Banking on Rice Kay Shimizu July 31, 2015 at Ritsumeikan University

Japan’s opposition to TPP portrayed as farmers’ opposition Government promised to protect 5 sacred products, the most important being rice

In fact, many farmers don’t care 1. The price difference between Japanese rice and foreign rice has disappeared  disappeared Japanese rice California rice Chinese rice Rice prices / 60 kg

In fact, many farmers don’t care 2. Most (rice) farmers are part-time farmers farming 30 days per year (per 1000 sqm)

In fact, many farmers don’t care 3. Farmers don’t depend on the price of rice Income of farm households Income from agriculture Total income of farm households Income of farm households vs non- farm households

Protection of rice has not been effective  Japanese production of rice has gone from  12 million tons in 1994 to  8 million tons in 2012  High tariffs ineffective against the aging of farmers and declining population  In fact, Japan is overproducing rice  In order to export rice and other agricultural produce, TPP is ideal for opening the gates to foreign markets

Who actually opposes TPP?  Unlike the Uruguay Round, according to a Kyodo survey, 45% of primary sector workers opposed TPP, while 17 % supported TPP  Full-time farmers support the TPP  Direct payments to farmers should adequately compensate the losers  BUT, no talk of such alternative policies  Farmers are not opposed to TPP, but Japan Agricultural Cooperative (JA) opposes TPP, because JA survives on the administrative fees for selling rice and other farm products

JA Bank, one of Japan’s largest banks  JA = Japan Agricultural Cooperative  Part of the JA Group, the only coop or legal entity in Japan allowed to  operate both a bank and an insurance company  have two-tiered membership giving part-time farmers membership  Number 2 in deposits (50 trillion yen in 2014), roughly the size of mega-bank Mizuho Bank  83 billion yen (in 2014) in total assets

The price of rice supported by Japanese people = 1 trillion yen  Gentan – decreases rice acreage  400 billion yen as subsidies  Tariffs – prevents the entry of “cheaper” foreign rice  High prices – consumers pay artificially high prices despite decreasing demand  600 billion yen in additional costs  Where does all this money go???

Japanese agriculture left behind  High rice prices allow part time farmers to stay put  Full time farmers cannot expand their land to become more efficient and profitable  Planting alternative crops (gentan) keeps rice paddy production low  Decreases food self sufficiency by  Decreasing the acreage of rice by 30%  Decreasing the production of rice by 5 million tons  Increasing the import of wheat by 7 million tons

# of farmers declining, but JA membership increasing Farm households JA full members JA part-time members

High rice price allows part time farmers to remain farmers = JA members Breakdown of farm household incomes Pensions, subsidies Non-agricultural income Agricultural income

 The mission of The Norinchukin Bank is to fully support Japan’s agricultural, fisheries and forestry industries as the national-level organization of JA Bank Group, JF Marine Bank Group and JForest Group. Through this support, the Bank contributes to the development of food production and consumption and a better quality of life for the people living in local communities.

Does the financial economy support the productive economy?  JA Bank propped up by high rice prices  High rice prices propped up by  Trade barriers preventing the entry of “cheaper” foreign rice  Taxpayers subsidizing farmers NOT to plant rice  Consumers paying high prices for rice  JA Bank rich in deposits from part time farmers  JA Bank increasingly earning profits beyond Japanese borders  JA Bank’s Japanese government bonds holdings decreasing  Who profits? JA Group… uses funds to lobby for trade barriers…

END

JA Group, and JA Bank, built by Japanese taxpayers and consumers

JA Bank system

Why does JA Bank flourish as Japan’s agriculture weakens?  The number of farmers are decreasing rapidly  Average age of farmers 69  Increasing abandoned farmland  How can JA Bank, the main bank of farmers, continue to flourish?