin Jikanron’, p. 57. 37 This is the right to enjoy the use and advantages of another’s property short of the destruction or waste of its substance. 38 They may take the form of joint farming cooperatives – literally ‘legal person associations of farming affairs’ – (noji kumiai hojin), an unlimited partnership ( gomeigaisha), a limited partnership ( goshigaisha), or a limited liability company ( yugengaisha). Ogura, Can Japanese Agriculture Survive?, p. 560. Legal person associations of farming affairs are cooperative unions that natural persons form as persons who engage in cultivation themselves. The yugengaisha must have less than 50 persons as company members; they must be persons engaged in cultivation themselves; the shares of the company cannot be converted into stocks; and the transfer of shares is not permissible without the approval of the general meeting of the company. Given these limitations, both noji kumiai hojin and yugengaisha observe the principle of agricultural land ownership being restricted to those who cultivate it, that is, the agricultural land-cultivator principle. Most agricultural incorporated entities are yugengaisha (around 74.5 per cent in 2001), while 25.1 per cent were joint farming cooperatives. Nihon Nogyo Hojin Kyokai, ‘Nogyo Hojin to wa’ [‘Agricultural Corporations Are . . . ’], http://www.hojin.or.jp/ nouhou/kyo_01.html#06. For the differences between noji kumiai hojin and yugengaisha in the conduct of cooperative farming operations, see Nogyo Sogo Kenkyujo, Nogyo Keizai: Kenkyu Seika Joho [Agricultural Economics: Research Results Report], 4, 1995, p. 25. See also note 39.

Notes to pp. 134–137

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39 Ogura, Can Japanese Agriculture Survive?, p. 560. Some of these restrictions have recently been liberalised. See Chapter 5 on ‘Agricultural Policies from the Late 1990s’ in my forthcoming volume, Japan’s Agricultural Policy Regime. 40 Legal person associations of agricultural affairs are a type of agricultural cooperative that conducts cooperative farming work or undertakes cooperative utilisation of farming facilities. For this reason they are also called joint farming cooperatives. 41 ‘Inputto – Nochi Ryudoka to Kibo Kakudai’, p. 192. 42 See Tanaka Toyotoshi, Nihon no Nokyo [ Japan’s Nokyo], Tokyo, Nokyo Kyokai, 1971, p. 275. 43 ‘Inputto – Nochi Ryudoka to Kibo Kakudai’, p. 192. 44 Hiroshi Fujiki, ‘The Structure of Rice Production in Japan and Taiwan’, Economic Development and Cultural Change, 47, 1, January 1999, http://www.kier.kyoto-u.ac.jp/ DP/DP47 45 Fujiki, quoting Honma Masayoshi, ‘The Structure of Rice Production’, http:// www.kier.kyoto-u.ac.jp/DP/DP47 46 Hisao Fukuda, John Dyck and Jim Stout, Rice Sector Policies in Japan, United States Department of Agriculture, Electronic Outlook Report from the Economic Research Service, March 2003, p. 16. 47 The translation of the term ‘bearers’ is difficult. The generic definition is ‘persons who undertake some work’. In the context of agriculture, it means, broadly speaking, ‘persons who undertake or carry on farming’, or, more emotively, ‘persons who shoulder the burden of agriculture’ or who are ‘primarily responsible for agricultural production’. The MAFF also uses the term stipulatively to mean ‘core workers’, or ‘core farmers’, or ‘core farm managers’ that is, persons who are predominantly employed in agriculture. In an ideal sense, it can also mean ‘farmers who are committed to farming’, that is, full-time, professional farmers, whom the MAFF wants to cultivate. 48 Nihon Keizai Shinbun, 1 August 1986. 49 Nihon Keizai Shinbun, 1 August 1986. 50 Yamada Toshio, Nihon Nosei no Jittai: Shokuryo Anzen Hosho o Motomete [The Reality of Japanese Agricultural Policies: Seeking Food Security], Tokyo, Kyoikusha, 1985, p. 114. 51 Yamada, Nihon Nosei no Jittai, p. 110. 52 According to the 1985 Rice Production Survey undertaken by the MAFF, the national average of secondary production costs was ¥20,300 per 60 kg. In the case of farms more than 3 ha, however, it was ¥16,587, which was nearly 39 per cent lower than farms of less than 0.3 ha. Nihon Keizai Shinbun, 1 August 1986. 53 Asahi Shinbun, 12 April 1989. 54 One of the unique features of the ownership of rice paddies in Japan has been the system of scattered plots. After the mechanisation of agriculture, this became a major obstacle to the effective use of large machinery. Yamada, Nihon Nosei no Jittai, pp. 110–111. Yamada cites the example of the Takemoto family farm in Ishikawa prefecture, which was one of the biggest family owned farms in Japan. The land they owned (5.8 ha) was divided into 70 plots, while the land they rented (9.7 ha) was divided into 146 sections (p. 111). 55 Yamada, Nihon Nosei no Jittai, pp. 114 –115. 56 The new law replaced the old law. See also Chapter 4 on ‘Agricultural Policies from the Late 1980s to the Late 1990s’ in my forthcoming volume, Japan’s Agricultural Policy Regime. 57 ‘Inputto – Nochi Ryudoka to Kibo Kakudai’, p. 192. 58 ‘Inputto – Nochi Ryudoka to Kibo Kakudai’, p. 192. 59 ‘Inputto – Nochi Ryudoka to Kibo Kakudai’, p. 193. 60 ‘Inputto – Nochi Ryudoka to Kibo Kakudai’, p. 193. 61 ‘Inputto – Nochi Ryudoka to Kibo Kakudai: Kibo Kakudai no Kanosei’, Nogyo to Keizai, 66, 8, July 2000, p. 197. 62 In Japanese this is referred to as ‘land utilisation-type agriculture’, or tochi riyokei nogyo.

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Notes to pp. 137–142

63 Norinsuisansho, Daijin Kanbo Chosaka (ed.), Nogyo Hakusho Fuzoku Tokeihyo, [A Statistical Compendium to the Agricultural White Paper], 1998, Tokyo, Norin Tokei Kyokai, 1999, p. 63. 64 ‘Inputto – Nochi Ryudoka to Kibo Kakudai: Kibo Kakudai no Kanosei’, p. 197. 65 The literal translation of keieitai is ‘management body’, but as this is cumbersome in English, hence the use of alternative terms such as farming ‘enterprise’, or ‘farming entity’ or ‘farm management unit’ are used. 66 These are farm households mainly engaged in the production of agricultural commodities for sale. They have 30 a (ares) or more of cultivated land area or annual sales of ¥500,000 or more. 67 These would not be companies owning agricultural land, but agricultural facilities. 68 Shokuryo, Nogyo, Noson Hakusho Fuzoku Tokeihyo, 1999, p. 91. 69 Shokuryo, Nogyo, Noson Hakusho Fuzoku Tokeihyo, 1999, p. 93. 70 ‘Inputto – Nochi Ryudoka to Kibo Kakudai: Nochi Ryudoka no Genjo’, Nogyo to Keizai, 66, 8, July 2000, p. 194. 71 These are 1997 figures. ‘Inputto – Nochi Ryudoka to Kibo Kakudai: Nochi Ryudoka’, p. 194. 72 See note 73. 73 ‘Soshiki to Keiei – Nogyo Keiei no Tenkai: Nogyo Keiei no Genjo to Tenkai’ [‘Organisation and Management – The Development of Farm Management: The Development and Current Conditions of Farm Management’], Nogyo to Keizai, 66, 8, July 2000, p. 128. 74 Kajii Isoshi, Hayami Yujiro and Nakamura Yasuhiko, ‘Toron: Kome Kaihogo no Nihon Nogyo’ [‘Discussion: Japanese Agriculture After the Opening of the Rice Market’], in Nakamura Yasuhiko, Kome Kaiho [Rice Market Opening], Tokyo, NHK Shuppan, 1994, p. 159. 75 Tanaka, Nihon no Nokyo, p. 284. 76 See also Chapters 3–5 in my forthcoming volume, Japan’s Agricultural Policy Regime. 77 Yamashita Kazuhito, ‘Replace Price Props with Direct Payments to Farmers’, Japan Echo, 31, 3, June 2004, p. 47. 78 In late 2003, the Koizumi administration submitted legislation to the Diet to make it illegal for former bureaucrats to seek favours for private companies from the ministries or agencies where they once worked. Such action would be punishable by up to six months in prison or a ¥500,000 fine. The new law which will come into effect in 2006 aims to clamp down on the practice of amakudari ‘in which private companies offer plum jobs to high-ranking bureaucrats in return for their influence in winning new business’. Nikkei Weekly, 7 March 2003. 79 In the case of special public corporations, there is strong legislative control on the establishment of these organisations. The MOF and previously the Management and Coordination Agency had to give their approval from their own financial and administrative perspectives. 80 See Chapter 7 on ‘Representative Politics’, in George Mulgan, The Politics of Agriculture, pp. 512–521. 81 ‘ “Okawara Jimusho” ’, pp. 18–19. 82 An unnamed MAFF official quoted in ‘ “Okawara Jimusho” ’, p. 20. 83 ‘ “Okawara Jimusho” ’, p. 20. 84 The task of special public corporations that are kodan is to undertake public works projects such as highway and housing construction, the development of forests and water resources, and agricultural land. See Masujima, ‘Appendix 3’, pp. 295–296. 85 Shigeki, Kakinuma and Fukunaga, ‘When in Doubt’, p. 7. 86 Shigeki, Kakinuma and Fukunaga, ‘When in Doubt’, p. 8. 87 Shigeki, Kakinuma and Fukunaga, ‘When in Doubt’, p. 8. 88 This began in April 1990. See also Chapter 8 on ‘The Three Pillars of MAFF Intervention’.

Notes to pp. 142–148 89 90 91 92 93 94 95 96 97 98 99 100 101 102 103 104 105 106 107 108 109 110 111 112 113 114 115 116 117 118 119 120 121 122 123 124 125 126

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Hojokin Soran, 1995, p. 390. Hojokin Soran, 1995, pp. 390–391. See also note 90. The new post-1995 import arrangements are set out in greater detail in Chapter 4 on ‘Agricultural Policies from the Late 1980s to the Late 1990s’ in my forthcoming volume, Japan’s Agricultural Policy Regime. See also Chapter 5 on ‘Agricultural Policies from the Late 1990s’ in my forthcoming volume, Japan’s Agricultural Policy Regime. The political party, Sakigake, for example, made both corporations an object of planned abolition in its policy platform. Asahi Shinbun, 31 January 1995. Asahi Shinbun, 31 January 1995. Personal interview, former MAFF official, Tokyo, July 1995. Norinsuisansho, ‘Nochikusan Shinko Jigyodan no Setsuritsu ni tsuite’ [‘Concerning the Establishment of the Agriculture and Livestock Industries Promotion Corporation’], MAFF Home Page, http://www.maff.go.jp, 22 August 1997, p. 1. Norinsuisansho, ‘Nochikusan Shinko Jigyodan’, p. 1. MAFF Update, No. 109, 13 January 1995, http://www.maff.go.jp/mud/109.html Wright, Japan’s Fiscal Crisis, p. 112. He makes this comment with respect to the administrative restructuring of January 2001. Norinsuisansho, ‘Nochikusan Shinko Jigyodan’, p. 1. Personal communication, ALIC official, Tokyo, November 1997. President’s Message, http://alic.lin.go.jp/alic/aisatu-e.html See Chapter 2 on ‘Interest Group Politics’, in George Mulgan, The Politics of Agriculture, pp. 39–163. See also note 104. See Chapter 2 on ‘Interest Group Politics’, in George Mulgan, The Politics of Agriculture, pp. 39–163. See also note 106. See George Mulgan, Japan’s Failed Revolution, for an analysis of the Koizumi administration’s ‘structural reform’ programme. Personal interview, MAFF official, Canberra, December 2002. Personal interview, MAFF official, Canberra, December 2002. ‘Tokushu Hojin Kaikaku: Seiri Gorika Keikaku Kimaru’ [‘Reform of Special Public Corporations: Reorganisation and Rationalisation Plan Decided’], Nosei Undo Jya¯ naru, 41, February 2002, p. 7. ‘Tokushu Hojin Kaikaku’, p. 7. ‘Tokushu Hojin Kaikaku’, p. 7. 11 September 1986. Longworth, Beef in Japan, pp. 199–200. Longworth, Beef in Japan, p. 201. Yomiuri Shinbun, Editorial, 6 May 1986. ‘Kokuhatsu “Gyuniku Konekushyon” ’, p. 10. This compares with a figure of ¥14 billion in 1976 (Longworth, Beef in Japan, pp. 199–202) and ¥39 billion in 1977 (Sankei Shinbun, 10 August 1978). ‘Kokuhatsu “Gyuniku Konekushyon’’ ’, p. 10. These figures are slightly higher than those calculated by the author from figures given in LIPC annual reports. This may be due to the complexities in the annual report figures themselves. ‘Kokuhatsu “Gyuniku Konekushyon” ’, p. 10. Editorial, Sankei Shinbun, 4 April 1986. Asahi Shinbun, 15 March 1986. Asahi Shinbun, 15 March 1986. Yomiuri Shinbun, 2 April 1986. Under pressure, the government made the LIPC release some of its stocks of beef on to the market, with the result that beef prices fell by 10 per cent. Hayashi Nobuaki,

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127 128 129 130

131 132

133 134 135 136

137 138 139

140 141 142

143 144

Notes to pp. 148–150 ‘Shijo Kaiho – Endaka no Nihon Nogyo’ [‘Market Opening and Japan’s Agriculture under High Yen Conditions’], in Ouchi Tsutomu and Gomi Kenkichi (eds), Keizai Masatsuka no Nihon Nogyo [ Japanese Agriculture Under Economic Friction], Nihon Nogyo Nenpo 34, Tokyo, Ochanomizu Shobo, 1986, pp. 135. Takahashi Ichiro, ‘Boeki Masatsu no Shinkyokumen to Chikusan’ [‘The New Phase of Trade Friction and the Livestock Industry’], in Ouchi and Gomi (eds), Keizai Masatsuka, p. 149. Yomiuri Shinbun, 2 April 1986. Editorial, Sankei Shinbun, 4 April 1986. These are designated raw milk producer groups whose members are specialist dairy cooperatives (rakuno nokyo) and multi-purpose unit cooperatives (tani nokyo), and which comprise, in turn, the organisational membership of the Central Dairy Council, a Nokyo-related organisation that is also a gaikaku dantai of the MAFF. For more details of the organisational nature of Central Dairy Council, see Chapter 2 in George Mulgan, The Politics of Agriculture, pp. 39–163. Asahi Shinbun, 31 January 1995. As Table 6.1 shows, the losses on domestic wheat purchases increased from ¥21.5 billion in 1977 to a peak of ¥114.9 billion in 1988, remaining at relatively high levels until the Food Agency began to bow out of the domestic wheat market in 2000. See also Chapter 5 on ‘Agricultural Policies from the Late 1990s’ in my forthcoming volume, Japan’s Agricultural Policy Regime. Mainichi Shinbun, 13 May 1998. Saeki Naomi, GATTO to Nihon Nogyo [GATT and Japanese Agriculture], Tokyo, Tokyo Daigaku Shuppankai, 3rd edn, 1992, p. 250. See Table 65 in Beika ni kansuru Shiryo, December 2002, pp. 173–174. Hiroyoshi Toda, ‘General Introduction and Summary: Changes in Agriculture and Food Consumption in Japan Created by Increased Imports of Agricultural Products’, in Food and Agriculture Policy Research Center, Impact of Increased Imports on Japan’s Food Market, Tokyo, Food and Agriculture Policy Research Center, 2000, p. 27. Sugar imports were liberalised in 1972, but imports remained under state trading arrangements in order to maintain the domestic price support system. See Table 65 in Beika ni kansuru Shiryo, December 2002, p. 174. Yomiuri Shinbun, 1 August 1986. This is a sub-account of the FCSA which includes figures for Food Agency losses/profits on the purchase and sale of domestic rice as well as for various jishu ryutsumai-related subsidies and other management costs of rice distribution control such as storage fees. After 1998 it also included the costs of rice cultivation management stabilisation subsidies. See Table 6.1 Notes. Yomiuri Shinbun, 14 June 1986. In 1993, the Food Agency imported just over 1 million tonnes and in 1994, it imported just over 1.8 million tonnes. Beika ni kansuru Shiryo, December 2002, p. 117. Kenichi Ohmae, The End of the Nation State: The Rise of The Regional Economies, London, Harper Collins, 1995, p. 51. There are differing estimates of Food Agency profits from this trade in 1993 in Australian dollars. The Nihon Keizai Shinbun estimated that the Food Agency pocketed more than A$1.4 billion from selling the imports, while the Asahi Shinbun put the figure at closer to A$2.8 billion. The Australian, 3 October 1993. Food Agency figures show that its profits from rice and wheat sales increased by ¥606 billion in 1993 over 1992 and by a further ¥781 billion in 1994 over 1993. Beika ni kansuru Shiryo, December 2002, p. 174. Domon Takeshi, ‘Kome Gyosei: Kengyo Noka o Mamori, Shokuryocho o Mamotta?’ [‘The Administration of Rice: Protection for Part-Time Farmers and the Food Agency?’], Ekonomisuto, 22 November 1994, pp. 47–48. These profits were only cut down to more realistic levels in 1995 when the Food Agency markup on rice was restricted to ¥292 per kg by the URAA.

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145 ‘Kome Gyosei’, pp. 47–48. 146 ‘Kome Gyosei’, pp. 47–48. 147 See Aurelia George Mulgan, ‘Japan Inc’ in the Agricultural Sector: Reform or Regression, Pacific Economic Papers, No. 314, April 2001. 148 See Chapter 1 in The Politics of Agriculture, pp. 1–38. 149 For an extended analysis of the costs and benefits to Nokyo of being a corporatised agricultural interest group, see George Mulgan, The Politics of Agriculture, pp. 134–163. 150 The following persons and companies can apply for loans for purposes specified in the 1952 Agriculture, Forestry and Fisheries Finance Corporation Law: persons who engage in agriculture, forestry and fisheries, or the salt industry, or companies organised by such persons (Article 18); entities that operate primary products wholesale markets, entities that engage in wholesale business, or companies organised by such entities (Article 18, Clause 2); innovative manufacturers who use certain primary products (Article 18, Clause 3); manufacturers who use primary products produced in specific areas (Article 18, Clause 4-1); and entities constructing public health/leisure facilities that facilitate the use of farmland, forests etc. in specific areas (Article 18, Clause 4-2). Norinsuisan Roppo, 2001, p. 581. 151 ALIC can provide subsidies or funds to private companies in the livestock industry under its own organising law to subsidise the cost of carrying out approved storage of designated dairy products, meats etc. (Article 28, Clause 1-1-4); to subsidise projects that provide domestic milk for school lunches (Article 28, Clause 1-3); and to subsidise and invest in storage and/or processing projects that help to streamline the distribution of livestock products etc. (Article 28, Clause 2-2). Norinsuisan Roppo, 2001, pp. 362–363. 152 See George Mulgan, The Politics of Agriculture, pp. 228–229, 394–395. 153 See Chapter 8 on ‘The Three Pillars of MAFF Agricultural Policy’. 154 Asahi Shinbun, 26 April 1989. 155 Asahi Shinbun, 26 April 1989. 156 Asahi Shinbun, 26 April 1989. See also Chapter 8 on ‘The Three Pillars of MAFF Agricultural Policy’. 157 See also Chapter 8 on ‘The Three Pillars of MAFF Agricultural Policy’. 158 ‘Nosuisho no Daizai’, p. 3. 159 See Chapter 8 on ‘The Three Pillars of MAFF Agricultural Policy’. 160 Hayami, Japanese Agriculture Under Siege, p. 71. 161 See Chapter 8 on ‘The Three Pillars of MAFF Agricultural Policy’. 162 MAFF Update, No. 96, 30 September 1994, http://www.maff.jo.jp/mud/96, html 163 Shinshokuryoho, p. 96. 164 Seisakuron, p. 108. 165 See the following note for the circumstances of the abolition of the Food Agency and the birth of the new Food Department in the MAFF. 166 Included in the qualification for registration is incorporation and location in Japan as well as being well-established companies. Personal communication, US official, Foreign Agricultural Service, United States Department of Agriculture, August 2003. 167 Personal communication, MAFF official, August 2003. 168 Most of the general trading houses such as Mitsubishi, Mitsui, Marubeni, Sumitomo and Itochu are on the list. The only foreign capital companies are Andrey Far East and Cargill Japan. Personal communication, US official, Foreign Agricultural Service, United States Department of Agriculture, August 2003. 169 Personal communication, US official, Foreign Agricultural Service, United States Department of Agriculture, August 2003. 170 This system is now operated by the new Food Department in the MAFF. See the following note. 171 The number and identity of the buyers – around 24 user groups, which were national associations of private sector meat traders (wholesalers and retailers) and processors,

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183 184 185 186 187 188 189 190 191 192 193 194 195 196 197 198 199 200 201 202 203 204 205

Notes to pp. 154–159 agricultural and consumer cooperative federations and associations, and associations of educational food suppliers – were approved by the LIPC. Beef in Japan, p. 201. Beef in Japan, p. 205. Beef in Japan, pp. 291–292. Australian Bureau of Agricultural and Resource Economics (ABARE), Japanese Beef Policies: Implications For Trade, Prices and Market Shares, Occasional Paper 102, Canberra, Australian Government Publishing Service, 1987, p. 3. Kym Anderson, ‘The Peculiar Rationality of Beef Import Quotas in Japan’, American Journal of Agricultural Economics, 65, 1, February 1983, p. 111. Hayami, Japanese Agriculture Under Siege, p. 71. Magoroh Maruyama, ‘Japan’s Agricultural Policy Failure’, Food Policy, May 1987, p. 125. Australian Financial Review, 16 March 1988. Australian Financial Review, 31 August 1988. Asahi Shinbun, 8 March 1989, p. 5. Moore argues that one of the reasons why this particular interest is omitted from the rational choice explanation of agricultural protection is because ‘rational choice theory is predominantly . . . a tool by neo-liberals activated in large degree by hostility to state action and . . . in favour of the private sector, [and therefore] recognition of the ‘rent-seeking political action by large-scale private business is unwelcome and therefore avoided’. ‘Economic Structure and the Politics of Sectoral Bias’, p. 123. Hayami, Japanese Agriculture Under Siege, p. 71. Yujiro Hayami, ‘Trade Benefits to All: A Design of Beef Import Liberalization in Japan’, American Journal of Agricultural Economics, 61, 2, May 1979, pp. 342–347. William T. Coyle, The 1984 U.S. – Japan Beef and Citrus Understanding: An Evaluation, Foreign Agricultural Economic Report, No. 222, Economic Research Service, United States Department of Agriculture, 1986, p. 4. Japanese Agriculture Under Siege, p. 52. Japanese Agriculture Under Siege, p. 52. See, for example, the membership structure of the Central Livestock Association and the Compound Feed Supply Stabilisation Organisation explained in Chapter 2 on ‘Interest Group Politics’ in George Mulgan, The Politics of Agriculture, pp. 39–163. ‘Chuo Shocho Saihen Suta¯ to’, p. 13. ‘Heisei 13 Nendo Nogyo Kankei Yosan: Gaisan Yokyu Kimaru’ [‘The 2001 Agriculture-Related Budget: Draft Budget Decided’], Nosei Undo Jya¯ naru, 33, October 2000, p. 28. ‘Chuo Shocho Saihen Suta¯ to’, p. 13. Kawakita and Onoue, Norinsuisansho, p. 71. Kawakita and Onoue, Norinsuisansho, p. 72. ‘Chuo Shocho Saihen Suta¯ to’, p. 14. Norinsuisansho, p. 34. See Chapters 4–5 in my forthcoming volume, Japan’s Agricultural Policy Regime. ‘Chuo Shocho Saihen Suta¯ to’, p. 14. See Chapter 5 on ‘Agricultural Policies from the Late 1990s’ in my forthcoming volume, Japan’s Agricultural Policy Regime. See Chapter 5 on ‘Agricultural Policies from the Late 1990s’ in my forthcoming volume, Japan’s Agricultural Policy Regime. Kawakita and Onoue, Norinsuisansho, p. 60. See Chapter 8 on ‘The Three Pillars of MAFF Agricultural Policy’. Personal interview, MAFF official, Tokyo, June 2001. Personal interview, MAFF official, Tokyo, June 2001. See the following note. Editorial, Nikkei Weekly, 1 October 2001. Nikkei Weekly, 13 May 2002. Kumazawa gave up his post to take responsibility for the scandal, but his retirement payment of ¥88.74 million was not affected. The Japan Times,

Notes to pp. 159–163

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225 226 227 228 229 230 231

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11 January 2002. However, his post-retirement move into a livestock organisation did not go ahead. Quoted in asahi.com, http://asahi.com/column/hayano/K2002041500580.html The Japan Times Online, 11 January 2002. asahi.com, http://asahi.com/column/hayano/K2002041500580.html Hayano Toru, quoted in asahi.com, http://asahi.com/column/hayano/ K2002041500580.html Quoted in asahi.com, http://asahi.com/column/hayano/K2002041500580.html. The committee also commented that ‘Japan’s laws, systems, policies and administrative organizations (related to agriculture) are legacies from the period of food shortages in which producers took precedence over consumers’. Quoted in The Japan Times, http://www.japantimes.co.jp/cgi-bin/getarticle.p15?ed20020405a1.htm The Japan Times, http://www.japantimes.co.jp/cgi-bin/getarticle.p15?ed20020405a1. htm One of the main points of comparison between the 1961 Basic Law and the 1999 New Basic Law, for example, was the emphasis in the latter on ‘developing food policies that emphasise consumers’. Kawakita and Onoue, Norinsuisansho, p. 55. The Japan Times, http://www.japantimes.co.jp/cgi-bin/getarticle.p15?ed20020405a1. htm Prime Minister Koizumi stated that he would study organisational reform of the bureaus and divisions involved in food safety without being bound by existing organisational frameworks. Furthermore, it was clearly stated in the proposals from the independent investigative committee for an organisational review of the MAFF that the Food Agency would be disbanded. ‘Special Edition on Livestock’, Japan Agrinfo Newsletter, March 2003, pp. 5, 15. Kawakita and Onoue, Norinsuisansho, p. 96. ‘Norinsuisansho Soshiki no Saihen’ [‘Reorganisation of the Ministry of Agriculture, Forestry and Fisheries’], Mini Letter, 222, 27 June 2002, p. 3. The commission is responsible for conducting ‘health risk assessments’ of food in a ‘fair and objective manner’. On the basis of these assessments, the commission makes recommendations to the MAFF and MHLW and monitors the effectiveness of the measures taken. Japan Agrinfo Newsletter, 20, 7, March 2003, p. 2. Japan Agrinfo Newsletter, 20, 6, February 2003, p. 2. ‘Special Edition on Livestock’, p. 17. ‘Special Edition on Livestock’, p. 16; ‘Norinsuisansho Soshiki no Saihen’, p. 1, 3. Japan Agrinfo Newsletter, 21, 1, September 2003, http://www.jiac.or.jp/agrinfo/ 0309.html ‘Special Edition on Livestock’, p. 16. ‘Norinsuisansho Soshiki no Saihen’, p. 3. Personal interview, MAFF official, Canberra, December 2002. See also ‘Special Edition on Livestock’, pp. 16–17. The original title suggested for the Food Department was Rice and Wheat Department (Beibakubu). The task of administering rice production adjustment will be abolished by 2008. See Chapter 5 on ‘Agricultural Policies from the Late 1990s’ in my forthcoming volume, Japan’s Agricultural Policy Regime. Personal communication, MAFF official, August 2003. ‘Norinsuisansho Soshiki no Saihen’, p. 3. ‘Norinsuisansho Soshiki no Saihen’, p. 3. ‘Shokuhin Anzen Gyosei ni Soshiki Seibi – Nosuisho’ [‘Organisational Consolidation in Food Safety Administration – The Ministry of Agriculture and Fisheries’], Nosei Undo Jyânaru, No. 49, June 2003, p. 25. ‘Nosuisho no Daizai’, p. 15. ‘Norinsuisansho Soshiki no Saihen’, p. 1. The Japan Times, 2 July 2003, http://www.japantimes.co.jp/cgi-bin/getarticle.p15? eo20030702a1.htm

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Notes to pp. 163–170

232 The Japan Times, 2 July 2003, http://www.japantimes.co.jp/cgi-bin/getarticle.p15? eo20030702a1.htm 233 Personal communication, MAFF official, Canberra, October 2003. 234 The Japan Times, 2 July 2003, http://www.japantimes.co.jp/cgi-bin/getarticle.p15? nb20030627a1.htm 235 Personal communication, Professor Godo Yoshihisa, March 2001. 236 See also Chapter 8 on ‘The Three Pillars of MAFF Agricultural Policy’. 237 See also Chapter 8 on ‘The Three Pillars of MAFF Agricultural Policy’. 238 See Chapter 5 on ‘Agricultural Policies from the Late 1990s’ in my forthcoming volume, Japan’s Agricultural Policy Regime. 239 See Chapter 5 on ‘Agricultural Policies from the Late 1990s’ in my forthcoming volume, Japan’s Agricultural Policy Regime. 240 See Chapter 2 on ‘Ideological Politics’ in my forthcoming volume, Japan’s Agricultural Trade Policy Strategies. 241 See Chapter 2 on ‘Ideological Politics’ in my forthcoming volume, Japan’s Agricultural Trade Policy Strategies. 242 It is, of course, the administering agency of the forestry and fishing industries, but these other primary industries do not concern us here. 243 Norinsuisansho: Sono Yakuwari to Seisaku, p. 12.

8 The three pillars of MAFF agricultural policy 1 For definitions of these concepts of market-liberal reform, see Chapter 1 ‘Introduction’ in my forthcoming volume, Japan’s Agricultural Policy Regime. 2 As noted in Chapter 5 on ‘Modes and Means of Agricultural Intervention’, the FC system also governed the distribution and pricing of wheat, barley and naked barley. 3 See also Chapter 2 on ‘The Agricultural Policy Regime in Historical Perspective’ in my forthcoming volume, Japan’s Agricultural Policy Regime. 4 Kajii Isoshi, ‘Nogyo Kosho no Zasetsu to Nihon Nogyo no Saihensei’ [‘The Failure of the GATT Agricultural Trade Negotiations and the Reorganisation of Japanese Agriculture’], in Ouchi Tsutomu and Saeki Naomi (eds), GATTO Nogyo Kosho to Nihon Nogyo [The GATT Agricultural Negotiations and Japanese Agriculture], Nihon Nogyo Nenpo 37, Tokyo, Norin Tokei Kyokai, 1991, pp. 136–137. 5 Keeping the rice trade under government control also suited the agricultural cooperatives because of the concessions and benefits they reaped from rice distribution control. See Chapter 4 on ‘Organisational Politics’ in George Mulgan, The Politics of Agriculture, pp. 205–299. 6 See below and Chapters 2–5 in my forthcoming volume, Japan’s Agricultural Policy Regime. 7 In fact the government trialled rice acreage reduction in 1969, but the policy began in earnest in 1970. 8 Mitsukawa, Nogyo Dantai, p. 638. 9 Nihon Nosei no Jittai, p. 142. 10 See Chapter 2 on ‘Party Politics’ in my forthcoming volume Agricultural Policymaking in Japan: The Role of the LDP. 11 Godo, ‘Reforming Japan’s Agricultural Policies’, p. 80. 12 Susumu Yamaji and Shoichi Ito, ‘The Political Economy of Rice in Japan’, in Tweeten et al. (eds), Japanese & American Agriculture, p. 350. As Oda points out: ‘Although “ Jishuryutsu-mai” rice does circulate independently from government controlled rice, the circulation of “Jishuryutsu-mai” is required to meet the restrictions and regulations enforced by the Foodstuffs Control Law and its application. Persons engaged in handling of “ Jishuryutsu-mai” rice must be those who are recognized by the government and they are obliged to carry out their transactions of the

Notes to pp. 170–173

13 14 15 16 17 18 19 20 21

22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37

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“ Jishuryutsu-mai” rice within the quantitative limits as envisaged necessary by the government’. Food Control System, p. 15. Hayami, Japanese Agriculture Under Siege, p. 62. See Chapter 3 on ‘Agricultural Policies from the Late 1970s to the Late 1980s’ in my forthcoming volume, Japan’s Agricultural Policy Regime. However, in Yamada’s view, the government did its best to involve itself less in rice production and distribution and introduce the market mechanism as much as possible into rice price decisions and rice distribution. Nihon Nosei no Jittai, pp. 153–154. Kajii, ‘Nogyo Kosho’, pp. 112–182, p. 136. For further details, see Chapter 3 on ‘Agricultural Policies from the Late 1970s to the Late 1980s’ in my forthcoming volume, Japan’s Agricultural Policy Regime. See Chapter 4 on ‘Agricultural Policies from the Late 1980s to the Late 1990s’ in my forthcoming volume, Japan’s Agricultural Policy Regime. Kanagawa Shinbun, 13 November 1987. Domon Takeshi, Yoi Nokyo: Jiyukago ni Ikinokoru Senryaku [The Good Nokyo: A ‘PostLiberalisation’ Survival Strategy], Tokyo, Nihon Keizai Shinbunsha, 1988, p. 50. Domon, Yoi Nokyo, p. 50. Voluntarily marketed rice was sold by the agricultural cooperatives directly to wholesalers ‘at a price negotiated between representatives of cooperatives and wholesalers’ [Hayami, Japanese Agriculture Under Siege, p. 64], using the producer rice price as a yardstick. Yamada, Nihon Nosei no Jittai, p. 155. The basic price was decided once a year in meetings between JA Zenno as a government-designated collection agent and private rice wholesalers in Tokyo, Osaka, Nagoya, Fukuoka and Sapporo respectively. Asahi Shinbun, 24 June 1989. Asahi Shinbun, 27 April 1990. Matsushima Masahiro ‘ “Jiyuka” no Ugoki to Kome no Seisan, Ryutsu’ [‘Trends in Liberalisation and Rice Production and Distribution’], in Ouchi Tsutomu and Saeki Naomi (eds), GATTO Nogyo Kosho, p. 137. It was set up as a gaikaku dantai of the Food Agency in the form of an incorporated foundation (zaidan hojin). Its main office was in Tokyo, but it also had a branch in Osaka. Ozawa Kenji, ‘A New Phase for Rice in Japan: Production, Marketing, and Policy Issues’, in Tweeten et al. (eds), Japanese & American Agriculture, p. 369. The range was later increased. See also Chapter 4 on ‘Agricultural Policies From the Late 1980s to the Late 1990s’ in my forthcoming volume, Japan’s Agricultural Policy Regime. ‘Kome Tosei’, p. 26. This was an advisory council attached to the Food Agency, which issued a report on the MAFF’s recommended buying price for seifumai each year. Its operations were halted by the introduction of the New Food Law in 1995. See below. Yoshida Toshiyuki, ‘Shokkan Seido no Kaikaku Kadai’ [‘Issues in the Reform of the Food Control System’], Nogyo to Keizai, 60, 5, May 1994, p. 29. Toshihiko Kawagoe, ‘The Origins of Protectionism in Japanese Agriculture’, Seminar presented to the Department of Economic History, Australian National University, September 1996, p. 17. Domon, Shinshokuryoho, pp. 145, 148. Ozawa, ‘A New Phase for Rice’, p. 367. Ozawa, ‘A New Phase for Rice’, p. 369. Yamaji and Ito, ‘The Political Economy of Rice’, p. 351. Food Agency, An Outline of the Staple Food Law: The Law for Stabilization of Supply-Demand and Price of Staple Food, January 1995, p. 2. Domon, Shinshokuryoho, p. 144. See also note 37. The new price formation centre was basically the same as the previous price formation organisation. It was less restrictive in operation than the organisation was, but as an operating entity, the centre was the same as the organisation. Professor Honma Masayoshi, personal communication, October 2000.

262

Notes to pp. 173–179

38 The price formation centre operates in Tokyo. The amount of rice transacted directly through the centre is 1–1.5 million tonnes, while about another 3.0–3.5 million tonnes of jishu ryutsumai are transacted in local markets with the price following the centre’s price. Professor Honma Masayoshi, personal communication, October 2000. 39 Domon, Shinshokuryoho, p. 144. 40 ‘Kome Tosei wa itsu made Tsuzuku’ [‘How Long Will the Control of Rice Continue?’], Aera, No. 43, 20 October 1997, p. 26. 41 Department of Foreign Affairs and Trade, ‘Agriculture and Food’, draft chapter 11, in Japan At the Crossroads: Strategies for the 21st Century, n.d., p. 24. 42 ‘Agriculture and Food’, p. 22. 43 The 1997 rice year ran from November 1996 to October 1997. 44 ‘Kome Tosei’, p. 24. 45 ‘Kome Tosei’, p. 24. 46 Professor Honma Masayoshi, personal communication, November 2000. 47 This argument was first made by Yuize although others have claimed authorship. See Yuize Yasuhiko, ‘Chiho Bunken ni Tesshita Shinnosei o Kakuritsu seyo’ [‘Establish the Decentralisation of Authority for the New Agricultural Policies’], Shukan Toyo Keizai, 19 November 1994, p. 111. As Yuize points out, the black market, which adjusted prices according to quality, existed in Japan for nearly 30 years prior to the introduction of the New Food Law. ( p. 111) 48 Godo, ‘Reforming Japan’s Agricultural Politics’, p. 81. 49 Table 1 in ‘Nosanbutsu Ryutsu – Nosanbutsu Ryutsu to Shijo no Kozo Henka: Shokkan Seido no Hokai, Soshite Shinshokuryoho e’ [‘Agricultural Product Distribution – Changes in the Market Structure and Distribution of Agricultural Products: The Collapse of the Food Control System, and Towards the New Food Law’, Nogyo to Keizai, 66, 8, July 2000, p. 207. 50 For details, see Chapter 4 on ‘Agricultural Policies from the Late 1980s to the Late 1990s’ in my forthcoming volume, Japan’s Agricultural Policy Regime. 51 Yuize, ‘Chiho Bunken’, p. 111. 52 See Chapter 4 on ‘Agricultural Policies from the Late 1980s to the Late 1990s’ in my forthcoming volume, Japan’s Agricultural Policy Regime. 53 Food Agency, An Outline of the Staple Food Law, p. 3. 54 ‘Kome Tosei’, p. 24. 55 ‘Kome Tosei’, p. 25. 56 ‘Kome Tosei’, p. 26. 57 ‘Kome Tosei’, p. 25. 58 Yuize, ‘Chiho Bunken’, p. 112. 59 ‘Kome Tosei’, p. 26. 60 ‘Kome Tosei’, p. 26. 61 Food Agency, An Outline of the Staple Food Law, p. 2. 62 Taro Yayama, ‘Who Has Obstructed Reform?’, in Frank Gibney (ed.), Unlocking the Bureaucrat’s Kingdom, Washington, DC, The Brookings Institution, 1998, p. 103. 63 See also Chapter 5 on ‘Agricultural Policies from the Late 1990s’ in my forthcoming volume, Japan’s Agricultural Policy Regime. 64 ‘Nosuisho no Daizai’, p. 7. 65 Quoted in Sankei Shinbun, 6 March 1987. 66 Personal interview, MAFF adviser, Canberra, November 1999. 67 Hirose, Hojokin, p. 102. 68 Personal interview, MAFF adviser, Canberra, November 1999. 69 Hojokin, p. 100. 70 Hojokin, p. 101. 71 ‘Nosuisho no Daizai’, p. 9. 72 Quoted in ‘Nosuisho no Daizai’, p. 9.

Notes to pp. 179–188

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73 See also Chapter 2 on ‘Party Politics’ in my forthcoming volume, Agricultural Policymaking in Japan: The Role of the LDP. 74 Hirose, Hojokin, p. 106. 75 Hirose, Hojokin, p. 106. 76 See also the analysis in Chapter 2 on ‘The Agricultural Policy Regime in Historical Perspective’ in my forthcoming volume, Japan’s Agricultural Policy Regime. 77 Hirose, Hojokin, p. 106. 78 Imamura Naraomi, ‘Nogyo Zaisei no Genjo’ [‘The Current State of Agricultural Finance’], in Matsuura and Imamura (eds), Nogyo Hogo, p. 46. 79 In fact there is another minor category not shown in the table: ‘Development of Statistical Research’. 80 Norinsuisan Roppo, 1998, p. 4. 81 This analysis is based on Imamura, ‘Nogyo Zaisei’, pp. 49–51. See also Norinsuisan Roppo, 1998, p. 4. 82 ‘Seisaku – Nihon no “Shinnosei” to Shinnogyo Kihonho: Nogyo Kihonho no Hyoka to Minaoshi’ [‘Policy – Japan’s “New Policies” and the New Agricultural Basic Law: Review and Re-evaluation of the Agricultural Basic Law’], Nogyo to Keizai, 66, 8, July 2000, p. 57. 83 See Chapter 2 on ‘The Agricultural Policy Regime in Historical Perspective’ in my forthcoming volume on Japan’s Agricultural Policy Regime. 84 See note 85. 85 For details of the political reasons behind this policy initiative and the role of the LDP, see Chapter 2 on ‘Party Politics’ in my forthcoming volume, Agricultural Policymaking in Japan: The Role of the LDP. 86 Goto and Imamura, ‘Japanese Agriculture’, p. 24. 87 ‘Seisaku – Nogyo Kihonhogo no Nosei: 1970 Nendai no Nosei’ [‘Policy – Agricultural Policy after the Agricultural Basic Law: Agricultural Policies in the 1970s’], Nogyo to Keizai, 66, 8, July 2000, p. 82. 88 Goto and Imamura, ‘Japanese Agriculture’, pp. 24–25. 89 Imamura, ‘Nogyo Zaisei’, p. 47. 90 Hojokin, p. 106. 91 See Table 8 in ‘Seisaku – Nogyo Kihonhogo no Nosei: 1970 Nendai no Nosei’, p. 82. Imamura maintains that subsidies rose from around ¥35,000 per 10 a in 1970 to ¥70,000 in 1978, declining to around ¥25,000 by 1988. Table I-15 in Imamura Naraomi, ‘Shokkan Zaisei no Kozo’ [‘The Structure of Food Control Finance’], in Matsuura and Imamura (eds), Nogyo Hogo, p. 115. 92 ‘Shinshokuryoho Ketchaku: Seika Ageta Tokubetsu Undo’ [‘The New Food Law Concluded: The Results of the Special Campaign’], Nosei Undo Jya- naru, No. 5, January 1996, p. 14. See also Chapters 3–5 in my forthcoming volume, Japan’s Agricultural Policy Regime. 93 Personal communication, MAFF official, Canberra, May 2003. 94 Calculated from figures in Table 5.1. 95 Jimmye S. Hillman and Robert A. Rothenberg, Agricultural Trade and Protection in Japan, London, Trade Policy Research Centre, Gower Publishing Co., 1988, p. 27. Yamada reports that for feed crops, wheat and soybeans where production promotion was necessary, the highest level of incentive subsidies was paid (¥42,000 per 10 a in 1984). This figure compared with ¥27,000 per 10 a for general crops, except those trending towards surplus such as vegetables, which attracted a subsidy of ¥22,000 per 10 a. In terms of cultivation area, soybeans constituted the largest proportion of alternative crops (61 per cent), followed by wheat (29 per cent), feed crops (13 per cent) and vegetables (17 per cent). Production promotion of soybeans and wheat with low profitability became possible with alternative crop incentive payments. Nihon Nosei no Jittai, pp. 138–139. 96 Agricultural Trade, p. 27. 97 Beika ni kansuru Shiryo, December 2002, p. 119.

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Notes to pp. 189–192

98 Hirose, Hojokin, p. 28. 99 See comment in note 100. 100 See Chapter 4 on ‘Agricultural Policies from the Late 1980s to the Late 1990s’ in my forthcoming volume, Japan’s Agricultural Policy Regime. 101 Zenno Sogo Kikakubu (ed.), Keito Keizai Jigyo Kiso Tokei [Federated Economic Business Basic Statistics], Tokyo, Zenno Sogo Kikakubu Kikaku Chosaka, 1991, p. 227; JA Zenno Sogo Kikakubu (ed.), JA Gurupu Keizai Jigyo Kiso Tokei [ JA Group Economic Business Basic Statistics], Tokyo, Zenno Sogo Kikakubu Kikaku Chosaka, 1999, p. 127. 102 Nihon Keizai Shinbun, 5 August 1998. 103 ‘Nosuisho no Daizai’, p. 3. 104 Kawakita and Onoue, Norinsuisansho, p. 37. 105 Kawakita and Onoue, Norinsuisansho, p. 60. 106 Wright also reports that in 1994, the MAFF campaigned against the introduction of a priority ranking for public works budget allocation, which it regarded as working against its interests (although MAFF projects occupied all three groups of A, B, and C priority ranked projects). Japan’s Fiscal Crisis, p. 445. 107 Nihon Keizai Shinbun, 29 December 1999. 108 Zaisei Kinyu Tokei Geppo, No. 468, April 1991, p. 76. 109 Zaisei Kinyu Tokei Geppo, No. 468, April 1991, pp. 76–77. 110 Zaisei Kinyu Tokei Geppo, No. 468, April 1991, p. 77. 111 Asahi Shinbun, 26 April 1989. 112 Asahi Shinbun, 26 April 1989. 113 Takahashi Yurika, ‘Nosuisho yo, Noka no Koe o Kike’ [‘MAFF, Listen to Local Voices’], Sekai, June 2000, pp. 170–176. 114 Wright also reports that: ‘Falling completion rates were especially noticeable in rural land schemes, where farmers were required to contribute a large proportion of the costs of reclamation and improvement. With falling rice prices, they were reluctant to undertake such schemes, “and a large portion of the budget funds ended up not being used”.’ Japan’s Fiscal Crisis, p. 451. The quote is from Kazutoshi Kase, ‘Economic Aspects of Public Works Projects in Japan’, Social Science Japan, No. 17, 1999, pp. 16–19. 115 Asahi Shinbun, 26 April 1989. 116 Takeuchi, Nihon no Kanryo, p. 186. A subsidy ratio refers to the proportion of the costs borne by government as opposed to private individuals. 117 Yomiuri Shinbun, 27 November 1994. As Imamura points out, the administrative (i.e. government) burden share of land improvement works grew from 77 per cent in 1960 to 87 per cent in 1985, with the central government’s share by and large stable at around 55 per cent, meaning that local government picked up the difference. Farmers’ share of the financial cost declined from 23 per cent in 1960 to 13 per cent in 1985. Within this broad category, the administrative burden of the sub-category of field development works rose from 45.5 per cent in 1960 to 84.7 per cent in 1985 (with the national government’s share rising from 39.8 to 50.9 per cent), while that for main irrigation works grew only marginally from 91.1 to 93.9 per cent (with the central government’s share only rising marginally from 63.1 to 65.5 per cent). Imamura Naraomi, ‘Shikin no Nagare kara Mita Hojokin to Seido Kinyu’ [‘Subsidies and Institutional Financing Seen From the Flow of Funds’], in Matsuura and Naraomi (eds), Nogyo Hogo, p. 247. See also Table II-26 in Imamura’s chapter. 118 Hirose, writing in the late 1970s, explained that ‘the breakdown of the financial cost in the case of prefecturally managed projects is: state subsidy 45 per cent, prefectural subsidy 27.5 per cent, and farmers contribution 27.5 per cent. As far as the farmers’ contribution is concerned, finance is made available on easy terms from the Agriculture, Forestry and Fisheries Finance Corporation at an annual interest rate of 6.5 per cent for 10 years with no increase, and repayment after 15 years’. Hojokin, p. 20.

Notes to pp. 192–196

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119 Imamura, ‘Shikin no Nagare’, p. 247. See also Table II-26 Imamura’s chapter. 120 Imamura, ‘Shikin no Nagare’, pp. 249–250. 121 Yamazaki Yasuyo, ‘The Untapped Potential of Japanese Agriculture’, Japan Echo, 31, 3, June 2004, pp. 50–52. 122 This figure was for 2001. Kawakita and Onoue, Norinsuisansho, p. 37. 123 Indeed, as of 1987, the Food Agency made a profit on its rice buying and selling operations. See Chapter 3 on ‘Agricultural Policies from the Late 1970s to the Late 1980s’ in my forthcoming volume, Japan’s Agricultural Policy Regime. 124 This strategy is discussed more extensively in Chapters 3–5 in my forthcoming volume, Japan’s Agricultural Policy Regime. 125 See the discussion on price policies in my forthcoming volume on Japan’s Agricultural Policy Regime, which points to a MAFF preference for shifting the burden of price support to consumers by lifting its selling price of rice to wholesalers, and, by price stabilisation policies and border measures. With respect to pork, for example, Obara, Dyck and Stout point out that: ‘Part of the roughly $2 billion annual market price support for pork in Japan is caused by border measures that tend to raise the market price, rather than stemming from support provided by domestic policies. Actual government expenditures to support pork production are considerably less than $2 billion.’ Kakuyu Obara, John Dyck and Jim Stout, Pork Policies in Japan, Electronic Outlook Report from the Economic Research Service, United States Department of Agriculture, March 2003, p. 3. See also note 122. 126 Yuize, ‘Chiho Bunken’, pp. 110–111. 127 Hojokin Soran, 1998, p. 234. 128 This category includes subsidies allocated to the running of the agricultural committee system, subsidies to JA Zenchu for purposes such as auditing the agricultural cooperatives and to local governments for assisting agricultural cooperative merger programmes, funds for running the agricultural, forestry and fishery groups’ mutual aid associations, and subsidies to land improvement districts for land improvement projects and agricultural land mobilisation. 129 This is notwithstanding the fact that some of the subsidies for agricultural promotion and agricultural facilities disaster compensation etc. would also involve allocations for public works. 130 Imamura, ‘Nogyo Zaisei’, pp. 52–53. 131 Hojokin, p. 102. 132 See Chapter 4 on ‘Agricultural Policies from the Late 1980s to the Late 1990s’ in my forthcoming volume, Japan’s Agricultural Policy Regime. 133 ‘6-cho En wa Shinsai Taisaku ni Mawase’ [‘¥6 trillion Should Be Allocated to Measures for Earthquakes’], Aera, 13 February 1995, pp. 24–27. 134 Ronald P. Dore, Land Reform in Japan, 2nd edn, London, Athlone Press, 1984, p. 222. 135 Mainichi Shinbun, 9 August 1999. 136 JA Zenno had been entrusted with construction works under the ‘regional agricultural infrastructure establishment agricultural structural improvement works’ programme. This programme subsidised half the costs of establishing facilities like rice centres where the Food Agency could store rice. The remaining cost was borne by prefectural and municipal governments as well as those groups that undertook the works such as agricultural cooperatives and production associations organised amongst the farmers. The works costs including a commission of 3.5–7 per cent. Of the ¥450 million in overpaid commission, the subsidised portion alone was ¥220 million (the balance was commission received from JA Zenno’s clients i.e. agricultural cooperatives). The high rate of commission had not been reviewed since 1975 and because it was such a large amount, the Kaikei Kensain investigated the handling fee in 1996 and 1997, investigating 296 facilities constructed in 43 prefectures. Its investigation revealed that ¥1.6 billion had been paid in commission, ¥450 million more than was necessary on the actual cost of construction. Mainichi Shinbun, 9 August 1999.

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Notes to pp. 196–206

137 Kano Yoshikazu, ‘Hojokin Sakugen, Noka “Senbetsu” De Shijoka Isogu’ [‘Reducing Subsidies and Selecting Farm Households for the Introduction of the Market Mechanism in Agriculture’], Ekonomisuto, 22 November 1994, p. 83. 138 Kano, ‘Hojokin Sakugen’, p. 83. 139 Kano, ‘Hojokin Sakugen’, p. 83. 140 Asahi Shinbun, Editorial, 6 April 1986. 141 Nikkei Weekly, 13 January 1997. 142 Nikkei Weekly, 13 January 1997. 143 Nikkei Weekly, 13 May 2002. 144 See also Chapter 5 on ‘Agricultural Policies from the Late 1990s’ in my forthcoming volume, Japan’s Agricultural Policy Regime. 145 ‘Zaisei to Kinyu – Nogyo Kankei Yosan no Suii: Nogyo Kozo Seisakuhi no Kakudai’ [‘Finance and Loans – Trends in the Agriculture-Related budget: The Expansion of Agricultural Structure Policy Expenditure’], Nogyo to Keizai, 66, 8, July 2000, p. 241. 146 http://www.maff.go.jp/soshiki/kambou/kikaku/NewBLaw/daijin.html 147 MAFF Update, 342, 14 January 2000, http://www.maff.go.jp/mud/342.html 148 See also Chapter 5 on ‘Agricultural Policies from the Late 1990s’ in my forthcoming volume, Japan’s Agricultural Policy Regime. 149 See also my forthcoming volume, Japan’s Agricultural Policy Regime. 150 Nihon Nogyo Nenkan, 2001, p. 69. 151 ‘Heisei 13 Nendo Nogyo Kankei Yosan’, p. 28. 152 ‘Heisei 13 Nendo Nogyo Kankei Yosan’, p. 28. 153 Personal interview, MAFF official, Canberra, December 2002. 154 ‘2001 Nendo Yosan: Seifuan Kimaru’ [‘The 2001 Budget: Government Draft Decided’], Nosei Undo Jyânaru, 35, February 2001, p. 16. 155 In the 2002 budget, public works were cut by 10 per cent and seven structural reform priority areas were announced for expenditure emphasis such as urban revitalisation. 156 asahi.com http://www.asahi.com/english/nationa/K2002113000162.html 157 ‘2003 Nendo Seifu Yosanan Kimaru: Shohisha Jushi no Norinsuisan Yosan ni’ [‘The 2003 Government Budget Draft Decided: An Agriculture, Forestry and Fisheries Budget that Attaches Importance to Consumers’], Nosei Undo Jya¯ naru, 47, February 2003, p. 11. 158 Quoted in ‘Nosuisho no Daizai’, p. 4. 159 See Chapter 5 on ‘The Politics of Agricultural Policymaking’ in my forthcoming volume, Agricultural Policymaking in Japan: The Role of the LDP. 160 Chalmers Johnson, ‘Tanaka Kakuei, Structural Corruption, and the Advent of Machine Politics in Japan’, Journal of Japanese Studies, 12, 1, Winter 1986, p. 24. 161 Nagami Kishi, ‘Bureaucratic Quagmire’, Tokyo Business Today, December 1993, p. 13. 162 Troy Podbury, Ivan Roberts, David Vanzetti and Brian S. Fisher, ‘Increasing Benefits from WTO Agricultural Trade Liberalisation’, Paper presented to the 44th Annual Conference of the Australian Agricultural and Resource Economics Society, University of Sydney, 23–25 January 2000, p. 12. 163 Quoted in Y. Iwahashi, ‘Why Do Farmers Have Such Great Power?’, Tokyo Business Today, May 1986, p. 49. 164 Production costs for rice (per 10 a), for example, only started to decline continuously in 1999. To what extent this is due to deflation is debatable. The MAFF likes to attribute it to: ‘improved technology, streamlining of farming practice and reform of rice policy’. Personal communication, MAFF official, Canberra, May 2003. 165 Hayashi Nobuaki, ‘Shin Kokusai Bungyoron Hihan’ [‘A Critique of the New International Division of Labour Approach for Agricultural Trade’], Nogyo to Keizai, 48, 8, Special Edition, 1982, p. 81. 166 For an analysis of the process of agricultural trade liberalisation from the late 1970s, see Chapter 3 on ‘Gaiatsu Politics’ in my forthcoming volume, Japan’s Agricultural Trade Policy Strategies.

Notes to pp. 206–209

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167 A statement in the 1988 Agricultural White Paper reported in Asahi Shinbun, 11 April 1989. 168 Imamura Naraomi, ‘Kokusaika Jidai no Norin Yosan’ [‘The Agricultural Forestry and Fisheries Budget in the Age of Internationalisation’], in Matsuura and Imamura (eds), Nogyo Hogo, pp. 60–63. 169 See also note 166. 170 Imamura, ‘Kokusaika Jidai’, pp. 64 –65. 171 Calculated from figures in Hojokin Soran, 1995, pp. 190–436. 172 ‘Kome Gyosei’, pp. 47, 48. 173 ‘Kome Gyosei’, p. 48. The MAFF also feared that the exceptionally high tariff rates on rice that it would have to institute would not be acceptable to the GATT negotiations. See Chapter 4 on ‘Agricultural Policies from the Late 1980s to the Late 1990s’ in my forthcoming volume, Japan’s Agricultural Policy Regime. 174 Quoted in Asahi Shinbun, 1 February 1992. 175 Domon, ‘Shoeki ni Hashitta Nosui Kanryo’, p. 133. 176 See Chapter 4 on ‘Agricultural Policies from the Late 1980s to the Late 1990s’ in my forthcoming volume, Japan’s Agricultural Policy Regime. 177 Domon, ‘Shoeki ni Hashitta Nosui Kanryo’, p. 133. 178 Kazuo Ueda, ‘Getting into Line’, Look Japan, November 1991, p. 18. 179 Reported in Nikkei Weekly, 29 November 1993. 180 Domon, ‘Kome Gyosei’, p. 48. Honma argues, however, that the MAFF was confident that it could control the rice trade with state trading even if tariffication had been introduced for rice in 1995. Indeed wheat, barley and other products remained under state-trade control after tariffication. Personal communication, November 2000. 181 Yoi Nokyo, p. 50. 182 ‘Shoeki ni Hashitta’, p. 133. 183 Godo, ‘Reforming Japan’s Agricultural Policies’, pp. 81–82. He also mounts an interesting argument about the potential nullification effect of ‘clean’ tariffication on the acreage control programme, which he claims would prevent the MAFF from protecting farmers’ rice income further ‘without expense to the national treasury . . . [and may] may be the real reason why the Japanese government was so opposed to the Dunkel draft in the UR’. ‘Reforming Japan’s Agricultural Policies’, p. 86. The Dunkel draft proposed that all non-tariff barriers should be replaced by tariffs with a reduction in tariff rates over the course of the agricultural trade agreement (1995–2000). Clean tariffication is defined as: converting import quotas into tariffs with a tariff rate that exactly fills the border price gap. This contrasts with ‘dirty’ tariffication where import quotas are converted into tariffs with a tariff rate whereby the border price gap is intentionally over-estimated in order to protect domestic producers. Personal communication, Professor Godo Yoshihisa, June 2003. 184 Domon, ‘Kome Gyosei’, p. 48. 185 As Honma explains, ‘Japan converted the non-tariff border measures to tariffs for 28 commodities at the four-digit level of the HS, including wheat, barley, milk products, starches, legumes, peanuts, konnyaku roots, cocoons, silk, and pork. The TEs were calculated based on the price differentials between the domestic wholesale prices and the c.i.f import unit values in the 1986–88 period. The TEs were mostly bound as a secondary duty applied to imports beyond the access quantity committed’. Masayoshi Honma, ‘Political Economy and Agricultural Policy Reform in Japan’, Paper prepared for the Workshop on ‘Some Key Issues for the East Asian Food Sector’, Australian National University, 2 May 2000, p. 2. 186 The AMS was a comprehensive, standardised quantitative measure of domestic support that took into account both direct and indirect subsidies to agriculture. It constituted the so-called ‘amber-box’ support measures, outlays for which had to be cut under the terms of the URAA. In the base years (1986–88), Japan’s AMS was ¥4.966 trillion. Of this, price support accounted for ¥4.746 trillion. ‘Seisaku – Uruguai

268

187 188

189 190 191 192 193 194

195 196

197 198

Notes to pp. 209–210 Raundo to Nihon Noringyo: WTO Taisei to Nihon Nosei’ [‘Policy – The Uruguay Round and Japanese Agriculture and Forestry Industries: The WTO System and Japanese Agricultural Policies’], Nogyo to Keizai, 66, 8, July 2000, p. 43. Price support was measured in terms of differentials between domestic and international prices. Personal communication, Professor Honma Masayoshi, June 2000. This was a 20 per cent reduction on base period (1986–88 average). Japan’s URAA obligation required it to reduce its AMS by 20 per cent from the average of the base years of 1986–88 by the end of 2000 (i.e. to ¥3.97 trillion). Japan had already cleared this level of reduction by 1995, the first year of the URAA when it fell to ¥3.51 trillion. By 2000, Japan’s AMS had dropped further to ¥3.17 trillion, a 36 per cent fall (of which ¥2.97 trillion was for agricultural price support). Stefan Tangermann, Masayoshi Honma et al., Bringing Agriculture into the GATT: Implementation of the Uruguay Round Agreement on Agriculture and Issues for the Next Found of Agricultural Negotiations, International Agricultural Trade Research Consortium (IATRC) Commissioned Paper No. 12, October 1997, pp. 18, 20. The Green Box consists of unrestricted domestic supports that have – at most – a minimal effect on trade or production. http://www.wto.org/english/tratop_e/ agric_e/negs_bkgrnd29_ph2other_e.htm European Commission Directorate-general of Agriculture, ‘The Fifteen at the WTO: A Stronger, More United Voice’, Newsletter, 19, October 1999, p. 2. ‘The Fifteen at the WTO’, p. 2. http://www.wto.org/english/tratop_e/ agric_e/negs_bkgrnd15_ph2domest_e.htm Personal communication, (Australian) National Farmers Federation official, January 2000. C.i.f. stands for ‘cost including freight’. Tenma Tadashi, ‘Nihon Nogyo e no Eikyo to Nosei no Arata na Kadai’ [‘The Impact of the GATT Agreement on Japanese Agriculture and New Issues in Agricultural Policy’], Nogyo to Keizai, 80, 4, April 1994, p. 59. Tenma shows this in his Table 2. In 2000, for example, the import price of wheat would be 1.93 times the domestic wholesale price, 1.16 times the domestic wholesale price in the case of soybeans, and 1.29 times the domestic wholesale price in the case of butter (p. 61). Podbury et al. also comment that: ‘The base periods from which reductions were calculated were times of unrepresentative high protection and low prices. Consequently, countries have had to do little, if anything, to meet their commitments to reduce support.’ ‘Increasing Benefits’, p. 5. Podbury et al., ‘Increasing Benefits’, p. 5. A tariff-rate quota is a two-stage tariff: imports up to the quota level enter at a primary-duty rate (duty free, or low-duty rate); over-quota imports enter at a higher rate (secondary-duty rate). The terms tariff-rate quota and tariff quota are used interchangeably, although they can be differentiated technically. TRQs are not considered quantitative restrictions because in theory they do not limit import quantities. It is always possible to import over and above the quota level, providing the over-quota tariff rate is paid. This option is not available with standard import quotas. However, if the over-quota tariff rate is prohibitively high, then import volumes will not differ markedly from standard quota volumes. See David W. Skully, Economics of Tariff-Rate Quota Administration, Economic Research Service, United States Department of Agriculture, http://www.ers.usda.gov/publications/ As Podbury et al. comment about the URAA as a whole: ‘The tariffs for beyond quota imports were generally prohibitive, enabling tariff quotas to be used as tools for managing trade within highly distorting support systems.’ ‘Increasing Benefits’, p. 6. As Podbury et al. comment about the URAA in general: ‘Special safeguards are supposed to provide a cushion for producers against significant increases in imports and precipitous reductions in world prices. Such changes trigger import control mechanisms. However, in some instances safeguards are being used as an integral part of market management systems.’ ‘Increasing Benefits’, p. 6.

Notes to pp. 210–215

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199 Under the provision, ‘tariffs can be raised if the volume of imports in a given period exceeds 105 per cent of the average volume recorded in the same period over the previous 3 years, or if the import price falls by more than 10 percent below the 1986–88 reference price for product. In the case of volume surges, the tariff may be raised by up to one-third above the tariff applied before the safeguard takes effect. The tariff increase is then maintained for the rest of the fiscal year, and is removed at the beginning of the next fiscal year. If a price drop triggers the safeguard, the tariff increase is related to the extent of the price drop.’ Obara, Dyck and Stout, Pork Policies in Japan, p. 8. See also Chapter 5 on ‘Agricultural Policies from the Late 1990s’ in my forthcoming volume, Japan’s Agricultural Policy Regime. 200 Other safeguards available under international trade rules are those specifically permitted by the WTO Agreement on Safeguards. See also Chapter 5 on ‘Agricultural Policies from the Late 1990s’ in my forthcoming volume, Japan’s Agricultural Policy Regime. 201 See also Chapter 4 on ‘Agricultural Policies from the Late 1980s to the Late 1990s’ in my forthcoming volume, Japan’s Agricultural Policy Regime. 202 These are quotations from various speeches by Norota Hosei, reported in Nosei Undo Jya¯ naru, 5, January 1996, pp. 3, 4. 203 Ministry of Agriculture, Forestry and Fisheries, Japan, Elaboration of Japan’s Negotiating Proposal: Submissions to the Second Phase of the WTO Agricultural Negotiations, Japan’s Agricultural Review, 31, January 2002, p. 50. 204 See Chapter 5 on ‘Agricultural Policies from the Late 1990s’ in my forthcoming volume, Japan’s Agricultural Policy Regime. 205 ‘ “Jiyuka no Kijun” Zukuri e, Kosho Dai-3 Dankai ni’ [‘Towards Establishing a “Basis for Liberalisation”: In the Third Stage of Negotiations’], Nosei Undo Jya¯ naru, 42, April 2002, p. 3. 206 The Japanese delegation actually presented the proposal for a more flexible system of emergency import safeguards to the WTO in September 2001. The MAFF representatives argued that prompt measures were needed to protect domestic perishables, which tended to be seasonal and have short shelf lives. In exchange, they proposed to lower tariffs on agricultural products. Nikkei Weekly, 1 October 2001. 207 Elaboration of Japan’s Negotiating Proposal, pp. 1– 49. 208 For an elaboration of MAFF agricultural trade strategies, see my forthcoming volume, Japan’s Agricultural Trade Policy Strategies. 9 Conclusion 1 Hayami, Japanese Agriculture Under Siege, p. 71.

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‘6-cho En wa Shinsai Taisaku ni Mawase’ [ ‘¥6 trillion Should Be Allocated to Measures for Earthquakes’], Aera, 13 February 1995, pp. 24–27. ‘2001 Nendo Yosan: Seifuan Kimaru’ [‘The 2001 Budget: Government Draft Decided’], Nosei Undo Jya-naru, No. 35, February 2001, pp. 16–17. ‘2003 Nendo Seifu Yosanan Kimaru: Shohisha Jushi no Norinsuisan Yosan ni’ [‘The 2003 Government Budget Draft Decided: An Agriculture, Forestry and Fisheries Budget that Attaches Importance to Consumers’], Nosei Undo Jya-naru, No. 47, February 2003, pp. 10–11. Author unknown, ‘Shitei Josei Taisho Jigyo ni tsuite’ [‘About Designated Assistance Projects’], n.d. ‘Autoputto – Kome to Mugi: Beibaku ni kansuru Keiei Anteika Seisaku no Arikata’ [‘Output – Rice and Wheat: Management Stabilisation Policies Relating to Rice and Wheat’], Nogyo to Keizai, 66, 8, July 2000, pp. 160–161. ‘Chuo Shocho Saihen Suta¯to’ [‘Reorganisation of the Central Ministries and Agencies Starts’], Nosei Undo Jya-naru, No. 35, February 2001, pp. 12–15. Domon Takeshi, Yoi Nokyo: Jiyukago ni Ikinokoru Senryaku [The Good Nokyo: A ‘Post-Liberalisation’ Survival Strategy], Tokyo, Nihon Keizai Shinbunsha, 1988. Domon Takeshi, ‘Shoeki ni Hashitta Nosui Kanryo no Hyakunichi’ [‘One Hundred Days of An Agricultural Bureaucrat Pursuing Ministry Interests’], Chuo K oron, 109, 6, June 1994, pp. 128–135. Domon Takeshi, ‘Kome Gyosei: Kengyo Noka o Mamori, Shokuryocho o Mamotta?’ [‘The Administration of Rice: Protection for Part-Time Farmers and the Food Agency?’], Ekonomisuto, 22 November 1994, pp. 47–48. Domon Takeshi, Shinshokuryoho de Nihon no Okome wa ko Kawaru [ Japanese Rice Changes This Way Under the New Food Law], Tokyo, Toyo Keizai Shinposha, 1995. Fujiki Hiroshi, ‘The Structure of Rice Production in Japan and Taiwan’, Economic Development and Cultural Change, 47, 1, January 1999, http://www.kier.kyoto-u.ac.jp/DP/DP47 Fujitani Chikuji, Nokyo Daikakushin [Revolution in the Nokyo]. Tokyo, Ie no Hikari Kyokai, 1994. Hasegawa Hiroshi, ‘Nosuisho o Haishi seyo’ [‘Abolish the Ministry of Agriculture, Forestry and Fisheries’], Aera, 1 April 2002, pp. 35–38. Hayashi Nobuaki, ‘Shin Kokusai Bungyoron Hihan’ [‘A Critique of the New International Division of Labour Approach for Agricultural Trade’], Nogyo to Keizai, 48, 8, Special Edition,1982, pp. 78–84. Hayashi Nobuaki, ‘Shijo Kaiho – Endaka no Nihon Nogyo’ [‘Market Opening and Japan’s Agriculture under High Yen Conditions’], in Ouchi Tsutomu and Gomi Kenkichi (eds), Keizai Masatsuka no Nihon Nogyo [ Japanese Agriculture Under Economic Friction], Nihon Nogyo Nenpo 34, Tokyo, Ochanomizu Shobo, 1986, pp. 123–136.

Japanese language bibliography 277 Hayashi Nobuaki, Nogyo wa Nihon no O’nimotsu ka [Is Agriculture a Burden to Japan?], Tokyo, Ie no Hikari Kyokai, 1987. ‘Heisei 13 Nendo Nogyo Kankei Yosan: Gaisan Yokyu Kimaru’ [‘The 2001 AgricultureRelated Budget: Draft Budget Decided’], Nosei Undo Jya-naru, No. 33, October 2000, p. 28. Hirose Michisada, Hojokin to Seikento [Subsidies and The Ruling Party], Tokyo, Asahi Shinbunsha, 1981. Imamura Naraomi, Hojokin to Nogyo, Noson [Subsidies, Agriculture and Rural Villages], Tokyo, Ie no Hikari Kyokai, 1978. Imamura Naraomi, ‘Nogyo Zaisei no Genjo’ [‘The Current State of Agricultural Finance’], in Matsuura Toshiaki and Imamura Naraomi (eds), Nogyo Hogo no Rinen to Genjitsu: Zaisei to K inyu no Ugoki o Yomu [The Philosophy and Reality of Agricultural Protection: Understanding the Movement of Budget Finance and Loans], Tokyo, Nosangyoson Bunka Kyokai, 1989, pp. 38–56. Imamura Naraomi, ‘Kokusaika Jidai no Norin Yosan’ [‘The Agricultural Forestry and Fisheries Budget in the Age of Internationalisation’], in Matsuura Toshiaki and Imamura Naraomi (eds), Nogyo Hogo no Rinen to Genjitsu: Zaisei to Kinyu no Ugoki o Yomu [The Philosophy and Reality of Agricultural Protection: Understanding the Movement of Budget Finance and Loans], Tokyo, Nosangyoson Bunka Kyokai, 1989, pp. 57–70. Imamura Naraomi, ‘Shokkan Zaisei no Kozo’ [‘The Structure of Food Control Finance’], in Matsuura Toshiaki and Imamura Naraomi (eds), Nogyo Hogo no Rinen to Genjitsu: Zaisei to K inyu no Ugoki o Yomu [The Philosophy and Reality of Agricultural Protection: Understanding the Movement of Budget Finance and Loans], Tokyo, Nosangyoson Bunka Kyokai, 1989, pp. 105–119. Imamura Naraomi, ‘Nogyo Hojokin no Tokushitsu’ [‘The Characteristics of Agricultural Subsidies’] in Matsuura Toshiaki and Imamura Naraomi (eds), Nogyo Hogo no Rinen to Genjitsu: Zaisei to Kinyu no Ugoki o Yomu [The Philosophy and Reality of Agricultural Protection: Understanding the Movement of Budget Finance and Loans], Tokyo, Nosangyoson Bunka Kyokai, 1989, pp. 120–136. Imamura Naraomi, ‘Nogyo Kinyu no Seido to Saikin no Doko’ [‘The System of Agricultural Finance and Recent Trends’], in Matsuura Toshiaki and Imamura Naraomi (eds), Nogyo Hogo no Rinen to Genjitsu: Zaisei to Kinyu no Ugoki o Yomu [The Philosophy and Reality of Agricultural Protection: Understanding the Movement of Budget Finance and Loans], Tokyo, Nosangyoson Bunka Kyokai, 1989, pp. 149–178. Imamura Naraomi, ‘Shikin no Nagare kara Mita Hojokin to Seido Kinyu’ [‘Subsidies and Institutional Financing Seen From the Flow of Funds’], in Matsuura Toshiaki and Imamura Naraomi (eds), Nogyo Hogo no Rinen to Genjitsu: Zaisei to Kinyu no Ugoki o Yomu [The Philosophy and Reality of Agricultural Protection: Understanding the Movement of Budget Finance and Loans], Tokyo, Nosangyoson Bunka Kyokai, 1989, pp. 245–262. Imamura Naraomi and Inuzuka Akiharu, Seifu to Nomin [Government and the Farmers], Shokuryo Nogyo Mondai Zenshu No. 10, Tokyo, Nosangyoson Bunka Kyokai, 1991. Inoguchi Takashi, ‘Shin-Zoku Giin Taiboron’ [‘The Long-Awaited New Tribe Diet Member View’], Chuo Koron, February 1994, pp. 104–113. Inoguchi, Takashi and Iwai Tomoaki, ‘Zoku Giin’ no Kenkyu [Research on ‘Tribe Diet Members’ ], Tokyo, Nihon Keizai Shinbunsha, 1987. ‘Inputto – Nochi Ryudoka to Kibo Kakudai: Sengo Nochi Seido no Hatten’, Nogyo to Keizai, 66, 8, July 2000, pp. 192–193. ‘Inputto – Nochi Ryudoka to Kibo Kakudai: Nochi Ryudoka no Genjo’, Nogyo to Keizai, 66, No. 8, July 2000, pp. 194 –195.

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‘Inputto – Nochi Ryudoka to Kibo Kakudai: Kibo Kakudai no Kanosei’, Nogyo to Keizai, 66, 8, July 2000, pp. 196–197. Ito Osamu, ‘The “Japan Model” Financial System’, Social Science Japan, No. 5, November 1995, http://web.iss.utokyo.ac.jp/newslet/SSJ5/ito.html Iwamoto Isao, Hachiju Nendai Nihon Seiji to Sekai [ Japanese Politics and the World in the 1980s], Kyoto, Koyo Shobo, 1988. JA Zenno Sogo Kikakubu (ed.), JA Gurupu Keizai Jigyo Kiso Tokei [ JA Group Economic Business Basic Statistics], Tokyo, Zenno Sogo Kikakubu Kikaku Chosaka, 1999. Jinjiin, Kanri Kyoku, Shokukaika, Gyosei Kikan Soshikizu, [A Chart of Administrative System Organisations], annual. ‘ “Jiyuka no Kijun” Zukuri e, Kosho Dai-3 Dankai ni’ [‘Towards Establishing a “Basis for Liberalisation”: In the Third Stage of Negotiations’], Nosei Undo Jya-naru, No. 42, April 2002, pp. 2–3. Kaiin Toron, ‘Norin Kanryo Ikigai to Kikikan’ [‘The Agriculture and Forestry Bureaucracy’s Meaning of Life and Sense of Crisis’], in Nosei Jya¯ narisuto no Kai (ed.), Norin Kanryo o Kaibo Suru [Dissecting the Agriculture and Forestry Bureaucracy], Nihon Nogyo no Ugoki No. 11, Tokyo, Nihon Norin Keikaku Kyokai, January 1968, pp. 91–113. Kajii Isoshi, ‘Nogyo Kosho no Zasetsu to Nihon Nogyo no Saihensei’ [‘The Failure of the GATT Agricultural Trade Negotiations and the Reorganisation of Japanese Agriculture’], in Ouchi Tsutomu and Saeki Naomi (eds), GATTO Nogyo Kosho to Nihon Nogyo [The GATT Agricultural Negotiations and Japanese Agriculture], Nihon Nogyo Nenpo 37, Tokyo, Norin Tokei Kyokai, 1991, pp. 112–182. Kajii Isoshi, Hayami Yujiro and Nakamura Yasuhiko, ‘Toron: Kome Kaihogo no Nihon Nogyo’ [‘Discussion: Japanese Agriculture After the Opening of the Rice Market’], in Nakamura Yasuhiko, Kome Kaiho [Rice Market Opening], Tokyo, NHK Shuppan, 1994, pp. 131–170. Kano Yoshikazu, ‘Hojokin Sakugen, Noka “Senbetsu” De Shijoka Isogu’ [‘Reducing Subsidies and Selecting Farm Households for the Introduction of the Market Mechanism in Agriculture’], Ekonomisuto, 22 November 1994, pp. 80–83. Kawakita Takao and Onoue Yukio, Norinsuisansho [The Ministry of Agriculture, Forestry and Fisheries], Tokyo, Intamedia, 2001. Kawasaki Isonobu, Shokuryocho-dono: Watashi wa Yamigomeya Desu [Mr Food Agency: I Am A Black Market Rice Shop], Tokyo, Gendai Shorin, 1992. ‘Kokuhatsu “Gyuniku Konekushyon” ’, [‘A Denunciation: “The Beef Connection” ’], Aera, No. 10, 26 July 1988, pp. 6–13. ‘Kome Tosei wa itsu made Tsuzuku’ [‘How Long Will the Control of Rice Continue?’], Aera, No. 43, 20 October 1997, pp. 24 –27. Matsushima Masahiro ‘ “Jiyuka” no Ugoki to Kome no Seisan, Ryutsu’ [‘Trends in Liberalisation and Rice Production and Distribution’], in Ouchi Tsutomu and Saeki Naomi (eds), GATTO Nogyo Kosho to Nihon Nogyo [The GATT Agricultural Negotiations and Japanese Agriculture], Nihon Nogyo Nenpo 37, Tokyo, Norin Tokei Kyokai, 1991, pp. 132–146. Matsuzaka Shojiro, ‘Koritsuka Suru Norin Kanryo’ [‘The Increasingly Isolated Agriculture and Forestry Bureaucracy’], in Nosei Jya-narisuto no Kai (ed.), Norin Kanryo o Kaibo Suru [Dissecting the Agriculture and Forestry Bureaucracy], Nihon Nogyo no Ugoki 11, Tokyo, Nihon Norin Keikaku Kyokai, January 1968, pp. 4–15. Minato Tetsuro, Shin Nosei no Sozo [The Creation of a New Agricultural Policy], Tokyo, Norin Tokei Kyokai, 1972. Mitsukawa Motochika, Nogyo Dantai Hattenshi [A History of the Development of Agricultural Groups], Tokyo, Meibun Shobo, 1972.

Japanese language bibliography 279 Miyamoto Kenichi (ed.), Hojokin no Seiji Keizaigaku [The Political Economy of Subsidies], Tokyo, Asahi Shinbunsha, 1992 (3rd edn). Nakamura Yasuhiko, Kome Kaiho [Rice Market Opening], Tokyo, NHK Shuppan, 1994. Nihon Nogyo Hojin Kyokai, ‘Nogyo Hojin to wa’ [‘Agricultural Corporations Are . . . ’], http://www.hojin.or.jp/nouhou/kyo_01.html#06 Nihon Nogyo Nenkan Kankokai (ed.), Nihon Nogyo Nenkan [ Japan Agricultural Yearbook], Tokyo, Ie no Hikari Kyokai, annual. Nogyo Sogo Kenkyujo, Nogyo Keizai: Kenkyu Seika Joho [Agricultural Economics: Research Results Report], Vol. 4, 1995. Norinsuisansho, Daijin Kanbo Chosaka (ed.), Nogyo Hakusho Fuzoku Tokeihyo, [A Statistical Compendium to the 1998 Agricultural White Paper], 1998, Tokyo, Norin Tokei Kyokai, 1999. Norinsuisansho Gyosei Handobukku [A Handbook of Ministry of Agriculture, Forestry and Fisheries Administration], Tokyo, Taisei Shuppansha, 1999. Norinsuisansho Meibo [Ministry of Agriculture, Forestry and Fisheries Officials’ Register], Tokyo, Norin Shuppansha, annual. Norinsuisansho, Norinsuisansho Yosan no Setsumei [An Explanation of the Agriculture, Forestry and Fisheries Budget], annual, mimeo. Norinsuisansho, UR Taisaku no Aramashi [UR Policy Outline], n.d. Norinsuisansho, Tokei Johobu, Poketto Norinsuisan Tokei [Pocket Agriculture, Forestry and Fisheries Statistics], 2000, Tokyo, Norin Tokei Kyokai, 2000. Norinsuisansho, Tokei Johobu, Norinsuisansho, Tokeihyo [Statistical Yearbook of Ministry of Agriculture, Forestry and Fisheries], 2000–01, Tokyo, Norin Tokei Kyokai, 2003. Norinsuisansho Yosanka, Nendo Norinsuisan Yosan no Setsumei [An Explanation of the Agriculture, Forestry and Fisheries Budget], annual, mimeo. Norinsuisansho Yosanka, Norinsuisan Yosan no Taiyo [An Outline of the Agriculture, Forestry and Fisheries Budget], annual, mimeo. Norinsuisansho (ed.), Nogyo Roppo [A Compendium of Agricultural Laws], Tokyo, Gakuyo Shobo, 1993. Norinsuisansho (ed.), Norinsuisan Roppo [A Compendium of Agricultural, Forestry and Fisheries Laws], Tokyo, Gakuyo Shobo, 1998. Norinsuisansho (ed.), Norinsuisan Roppo [A Compendium of Agricultural, Forestry and Fisheries Laws], Tokyo, Gakuyo Shobo, 2001. Norinsuisansho (ed.), Norinsuisan Roppo [A Compendium of Agricultural, Forestry and Fisheries Laws], Tokyo, Gakuyo Shobo, 2003. Norinsuisansho, ‘Nochikusan Shinko Jigyodan no Setsuritsu ni tsuite’ [‘Concerning the Establishment of the Agriculture and Livestock Industries Promotion Corporation’], MAFF Home Page, http://www.maff.go.jp, 22 August 1997. ‘Norinsuisansho Soshiki no Saihen’ [‘Reorganisation of the Ministry of Agriculture, Forestry and Fisheries’], Mini Letter, No. 222, 27 June 2002, pp. 1–6. Norin Tokei Kyokai (ed.), Shokuryo, Nogyo, Noson Hakusho Fuzoku Tokeihyo [A Statistical Compendium to the Food, Agriculture and Rural Areas White Paper], 1999, Tokyo, Norin Tokei Kyokai, 2000. Norin Tokei Kyokai (ed.), Shokuryo, Nogyo, Noson Hakusho Sanko Tokeihyo, [The Food, Agriculture and Rural Areas White Paper Statistical Reference Tables], 2002, Tokyo, Norin Tokei Kyokai, 2003. ‘Nosanbutsu Ryutsu – Nosanbutsu Ryutsu to Shijo no Kozo Henka: Shokkan Seido no Hokai, Soshite Shinshokuryoho e’ [‘Agricultural Product Distribution – Changes in the Market Structure and Distribution of Agricultural Products: The Collapse of the Food Control System, and Towards the New Food Law’, Nogyo to Keizai, 66, 8, July 2000, pp. 206–207. ‘Nosanbutsu Shohi to Kakaku – Nosanbutsu Kakaku Keisei: Nosanbutsu Kakaku Seisaku no Tenkai’ [‘Consumption and Prices of Agricultural Products – Agricultural Product

280

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Price Formation: The Development of Price Policy for Agricultural Products’], Nogyo to Keizai, 66, 8, July 2000, pp. 230–231. ‘Nosui Kanryo ni Soncho ga Hyakuman En Sokin no Wake’ [‘The Reason Why the Village Mayor Put ¥1 Million into the Account of the MAFF Bureaucrat’], Aera, 22 May 2000, pp. 23–24. ‘Nosuisho Kyaria Kanryo no Sakenomi Jinsei’ [‘The Alcoholic Life of a Career MAFF Bureaucrat’], Shukan Asahi, 14 April 2000. ‘Nosuisho no Daizai’ [‘The MAFF’s Deadly Sins’], Shukan Daiyamondo, Special Issue, 20 April 2002. ‘Nosuisho Riken no Naibu Kiretsu’ [‘The Internal Split in the Vested Rights of the MAFF’], Aera, 27 September 1999, pp. 15–17. ‘ “Okawara Jimusho” no Seitai’ [‘The Living Body of “Okawara’s Office” ’], Aera, 20 March 2000, pp. 18–20. Okurasho, Zaisei Kinyu Tokei Geppo [Ministry of Finance Statistics Monthly], Tokyo, Okurasho, monthly. Saeki Naomi, GATTO to Nihon Nogyo [GATT and Japanese Agriculture], Tokyo, Tokyo Daigaku Shuppankai, 3rd edn, 1992. Sangyo Seisaku Kenkyujo, Norinsuisansho: Sono Yakuwari to Seisaku [The Ministry of Agriculture, Forestry and Fisheries: Its Role and Policies], Tokyo, Sangyo Seisaku Kenkyujo, 1988. Satake Goroku, Taikenteki Kanryoron [A Discourse on the Bureaucracy Based on Experience], Tokyo, Yuhikaku, 1998. Satake Goroku, Seisakuron no Saho [The Manners of Policy Debate], Tokyo, Sozo Shobo, 1999. Seikan Yoran [Handbook of Politicians and Ministry Officials], Tokyo, Seisaku Jihosha, 1995. ‘Seisaku – Nihon no “Shinnosei” to Shinnogyo Kihonho: Shinseisaku no Gaiyo’ [‘Policy – Japan’s “New Policies” and the New Agricultural Basic Law: Outline of the New Policies’], Nogyo to Keizai, 66, 8, July 2000, pp. 54 –55. ‘Seisaku – Nogyo Kihonhogo no Nosei: 1970 Nendai no Nosei’ [‘Policy – Agricultural Policy after the Agricultural Basic Law: Agricultural Policies in the 1970s’], Nogyo to Keizai, 66, 8, July 2000, pp. 82–83. ‘Seisaku – Nogyo Kihonhogo no Nosei: 1990 Nendai no Nosei’ [‘Policy – Agricultural Policy After the Agricultural Basic Law – Agricultural Policies in the 1990s’], Nogyo to Keizai, 66, 8, July 2000, pp. 86–87. ‘Seisaku – Uruguai Raundo to Nihon Noringyo: WTO Taisei to Nihon Nosei’ [‘Policy – The Uruguay Round and Japanese Agriculture and Forestry Industries: The WTO System and Japanese Agricultural Policies’], Nogyo to Keizai, 66, 8, July 2000, pp. 42– 43. ‘Shinshokuryoho Ketchaku: Seika Ageta Tokubetsu Undo’ [‘The New Food Law Concluded: The Results of the Special Campaign’], Nosei Undo Jya-naru, No. 5, January 1996, pp. 12–14. ‘Shokuhin Anzen Gyosei ni Soshiki Seibi – Nosuisho’ [‘Organisational Consolidation in Food Safety Administration – The Ministry of Agriculture and Fisheries’], Nosei Undo Jya-naru, No. 49, June 2003, p. 25. Shokuryocho, Beika ni kansuru Shiryo [Materials Concerning the Rice Price], annual. Sorifu (ed.), Koeki Hojin Hakusho [White Paper on Public Interest Corporations], 2000, Tokyo, Okurasho Insatsu Kyoku, 2000. ‘Soshiki to Keiei – Nogyo Keiei no Tenkai: Nogyo Keiei no Genjo to Tenkai’ [‘Organisation and Management – The Development of Farm Management: The Development and Current Conditions of Farm Management’], Nogyo to Keizai, 66, 8, July 2000, pp. 128–129. Takahashi Ichiro, ‘Boeki Masatsu no Shinkyokumen to Chikusan’ [‘The New Phase of Trade Friction and the Livestock Industry’], in Ouchi Tsutomu and Gomi Kenkichi (eds), Keizai Masatsuka no Nihon Nogyo [ Japanese Agriculture Under Economic Friction], Nihon Nogyo Nenpo 34, Tokyo, Ochanomizu Shobo, 1986, pp. 137–154.

Japanese language bibliography 281 Takahashi Yurika, ‘Nosuisho yo, Noka no Koe o Kike’ [‘MAFF, Listen to Local Voices’], Sekai, June 2000, pp. 170–176. Takeuchi Naokazu, Nihon no Kanryo [ Japan’s Bureaucracy], Tokyo, Shakai Shisosha, 1988. Takeuchi Yasuo, ‘Kyoso no Muchi de Kitaenaose’ [‘Competition is Just What the Economy Needs’],This is Yomiuri, August 1998, pp. 54–63. Tahara Soichiro, Shin Nihon no Kanryo [The New Japan Bureaucracy], Tokyo, Bungei Shunju, 1988. Tanaka Toyotoshi, Nihon no Nokyo [ Japan’s Nokyo], Tokyo, Nokyo Kyokai, 1971. Tenma Tadashi, ‘Nihon Nogyo e no Eikyo to Nosei no Arata na Kadai’ [‘The Impact of the GATT Agreement on Japanese Agriculture and New Issues in Agricultural Policy’], Nogyo to Keizai, 80, 4, April 1994, pp. 56–65. Terayama Yoshio, ‘Norin Jikanron’ [‘A Discussion on MAFF Vice-Ministers’], in Nosei Jya-narisuto no Kai (ed.), Norin Kanryo o Kaibo Suru [Dissecting the Agriculture and Forestry Bureaucracy], Nihon Nogyo no Ugoki 11, Tokyo, Nihon Norin Keikaku Kyokai, January 1968, pp. 51–62. ‘Tokushu Hojin Kaikaku: Seiri Gorika Keikaku Kimaru’ [‘Reform of Special Public Corporations: Reorganisation and Rationalisation Plan Decided’], Nosei Undo Jya-naru, No. 41, February 2002, p. 7. ‘Toron’ [‘Discussion’], in Saito Makoto, ‘Shimeikan no Henshitsu wa Tozen’ [‘It is Natural that the Nature of the Mission Has Changed’], in Nosei Jya-narisuto no Kai (ed.), Norin Kanryo o Kaibo Suru [Dissecting the Agriculture and Forestry Bureaucracy], Nihon Nogyo no Ugoki 11, Tokyo, Nihon Norin Keikaku Kyokai, January 1968, pp. 44–50. Yaguchi Yoshio, ‘Nogyo Hogo o Kangaeru’ [‘Considering Agricultural Protection’], Keizai Zemina-ru, December 1993, pp. 12–16. Yamada Toshio, Nihon Nosei no Jittai: Shokuryo Anzen Hosho o Motomete [The Reality of Japanese Agricultural Policies: Seeking Food Security], Tokyo, Kyoikusha, 1985. Yamaji Susumu, ‘Atsuryoku Dantai Toshite no Nokyo’ [‘Nokyo As A Pressure Group’], in Kondo Yasuo (ed.), Nokyo Nijugonen: Sokatsu to Tenbo [Twenty Five Years of Nokyo: Summary and Outlook], Nihon Nogyo Nenpo 22, Tokyo, Ochanomizu Shobo, 1973, pp. 238–243. Yokota Hajime, ‘Nosuisho Kozo Kaizen Kyoku no Kenkyu’ [‘A Study of the Structural Improvement Bureau of the MAFF’], Sekai, June 2000, pp. 160–169. Yoshida Toshiyuki, ‘Shokkan Seido no Kaikaku Kadai’ [‘Issues in the Reform of the Food Control System’], Nogyo to Keizai, 60, 5, May 1994, p. 25–37. Yuize Yasuhiko, ‘Chiho Bunken ni Tesshita Shinnosei o Kakuritsu seyo’ [‘Establish the Decentralisation of Authority for the New Agricultural Policies’], Shukan Toyo Keizai, 19 November 1994, pp. 110–113. Zaisei Chosakai (ed.), Hojokin Soran [A Complete Handbook of Subsidies], 1998, Tokyo, Nihon Densan Keikaku Kabushiki Kaisha, 1998. ‘Zaisei to Kinyu – Nogyo Kankei Yosan no Suii: Nogyo Yosan no Hiritsu no Teika’ [‘Finance and Loans – Transition in the Agriculture-Related Budget: The Decreasing Ratio of the Agricultural Budget in the National Budget’], Nogyo to Keizai, 66, 8, July 2000, pp. 236–237. ‘Zaisei to Kinyu – Nogyo Kankei Yosan no Suii: Nosanbutsu Kakaku Seisaku no Koshin’ [‘Finance and Loans – Trends in the Agriculture-Related Budget: The Retreat in Agricultural Product Price Policies’], Nogyo to Keizai, 66, 8, July 2000, pp. 238–239. ‘Zaisei to Kinyu – Nogyo Kinyu to Nokyo Kinyu: Seido Kinyu’ [‘Finance and Loans – Agricultural Loans and Nokyo Loans: Government Program Loans’], Nogyo to Keizai, 66, 8, July 2000, pp. 244–245. Zenno Sogo Kikakubu (ed.), Keito Keizai Jigyo Kiso Tokei [Federated Economic Business Basic Statistics], Tokyo, Zenno Sogo Kikakubu Kikaku Chosaka, annual.

Index

accounting profession 101 ‘adjustment storage’ 71 ‘administered prices’ (gyosei kakaku) 71, 150 Administrative Control Agency 196 administrative guidance ( gyosei shido) 23–5, 26, 71; by MAFF 96–8; written communications (tsutatsu) 23 administrative leadership ( gyosei shudo) 28 administrative power see bureaucratic power administrative procedures 73 administrative reform 142–6; councils 12; see also structural reform Administrative Reform Committee 119 administrative support organs ( gyosei hojo kikan) 94 Aggregate Measurement of Support (AMS) 209 aging society 204 agribusiness 54, 166 Agricultural Basic Law, 1961 73, 132, 165, 179–85 agricultural budget 180–3, 192, 194 agricultural chemicals 51, 54, 66, 95, 166 Agricultural Chemicals Control Law, 1948 73 agricultural committees 97, 163 agricultural communities (nogyo shuraku) 95, 110, 136; see also cooperative farming Agricultural Community Drainage Association 104 agricultural construction 95, 165, 170, 190 agricultural cooperatives 16, 21, 22, 216; and MAFF 51, 61, 83, 91, 96, 97, 111, 179, 232; see also Nokyo Agricultural Cooperative Union Law 80, 98, 111, 134

agricultural credit fund associations 70, 91, 216 agricultural credit guarantee insurance 70 Agricultural Credit Guarantee Insurance Law 17, 86, 237 Agricultural Disaster Compensation Law, 1947 73, 80 agricultural disaster prevention 48, 61 Agricultural Disaster Reinsurance 61 agricultural disaster relief 68 agricultural expenditure 83, 198–202 agricultural extension services 68 agricultural, forestry and fisheries budget (norinsuisan yosan) 18, 81–6, 108; see also Ministry of Agriculture, Forestry and Fisheries – budget Agricultural, Forestry and Fisheries Insurance Inspection Committee 61 Agricultural Housing Associations Law, 1980 80 Agricultural Improvement Fund 61, 69, 216, 236 Agricultural Improvement Fund Assistance Law, 1956 73, 80 agricultural infrastructure development see infrastructure development agricultural investment loans 93–4 Agricultural Land Development Corporation 80, 86, 141–2, 144, 216 agricultural land infrastructure 52; see also agricultural construction, infrastructure development Agricultural Land Law, 1952 15, 80, 86, 98, 111, 133, 134, 136, 138, 139, 239; 1970 135; 1998 97 Agricultural Land Utilisation Promotion Law, 1980 (Nochi Riyo Zoshinho) 135, 136, 138

284

Index

agricultural machinery 51, 54, 95, 151, 166; subsidies 178 Agricultural Mechanisation Law 80 Agricultural Modernisation Fund 69, 70, 191, 216, 237 Agricultural Modernisation Fund Assistance Law, 1961 16, 86 agricultural mutual aid associations 144 Agricultural Mutual Aid Fund 144, 216 Agricultural Mutual Aid Reinsurance 81 agricultural policy 3–4, 96, 110, 130, 139, 167, 168, 176; for land 132– 40, 167; reform 111, 133, 176; ‘three pillars’ 168; see also comprehensive agricultural policy Agricultural Policy Research Committee (Nosei Chosa Iinkai) 100, 216 agricultural pricing systems 70–1 Agricultural Production Bureau see Ministry of Agriculture, Forestry and Fisheries – Agricultural Production Bureau Agricultural Products Inspection Law 62 Agricultural Products Price Stabilisation Law, 1953 97 Agricultural Promotion Law 130 Agricultural Promotion Regions Development Plan 61 agricultural protection 1, 3, 159, 179, 199, 205; see also food security agricultural road development see road development Agricultural Structure Improvement Bureau see Ministry of Agriculture, Forestry and Fisheries – Agriculture Structure Improvement Bureau agricultural subsidies see subsidies Agriculture and Fishery Industries Cooperative Unions Deposit Insurance Organisation 100, 216 Agriculture, Forestry and Fisheries Credit Fund 70, 100, 216 Agriculture, Forestry and Fisheries Credit Fund Law, 1987 80 Agriculture, Forestry and Fisheries Finance Corporation 69, 70, 73, 80, 81, 86, 88, 91, 104, 146, 216; agricultural investment loans 93– 4, 151, 192; jimukan in 99, 104 Agriculture, Forestry and Fisheries Finance Corporation Law, 1952 16, 86 Agriculture, Forestry and Fisheries Policy Information Centre 92, 140 Agriculture, Forestry and Fisheries Promotion Association 141

Agriculture, Forestry and Fisheries Technical Information Association 103 Agriculture, Forestry and Fishery Groups Personnel Mutual Aid Association 99, 145, 217 Agriculture, Forestry and Fishing Industries Trust Fund 116, 217 Agriculture and Livestock Industries Corporation (ALIC) 60, 72, 73, 143–4, 145, 216; retired jimukan in 99, 116 Agriculture and Livestock Industries Corporation (ALIC) Law, 1996 16, 88, 90, 91 Ajinomoto Co. 95 ALIC see Agriculture and Livestock Industries Corporation allocatory intervention 5, 11–12, 28, 67–70, 89, 97–8, 108, 151, 170, 176, 193, 196, 205; tax measures 12; see also subsidies amakudari see ‘descent from heaven’ AMS see Aggregate Measurement of Support animal products in stockfeed 98; see also feedstuffs anti-competitive practice 121 Antimonopoly Law (Dokusen Kinshiho) 155 approvals (shonin) 17, 111 approved corporations (ninka hojin) 20, 36, 87, 91, 94, 111; retired jimukan in 100, 116; see also National Chamber of Agriculture approving requests (nintei shinsei) 92 Ariake Sea 197 articles of association (teikan) 97 Asia Pacific Economic Cooperation (APEC) forum 51, 210 bananas 156 Banking Law (Ginkoho), 1981 15 barley 52, 65, 71; see also naked barley Basic Law see Agricultural Basic Law Basic Plan, 2000 203 ‘Basic Policies for Economic and Fiscal Management and Structural Reform 2003’ 163 beef 66, 70, 88–9, 121–2; Australian 155; calves 71, 89, 142; imports 88, 122, 142, 147, 153–6, 207; price stabilisation 89, 122, 147, 148, 207; see also cattle

Index Beef Calf Production Stabilisation etc. Special Measures Law, 1988 80 Beika Shingikai see Rice Price Advisory Council Bio-oriented Technology Research Advancement Institution (BRAIN) 86, 100, 103, 145, 146 black market 153 Blair House Agreement 209 Board of Audit (Kaikei Kensain) 196 bovine spongiform encephalopathy (BSE) 98, 159, 163 BRAIN see Bio-oriented Technology Research Advancement Institution bribes 5, 33, 123, 124; see also gifts, golf – club-memberships, wining and dining bridge building 195 BSE see bovine spongiform encephalopathy budget, agricultural see agricultural budget budget subsidies see subsidies bureaucratic intervention-maximising theory see bureaucratic self-interest bureaucratic policymaking see policymaking – by bureaucrats bureaucratic power 17–18, 27, 53, 108–12, 164 –7; see also administrative guidance, intra-ministry competition bureaucratic self-interest 5–6, 27–8, 31– 44, 130, 212; see also Ministry of Agriculture, Forestry and Fisheries – bureaucratic self-interest bureaucrats see public servants business plans ( gyomu hohosho) 20, 91, 97, 111 cattle 178; feed 98, 178 Central Association of Fishing Boats Insurance 145 Central Bank for Agriculture and Forestry (Norinchukin) 61, 70, 80, 87, 217; retired jimukan in 100, 116 central bureaucratic control see bureaucratic power Central Fruit Production and Delivery Stabilisation Fund 100, 217 Central Fruit Production and Delivery Stabilisation Fund Association 90 central government 83; budget 18, 164; grants 18; ministries 13; projects 83; reorganisation, 2001 13; subsidies to farmers 178, see also subsidies; subsidies to local government 163; see also government financial institutions,

285

prime minister, vertically integrated administration chemical companies 101 chemicals in agriculture see agricultural chemicals Chiba Prefecture 177 Chikusanbutsu no Kakaku Antei to ni kansuru Horitsu see Law Concerning Price Stabilisation for Livestock Products Chikusan Shinko Jigyodan see Livestock Industry Promotion Corporation citrus quotas 156 coastal works 16, 194 collectivisation (danchika) 136 commerce and industry associations 16 commissions 31, 34 commodity exchanges 100 commodity exports 185 commodity imports 149, 209; see also rice – imports Common Agricultural Policy (CAP) xiv community infrastructure 190, 195; see also public works compensation 207 competition 34, 37, 207 Compound Feed Supply Stabilisation Organisation 90, 217 comprehensive agricultural policy (sogo nosei) 164 –5, 186 concessions 34 conflict of interest 32 construction 101, 123; see also agricultural construction construction companies 109, 151, 165, 247 consultancies 102 consumer policy 157 consumers 63, 155, 159, 165 contractors 165 ‘controlled cultivation’ (kanri kosaku) 137 cooperative farming 136 corporatisation 23 corruption 33, 123–6 cost efficiency 136 Council on Economic and Fiscal Policy (Keisei Zaisei Shimon Kaigi) 164, 205 dairy farmers 89, 97 dairy processing companies 98 dairy products 66, 70, 89, 121, 142; milk 71, 143, 196; price subsidies 89, 143, 148 danchika see collectivisation death duties see taxation – inheritance tax

286

Index

Decentralisation Promotion Committee (Chiho Bunken Suishin Iinkai ) 189 Depopulated Regions Activisation Special Measures Law (Kaso Chiiki Kasseika Tokubetsu Sochiho) 131 ‘descent from heaven’ (amakudari ) 25–6, 32, 37, 98, 104, 113, 116, 122, 140, 227; corporations see Ministry of Agriculture, Forestry and Fisheries – descent from heaven corporations; see also old boys, public servants – retirement salaries, ‘second careers’ designated assistance schemes (shitei josei jigyo) 89 designated corporations (tokushu kaisha) 18 Diet 24, 43, 101, 118; members see politicians direct market intervention 5, 10, 88, 112 direct market participation 31, 64 –5, 168, 205 disaster compensation 61, 150, 184 –5 Disaster Fund 69, 217 disaster prevention 204 distribution networks 203 dokuritsu okoku see ‘independent kingdoms’ Domestic Rice Control Account 150 draft budget 203, 204; see also Ministry of Agriculture, Forestry and Fisheries – budget drainage 52; construction plans 92 economic regulations 12, 34; see also import restrictions, price controls employment: rural 40, 165, 166; see also local industries engineers 101 ‘entertainment offensives’ 125, 126 entry controls see market entry – restrictions environmental protection 40, 166, 184, 201, 204; see also living environment establishment laws see ministries – laws Export and Import Trading Law (Yushutsunyu Torihikiho), 1952 16 extension centres 163 Fair Trade Commission (FTC) 155 farmers ( genba): ‘authorised farmers system’ (nintei nogyosha seido) 137; debts 190, 191; incomes 150, 193; and MAFF 4, 40, 44, 54, 60, 108, 129, 139, 151, 168, 179, 190, 191; part-time 131, 133, 138, 167, 208; pensions 68, 150; and rice adjustments 95, 113,

138, 208; subsidies for 91, 108, 109, 150, 165 farmers cooperatives 58; see also cooperative farming Farmers Pension Fund 61, 80, 99, 145, 217 farm households 54, 134, 138, 157, 190; number of 3, 131, 222 farm income support 159, 164, 165, 205, 210; see also price support farm inputs 51, 136 farmland conversion 97, 130 farm management 97, 132–3, 136–7, 150, 185, 190; units (nogyo keieitai) 137, 157 farm roads see road development farms: and MAFF 51, 130–40 farm vote: and DLP 1 FC see Food Control system FCSA see Food Control Special Account feed companies 98 feedstuffs 95, 166; meat and bonemeal in 159; see also forage crops fertiliser 51, 54, 95 Fertiliser Control Law, 1950 73 Fertiliser Science Research Institute 103, 217 FILP see Fiscal Investment and Loan Program finance (zaisei ) 67, 101 financial assistance 12, 19, 34, 73, 179, 197; see also commissions, low-interest loans, New Basic Law, public works contracts, subsidies financial issues 18–19, 26, 81–6, 203; see also public finance financial services: MAFF regulation 97 Fiscal Investment and Loan Program (FILP) (Zaisei Toyushi Keikaku (zaito)) 18, 20, 30, 85, 86, 140 fiscal opportunism 203–5 fishery cooperatives 97 Fishery Resources Development Corporation 99 Fishing Boat Reinsurance 81 Flour Millers Association 116, 217 flowers 51 Food Agency see Ministry of Agriculture, Forestry and Fisheries – Food Agency Food and Agricultural Policy Research Centre 90 Food, Agriculture and Rural Areas Basic Law (New Basic Law) see New Basic Law food consumption administration 160

Index Food Control Law (Shokuryo Kanriho) 15, 64, 70, 80, 87, 170 Food Control Special Account (FCSA) 81, 83 Food Control (FC) system 65, 66, 81, 111, 112–13, 168–72, 184; expenses (shokuryo kanrihi ) 112–13, 114 –15; and rice trading 152, 169–70 food distribution 58, 68, 95, 123, 155; regulated 155; see also food markets Food Distribution Structural Improvement Promotion Corporation 90 food imports 54; see also beef – imports, rice – imports food industry 54, 95, 166; see also staple foods Food Industry Centre 100 food industry councils 103 food labels: and GMO 158 Food Livelihood Information Service Centre 100 food markets 54 food poisoning 98 food prices 68 food processing 101, 108 food safety 165 Food Safety Commission 159, 160 food security 40, 53, 58, 60, 159, 165, 197, 198, 211 food self-sufficiency 161, 165, 197, 203, 204 forage crops 197 foreign exchange profits 147 Forestry Development Corporation 86, 144, 217 Forests Insurance 81 free-market competition see competition Free Trade Agreements (FTAs) 51 fruit 51, 71, 137; see also bananas, grapefruit, lemons, oranges FTC see Fair Trade Commission GA budget see agricultural, forestry and fisheries budget GAA budget see Government-Affiliated Agencies – budget gaikaku dantai 19–20, 21–3, 30, 37, 70, 88, 96, 121, 144; in community market 71; funding 92; increased numbers of 87; in market place 93, 94; OBs in 25, 32, 99, 153; as subsidy recipients 91, 108, 140 Gaimusho see Ministry of Foreign Affairs gaisan yokyu see draft budget

287

GATT see General Agreement on Tariffs and Trade genba see farmers General Agreement on Tariffs and Trade (GATT) 111 general works (ippan jig yo) 81 genetically modified organisms (GMO) 158 genkyoku 14 gentan see rice – production adjustment gifts 33, 123, 126 gikan see public servants – with technical qualifications GMO see genetically modified organisms golf: club memberships 33; goods 123; outings 126 Government-Affiliated Agencies (GAA) 21–2; budget 18 government financial institutions (seifu kinyu kikan) 93 government intervention see intervention Government Land Improvement Works Special Account 62 government programme loans (seido kinyu) 67, 69, 70 government system 13–14; see also central government, market management grapefruit 156 Green Resources Corporation 99, 103, 116 ‘Green Tourism’ 68 guidance fee (shidoryo) 93 guidelines (yoryo) 109 Gumma Prefecture 125 gyosei kaikaku see administrative reform gyosei shido see administrative guidance hanbai gyosha see rice sellers Hannan Corporation Ltd 126 Hashimoto administration 189 hilly and mountainous areas see Ministry of Agriculture, Forestry and Fisheries – Hilly and Mountainous Areas Promotion Office hojo jigyosha see subsidy agents Hokkaido 196 Hokuriku Agricultural Administration Bureau 190–1 horse racing see racing industry horticulture 137 hotsprings 125 housing finance companies 119 Hyogo Prefecture 178

288

Index

ideological convictions 40 import controls 146 import quotas (IQ ) 88, 154, 206 import restrictions 12, 168, 205–11 imports see commodity imports incentives 43, 150 Independent Administrative Corporation Green Resources Organisation 146, 217 independent farmers ( jisakuno) 69 ‘independent kingdoms’ (dokuritsu okoku) 120 industries see food industry, local industries industry associations ( gyokai ) 22, 25, 95; OBs in 33, 102 information technology development 203, 204 infrastructure development 69, 165, 179, 190, 194, 195, 199, 204; see also agricultural construction, public works institutional rents 146 institutional structures 71 instructions ( yoko) 109 Insurance Business Law (Hokengyoho), 1996 15 interest-free loans 33, 178 interest groups 27, 28, 121, 213; leaders of 38 intermediate corporations (chukan hojin) 21, 22, 87 internationalisation 130 international organisations 102, 167; see also Asia Pacific Economic Cooperation forum, GATT, OECD, WTO intervention (general theory) 5–6, 27–31, 212; role of MAFF 2, 104, 105, 130, 146, 150, 168, 212; typology 64 intra-ministry competition 120–1 ippan jigyo see general works ‘iron triangle’ 35, 129, 150; see also farmers, Liberal Democratic Party, Ministry of Agriculture, Forestry and Fisheries irrigation 52, 178, 190, 191 Isahaya Bay 197 Ishikawa Prefecture 151, 190 IT kakumei taio waku 204 Japan Agricultural Community Drainage Association 92–3, 103, 217; admission fees 93; supporting memberships 93 Japan Agriculture and Forestry Standard ( JAS) 60, 90, 217

Japan Bread Industry Association 116, 217 Japan Central Racing Association ( JRA) 80, 88, 92, 99, 116, 141, 212 Japan Drinking Milk Cooperative Association 90, 217 Japanese administrative system see government system Japan Food Association 95, 218 Japan Fruit Juice Association 100, 218 Japan Grain Inspection Association 90, 116, 218 Japan Green Resources Corporation 80, 144, 145, 146, 218 Japan Ham Sausage Manufacturing Cooperative Association 90, 218 Japan Horse Association 100, 218 Japan International Agricultural Council ( JIAC) 92, 218 Japan International Cooperation Agency ( JICA) 60, 80, 99, 103, 218 Japan Meat Conference 154 Japan Meat Consumption General Centre 122, 218 Japan Meat Council 88, 90, 218 Japan Meat Grading Association 90, 218 Japan Plywood Inspection Association 103, 218 ‘Japan Rebirth Plan’ 204 Japan Refrigerated Foods Association 100, 218 Japan Rice Market Co. Inc. (Nikon Kome Shijo Kabushiki Gaisha) 175 Japan’s Agricultural Policy Regime xiv Japan School Lunch Association 88, 90, 218 Japan Silk and Cocoon Corporation 143, 218 Japan Silk Industry Association 100, 218 JA Zenchu 94, 111 JA Zenno see National Federation of Agricultural Cooperative Unions jimukan see public servants – generalist jisakuno see independent farmers jiyumai see rice – ‘free rice’ josei see financial support and assistance jurisdiction (nawabari arasoi) 30 Kagome Company 95 Kakurai area 177 Kankyosho see Ministry of Environment kanri kosaku see controlled cultivation Kasumigaseki see Ministry of Agriculture, Forestry and Fisheries Kawabegawa region 191

Index Keizai Sangyosho see Ministry of Economy, Trade and Industry ‘key control variables’ 71 kickbacks see bribes Kikkoman Corporation 95 kinyu see loans koeki hojin see public interest corporation Koizumi administration 145, 163, 164, 204 Kokudo Kotsusho see Ministry of Land, Infrastructure and Transport kokyo jigyo see public works Kosei Rodosho see Ministry of Health, Labour and Welfare Kumazawa Hideaki 159 kyogyo soshiki see small scale cooperative enterprise organisations kyoka see permits kyokaigata plans see sewage works – industry association’s system kyoku see ministries – bureaus land improvement 48, 91, 117, 150, 177, 190, 191; districts (tochi kairyoku) 81, 87, 218; organisations 94, 103, 117; projects 109–10, 131, 151–2, 191–7; subsidies 178, 192 Land Improvement Law, 1949 16, 73, 80, 87, 109 land infrastructure development (tochi kiban seibi ) 165, 190 land leasing 135 136–40 land ownership 97, 132–3, 138; ‘bearers’ (ninaite) 136; deregulation of 135; restrictions on 132, 135, 139, 140, 185 land preservation see environmental protection land prices 136 land use 54, 130, 135, 138; ‘cultivator principle’ (kosakusha shugi ) 136, 138; and municipal governments 135; see also collectivisation, controlled cultivation Law Concerning the Adjustment etc. of Raw Silk Imports 80 Law Concerning the Agricultural Committees, 1951 80 Law Concerning the Development of Agricultural Promotion Regions 135 Law Concerning Information Disclosure by Administrative Organs, 1999 98 Law Concerning Price Stabilisation for Livestock Products (Chikusanbutsu no

289

Kakaku Antei to ni kansuru Horitsu) 17, 75, 80 Law Concerning the Promotion of Dairy Farming and Beef Cattle Production, 1984 73, 74 Law Concerning Safety Assurance and Quality Improvement of Feed, 1958 98 Law to Promote the Strengthening of the Agricultural Management Base, 1993 73, 80, 97, 136 laws: administered by MAFF 74–9, 96, 165; see also legal base of intervention Law for Stabilisation of Supply-Demand and Price of Staple Food see New Food Law LDP see Liberal Democratic Party leased land see land leasing legal base of intervention 71–81, 179, 197, 212; see also legislation legal profession 101 legislation 14 –18, 26; cabinet ordinances (seirei ) 17; enforcement ordinances (shikorei ) 17; enforcement regulations (shiko kisoku) 17; interpretation of 24, see also administrative guidance; ministerial ordinances (shorei) 17; ordinances (rei) 17; regulations (kisoku) 17; supporting rules 17 leisure facilities 68 lemons 156 Liberal Democratic Party (LDP) 150, 169; and bureaucracy 4, 123; and farm vote 1, 119, 151, 222; and government (seifu–Jiminto) 4, 164; Special Fund for Public Works 204 licenses 111 limited foreign access see import restrictions LIPC see Livestock Industry Promotion Corporation livestock 54, 101; industry 51, 68, 122, 142; prices 193; trade 66, 122 Livestock Industry Promotion Corporation (LIPC) (Chikusan Shinko Jigyodan) 17, 88, 89, 90, 92, 121–2, 126, 142, 143, 218, 249; beef profits 147, 154, 155 Livestock Trading Law, 1956 73 living environment (seikatsu kankyo) 185–6, 190 loans (kinyu) 67, 151, 192; see also interest free loans, low-interest loans local festivals 68

290

Index

local government 19, 27, 28, 153, 163, 195, 225; budgets 18; and MAFF 86–7, 92, 106, 177; projects 83; retired gikan in 103; retired jimukan in 101; see also prefectural governments local industries 166 low-interest loans 12, 34 MAC see Ministry of Agriculture and Commerce MAFF see Ministry of Agriculture, Forestry and Fisheries MAFF Establishment Law, 1949 48; and administrative guidance 96, see also administrative guidance; amendments 1999 72, 74, 160; 2001 53, 54, 58, 59, 60–2, 63; organisational ordinance (soshikirei) 59 manufacturing 101, 167 Marine Bio-Environment Research Institute 103, 218 Marine and Fisheries Resource Development Centre 145 marine insurance 101 market entry: restrictions 12, 34 market function 37 marketing: farm products 137 market intervention see direct market intervention market management 100, 205–6 markets: competitive see competition; and ministries 27, 36 medical clinics 101, 131 METI see Ministry of Economy, Trade and Industry MHA see Ministry of Home Affairs MHLW see Ministry of Health, Labour and Welfare MHW see Ministry of Health and Welfare milk see dairy products – milk Milk Transportation Facilities Lease Association 103, 218, 225 ministries 13–14, 27, 29; affiliated agencies 27; agencies (cho) 14, see also quasi-public bodies; basic laws (kihonho) 15; bureaus (kyoku) 14, 32, 42, 43, 120; client groups 44; comparative size of 107; departments (bu) 14, 42; divisions (ka) 14, 42; laws (ho and horitsu) 14, 24, 49, see also MAFF Establishment Law; loyalty to 42, 213; OBs see ‘old boys’; offices (shitsu) 14; policymaking in see policymaking – by bureaucrats;

political influence of 41; see also ‘independent kingdoms’ ministry-affiliated agencies see gaikaku dantai Ministry of Agriculture and Commerce ( MAC) 109 Ministry of Agriculture, Forestry and Fisheries (MAFF) (Norinsuisansho) 1, 40, 83, 106, 164–7, 212–15; Administrative Affairs Department 52; administrative guidance 96–8; administrative support organs 94; administrative vice-minister 109, 112, 162; agencies (gaikyoku) 47, 52, 143; Agricultural Cooperatives Division 51; Agricultural Production Bureau (Seisan Kyoku) 14, 48, 49, 51, 52, 54, 60, 97, 157,161; Agricultural Structure Improvement Bureau (Kozo Kaizen Kyoku) 48, 49, 97–8, 104, 109, 124–6, 189, 190; Agriculture, Sericulture and Horticulture Bureau 143; appointments on retirement 5, 92, 98–104, 116–17, 140, see also ‘descent from heaven’; ‘assisting forces’ 83, 86–95, 104; auxiliary agencies 100, 108, 121–6, 129, 229; branch offices (chiho nosei jimusho, jigyosho) 48; budget 108, 131, 140, 157, 177, 179, 180–3, 197–203, 207; bureaucratic self-interest 1–2, 3, 116, 120, 130, 131, 168, 206, 212; bureaus 47, 95, 177, see also MAFF – agencies; Cooperatives Inspection Department (Kyodo Kumiai Kensabu) 47, 49, 51; decisionmaking 53, 130–2; ‘descent from heaven corporations’ (Nosuisho amakudari hojin) 116; dominance 4, 94; duties 55–7; Economic Affairs Bureau (Keizai Kyoku) 14, 48, 49, 51; Establishment Law 2001 see MAFF Establishment Law; and farmers 4, 40, 44, 60, 108, 129, 130–40, 151, 168, 179, 191; Finance Division (Kinyu Choseika) 51; Fisheries Agency 49; Food Agency 48, 49, 51, 52, 54, 58, 59, 62, 70, 83, 87, 106, 108, 112–13, 149, 152–4, 158–9, 168–76, 208, 234; Food Department (Shokuryobu) 161; Food Distribution Bureau 143; Food Industry Planning Division (Shokuhin Sangyo Kikakuka) 51; Food Industry Promotion Division (Shokuhin Sangyo Shinkoka) 51; Food and Marketing Bureau (Shokuhin Ryutsu Kyoku) 14, 48,

Index see also Ministry of Agriculture, Forestry and Fisheries – General Food Policy Bureau; food offices (shokuryo jimusho) 48; Food Policy Division (Shokuryo Seisakuka) 51; Food Safety and Consumer Affairs Bureau (Shohi Anzen Kyoku) 160; Forestry Agency 49, 106; General Food Policy Bureau (Sogo Shokuryo Kyoku) 49, 51, 54, 60, 157, 158, 159, 161; Hilly and Mountainous Areas Promotion office 52, 131, 158, 195; history 164–6; Infrastructure Department 52, 113; Insurance Division (Hokenka) 51; internal organisational structure 47–53; International Affairs Department 49, 51, 158, 161; International Affairs Division 158; International Economic Affairs Division (Kokusai Keizaika) 51, 161; International Policy Planning Division (Kokusai Kikakuka) 51; International Trade Policy Coordination Division (Kokusai Choseika) 51; laws administered 74 –9, 96, 165, see also legal base of intervention; Livestock Department 157; Livestock Industry Bureau (Chikusan Kyoku) 49, 51, 88, 147, see also Kumazawa Hideaki; Livestock Industry Department (Chikusanbu) 51; main ministry (Kasumigaseki) 83; Management Improvement Bureau (Keiei Kyoku) 49, 51, 58, 61, 113, 157; Minister’s Secretariat (Daijin Kanbo) 47, 49, 59, 60, 126, 140, 141, 203; Moral Regulations 125; National Land Agency’s Regional Development Bureau 52; OBs 98, 104, 117, 141, 142, 145; Orderly Marketing Department 52; Planned Distribution Division (of Food Agency) 175; Production Adjustment Promotion Office ( Jigyo Sogo Choseishitsu) 52; public works administration see public works; regional agricultural administration bureaus (chiho nosei kyoku) 48, 49, 52, 58, 106, 108, 113, 161, 177; Regional Promotion Division (Chiiki Shinkoka) 52; reorganisation 2001 47, 48, 49, 50, 51–3, 108, 119, 156–8, 162; Rural Development Bureau (Noson Shinko Kyoku) 14, 49, 51, 52, 58, 61, 104, 109, 110, 113, 117 123, 157, 158, 189; Rural Infrastructure Division 113; staff 53, 105–8, 113, 119, 161;

291

Statistics and Information Department (Tokei Johobu) 49, 51; Structural Improvement Works Division 125; Structural Reform Bureau 103, 195; Structure Improvement Bureau 109–10, 157; subsidy-distributing 67–8, 81–6, 110, 117, 163–4; ‘three pillars’ of policy 168; see also ‘Reborn MAFF’, Regional Agricultural Policy Bureaus Ministry of Construction (MOC) 106, 11, 189; River Bureau 119 Ministry of Economy, Trade and Industry ( METI) (Keizai Sangyosho) 5, 13 Ministry of Environment (Kankyosho) 60, 112 Ministry of Finance (MOF) 30, 43, 91, 106, 108, 118; Budget Bureau 186 Ministry of Foreign Affairs (Gaimusho) 112, 118 Ministry of Health, Labour and Welfare ( MHLW) (Kosei Rodosho) 5, 159 Ministry of Health and Welfare (MHW) 108, 195 Ministry of Home Affairs (MHA) 108, 118 Ministry of International Trade and Industry (MITI) 106, 108, 111, 118 Ministry of Land, Infrastructure and Transport (MLIT) (Kokudo Kotsusho) 5 Ministry of National Land Development (proposed) 119 ministry officials see public servants Ministry of Posts and Telecommunications ( MPT) 106, 108, 111 Ministry of Transport (MOT) 106, 108, 112, 189 MITI see Ministry of International Trade and Industry Mitsubishi 155 Mitsui 155 MLIT see Ministry of Land, Infrastructure and Transport MOC see Ministry of Construction MOF see Ministry of Finance monopolies: government sanctioned 34, 92, 93 Mori administration 203, 204 MOT see Ministry of Transport Mountain Village Development Law 178 mountain villages 68, 69, 124; see also Ministry of Agriculture, Forestry and Fisheries – Hilly and Mountainous Areas Promotion Office

292

Index

MPT see Ministry of Posts and Telecommunications municipal governments 19, 97; agricultural divisions (norinka/noseika) 86; subsidies to 67 municipal mayors 87 Nagasaki Prefecture 197 naked barley 71 Nanbu region 151, 191 National Agricultural Engineering Technical league 103, 218 National Agricultural Research Centre 120, 218 National Agricultural Structural Improvement Association 92, 218 National Agricultural Technology Research Corporation 145, 146, 218 National Association of Regional Horse Racing 99, 116, 145, 219 National Central Markets Vegetable and Fruit Wholesalers’ Association 100 National Central Union of Agricultural Cooperatives ( JA Zenchu) 80, 219 National Chamber of Agriculture 61, 80, 94, 100, 144, 145, 219 National Federation of Agricultural Cooperative Unions ( JA Zenno) 65, 111, 196, 219, 265 National Federation of Food Industry Cooperative Associations (Zenshokuren) 65, 116, 219 National Federation of Meat Industry Cooperative Associations 90, 218 National Federation of Rice Trade Cooperative Associations (Zenbeishoren) 65, 152, 219 National Federation of Staple Food Collection Cooperative Associations (Zenshuren) 65, 152, 219 National Federation of Wheat Polishing Industry Cooperative Associations 116, 219 National Food Inspection Association 116, 219 National Food Storage Association 116, 219 National Forestry Service 106 National Forestry Works 81 national government see central government national interest 38, 39, 130, 168

National Land Improvement Works 81; Special Account 83 National Public Service Ethics law 126 National Rice and Wheat Improvement Association 116, 219 New Basic law, 1999 48–9, 73, 74, 156–8, 165, 166, 197–203 New Food Law 64, 66, 71, 81, 108, 172–3, 174 New Rice Policy, 1998 174 Nihon Kome Shijo Kabushiki Gaisha see Japan Rice Market Co. Inc. Nihon Shinsei Tokubetsu Waku see Special Fund for Japan’s Renewal Niigata prefecture 110 Niiharu Village 125 nintei shinsei see approving requests Nippon Foods 98 Nippon Meat Packers 95, 98 Nisshin Flour Milling Co. 95 Nissho-Iwai 155 nogyo keieitai see farm management – units nogyo kiban seibi see infrastructure development nogyo shuraku see agricultural communities Nokyo 1, 65, 83, 111, 113, 119, 150, 153, 214; loans 69, 93, 94; rice market share 175 nokyo (agricultural cooperative) see Nokyo Norinchukin see Central Bank for Agriculture and Forestry Norinchukin Research Institute 100 Norinsuisansho see Ministry of Agriculture, Forestry and Fisheries norinsuisan yosan see agricultural, forestry and fisheries budget OBs see ‘old boys’ Obuchi administration 189, 203 OECD 1 Ogawa Nokyo 124 Ogura Takekazu 132 Okawara Taichiiro 92, 140, 141 Okuhara Masaaki 175 ‘old boys’ (OBs) 25, 98, 104; see also Ministry of Agriculture, Forestry and Fisheries – OBs oranges 156 ordinances (as law) 17, 28; see also legislation – ordinances Osaka 171 Oshima Tadamori 160 owner-tiller principle see land ownership

Index parliament see Diet Pension Fund Association for Agriculture, Forestry and Fishery Corporation Personnel 99, 145 permits (kyoka) 17, 111 Petroleum Industry Law (Sekiyugyoho), 1962 15 Police Agency 124 policy instruments 73, 94, 96; see also administrative guidance policy loans (seisaku yushi ) 69, 70 policymaking 3, 4; by bureaucrats 5, 28, 36, 176–7; with consumers 161; see also agricultural policy ‘Policy Outline for Food Safety and Peace of Mind’ 161 politicians 34–5, 38, 113, 118 politics: ex-bureaucrats in 33, 37, 101, 103, 117–18 [The] Politics of Agriculture in Japan xiv, 221 pollution 190 pork 70, 89 post-retirement employment see retirement employment potatoes 71 poultry 71 prefectural governments 19, 94; agricultural departments (noseibu/ norinsuisanbu) 86, 177; MAFF people 86; subsidies to 67, 163; see also municipal governments prefectural governors 66, 87 price controls 12; see also price stabilisation price maintenance 71 price stabilisation 13, 70, 97, 143, 185, 193 price support 1, 71, 91, 149, 159, 169, 205 pricing policies 60 pricing systems see agricultural pricing systems primary producer organisations see producer organisations prime minister 43; see also Hashimoto administration, Koizumi administration, Mori administration, Obuchi administration Prime Minister’s Office 32 private companies 25, 27, 93; OBs in 33, 101, 102, 104; in regulated farm trades 152 private financial institutions 93 private gain 123–6 privatisation 145, 146, 169 producer organisations 22, 151, 156; see also farmers’ cooperatives

293

production costs 97 production levels 97, 164, 184 professional associations 102 profits 92, 147, 148, 154–5, 156; see also foreign exchange profits promotions 90, 147, 148 protectionism see agricultural protection Provisional Measures Law for a Deficiency Payment for Soybeans, 1961 58, 73, 80 Provisional Measures Law for Subsidies to Producers of Raw Milk for Processing 73, 80 public companies (kosha) 89 public corporations (tokushu hojin) 16, 145; capital for 18–19; see also public interest corporations public finance 18 public interest 39; see also national interest public interest corporations (koeki hojin) 20, 21, 23, 87, 94, 141; code of conduct (teikan) 21; retired gikan in 102, 103; retired jimukan in 100; see also Agricultural Policy Research Committee, approved corporations, special public corporations public policy 23, 145; see also policymaking public relations 101 public sector organisations (amakudari) 5 public servants 22, 53; generalist 53, 99–103; and the national interest 38, 40; personal benefits 33, 37; retirement salaries 19–20, 26, 31, 42; with technical qualifications (gijutsu kanryo or gikan) 53, 101–4, 113, 117, 126 public service: entrance exams 53 public works (kokyo jigyo) 81, 111, 116, 150, 166, 170, 189–90, 191–7; corruption in 124–5 public works contracts 34, 109 public works projects 19, 28, 33, 92, 110, 117, 151, 152, 185, 191; pseudo reformist 205; questionnaire 177 pulses 71 quality of life programmes 203 quarantine 60, 161 quasi-public bodies 19–20, 90 racing industry 51, 54, 64, 88, 92, 101; see also Japan Central Racing Association rapeseed 71 ration books (tsucho) 170

294

Index

real estate 101 ‘Reborn MAFF’ (Shinsei Norinsuisansho ) 157 recycling 203, 204 reform 36–7, 140, 143, 145, 156, 169 ‘Refresh Village’ 124, 195, 196 regional development 185 regulatory intervention 5, 10–11, 65–7, 155, 168, 205, 222; see also economic regulations, social regulations related companies (kanren gaisha) 20 related industries (kanren gyokai ) 93 rent control: abolition of 135 representative agent (madoguchi ) 92 research 90, 203 research organisations 102 retirement employment 25, 99, 116, 122; see also ‘descent from heaven’, Ministry of Agriculture, Forestry and Fisheries – appointments on retirement, ‘old boys’ rice 52, 59, 112, 137, 152, 161, 193, 207; black market 171, 174; distribution 152, 168, 169, 171, 172; Food Agency purchases 65, 110, 169; ‘free rice’ ( jiyumai ) 171; government rice (seifumai ) 65, 152, 170, 173, 174; imports 153, 168, 207; inspections 158–9; market control 168–76, 208; non-orderly marketed rice (keikakugai ryutsumai) 174, 175; ‘orderly marketed rice’ (keikaku ryutsumai) 173; producer rice price (seisansha beika) 65, 81; production 94 –5; production adjustment (gentan) 52, 71, 83, 95, 97, 110–11, 138, 169, 174, 175, 176, 186–9; research 203; spot market (genbutsu shijo ) 171; stockpiling 71, 175; surpluses 165, 169, 170, 173, 185, 186, 192; voluntarily marketed ( jishu ryutsumai ) 65, 112, 152, 169–70, 171, 173, 174, 189; wholesalers 171, 173, 209 Rice Distribution Study Group (Kome Ryutsu Kenkyukai ) 170–1 Rice Price Advisory Council ( RPAC) (Beika Shingikai ) 172 rice sellers (hanbai gyosha) 65, 66 risk management 160 road development 69, 178, 195, 204 RPAC see Rice Price Advisory Council rural business 63 rural communities 40, 63, 186, 195, 202; decline of 130 rural community drainage works 104 Rural Development Planning Committee 103, 219

Rural Environmental Infrastructure Centre 103, 219 rural infrastructure 52, 68, 131, 190, 195, 202 rural population 131 SA budget see Special Accounts budget Sato Masato 195 Sato Takashi 167 School Lunch Program 89 seacoast protection 58 seaweed harvests 197 ‘second careers’ (daini no jinsei) 32, 116 seed-raising facilities 178 seido kinyu see government programme loans seifu-Jiminto see Liberal Democratic Party – and government seifu kinyu kikan see government financial institutions seikatsu kankyo see living environment semi-public organisations 121 sense of mission (shimeikan) 38 sewage works 190, 195, 204; association’s system (kyokaigata) 92–3; industry 92 shidoryo see guidance fee shipbuilding 101 shoeki see Ministry of Agriculture, Forestry and Fisheries – bureaucratic self-interest shokuryo kanrihi see Food Control – expenses shonin see approvals silk: raw silk 70, 90, 142, 143 Silk and Sugar Price Stabilisation Corporation (SSPSC) 90, 143, 148, 219 silkworms 73, 125; cocoons 71, 90, 143 Singapore Sangyo Co. 155 small scale cooperative enterprise organisations (kyogyo soshiki) 69 Snow Brand Co. 98 social infrastructure see infrastructure development social regulations 12 Social Security Pension System 145, 219 Society of Japan Food Industry Executives 95, 100, 219 sogo nosei see comprehensive agricultural policy South Korea 124 soybeans 71, 178, 187, 197 Special Accounts (SA) budget 18 Special Fund for Japan’s Renewal 204 Special Fund for Prioritising Public Works Relating to People’s Lives Etc. 204 Special Fund to Reduce the Farmers Burden 69

Index Special Measure Law to Promote the Independence of Depopulated Regions, 2000 197 Special Measures Law for Promoting Fruit Farming, 1961 73 special public corporations 20, 21, 22, 83, 86, 87, 91, 121, 143; corruption in 126; funding 20, 30; gikan in 102; jimukan in 99–100; laws 73; in market places 88, 92, 93, 146; tax privileges 31; see also Agriculture and Livestock Industry Corporation, Farmers Pension Fund, Japan Central Racing Association etc. special rights (tokken) 153 ‘special works bodies’ (tokushu jigyotai ) 69 SSPSC see Silk and Sugar Price stabilisation Corporation Staple Food Law 173 staple foods 58, 60, 64, 81, 112; see also barley, rice, wheat state intervention see intervention state trading 146–50 state trading enterprises (STE) 88 statistics 58 statutory organisations 16–17, 90; see also public corporations stockfeed see feedstuffs structural adjustment 145, 206, 210; prevention of 59 structural reform 163 subsidies 18, 19, 28, 31, 43, 67–9, 81–6, 109, 168, 194; abolition proposal 164; to dairy and cattle producers 146; guidebook for 178; 1980s 165; and MAFF power 108, 117, 163– 4, 176–9; to public interest corporations 21; for public works 190–1, 193; statutory support (horitsu hojo) 16; for sugar 144 subsidy agents (hojo jigyosha) 19 sugar 90; beet 71; cane 71, 143; imported 70 Sugar Price Stabilisation Corporation 143 Sugar Refining Industry Association 100, 220 Super Comprehensive Fund System 69 supply controls 70, 157 sweet potatoes 71 Tamazawa Tokuichiro 125 tangerines 66 tariffs 150 tatewari gyosei see vertically integrated administration

295

taxation 150; evasion 155; exemptions 31; inheritance tax 136, 139; by local government 163; reform 139, 163 technical support 102 teikan see articles of association telecommunications projects 203 tenancy charges see rent control tochi kairyoku see land improvement – districts tochi kiban seibi see land infrastructure development Tohoku region 191 tokken see special rights tokushu jigyotai see ‘special works bodies’ tokushu kaisha see designated corporations Tokyo 171, 175 tourism 59, 125, 202; infrastructure 195; see also ‘Green Tourism’ trade liberalisation 205, 211 trade policies 4, 54, 165, 205–11 trade promotion 51 transportation 101, 131 tsucho see ration books University of Kyoto: Department of Agriculture 113 university positions 101, 102 upland field development 48 urban infrastructure 204 Uruguay Round Agreement on Agriculture (URAA) 64, 83, 111, 118, 124, 165, 209–10; countermeasures 126, 207 vegetables 51, 66, 137, 178; harvesting machinery 68; imported 211; see also potatoes, sweet potatoes Vegetable Supply Stabilisation Fund 90, 100, 145, 220 vertically integrated administration (tatewari gyosei) 13 veterinary services 60 villages 204; see also mountain villages Voluntarily Distributed Rice Price Formation Arena Investigation Committee ( Jishu Ryutsumai Kakaku Keiseiba Chosakai) 171 Voluntarily Marketed Rice Price Formation Centre 173, 220 Voluntarily Marketed Rice Price Formation Organisation ( Jishu Ryutsumai Kakaku Keisei Kiko) 171, 173 wastewater treatment 93 Watanabe Yoshiaki 162

296

Index

Water Resources Development Corporation 80, 220 welfare assistance works 195 wheat 52, 65, 71, 148–9, 178, 187, 197 wining and dining (settai ) 33, 123, 126 World Trade Organisation (WTO) 51, 52, 158, 161, 211 Yamamoto Toru 144 yoko see instructions yoryo see guidelines

zaisei see finance Zaisei Toyushi Keikaku see Fiscal Investment and Loan Program Zenbeishoren see National Federation of Rice Trade Cooperative Association Zenchu see JA Zenchu Zenshokuren see National Federation of Food Industry Cooperative Associations Zenshuren see National Federation of Staple Food Collection Cooperative Associations