Institutional Aspects of Agriculture Development in Japan

A Summary of Chapter II of the Agricultural Development of Japan: a Century’s Perspectives, by Hayami, Y. and S. Yamada, 1991, University of Tokyo Press.

The society was under rigid hierarchical class structure during Tokugawa regime, in that social mobility was low, and occupations were determined by blood. Based on this class, the feudal lords and samurai determined the tax revenue including from peasant in type of rice tax. To ensure the sustainability of this tax, the peasant activities were also restricted with some rules including their relation to their land. The dominant character of farming in the Tokugawa period was large holding. When the intensive cropping system developed the small-scale based on family labor to be more consider.

As the market economy developed, the peasants got the opportunity to raise the agriculture productivity for selling to the market. Improvement in agriculture technology such as the use of fertilizer, improvement of flood control and irrigation positively contributed to the agriculture development. To prepare for open/market economy system, under the modern nation of Emperor Meiji, the feudal constraints were removed on economic activities one by one. Thus, some new policies introduced include 1) free to growth crops or mortgage the land for the farmers (1871/1872), 2) the land tax revision (1895), and 3) promotion of better education system. From those mentioned policies, land tax revision was the most important reform in the Meiji era. This policy aimed to secure the stable source of government revenue for modernization. Thus, most agricultural resources transferred to nonagricultural sector for this purpose. The communal resources such pasture and forests were also transformed to the wealthy landlords or to the government ownership to establish the land title for the tax sources.

Unfortunately, for small-scale farmer, the dominate farmers (Table 2-1, page 66), in some cases this policy did not contribute positive economy impact due to the common resources as the main sources of fertilizer, fuel, and feed had been transferred to the landlords or government. Related to the technology development, western and US agriculture model was chosen. Thus the use of modern input such fertilizers and machinery combined with organic farming was the main form.

The government also established agriculture education and training center such as Komaba Agriculture School (later become college of Agriculture Tokyo University in 1890) and Sapporo Agricultural School (later become college of Agriculture Hokkaido University in 1918). Unfortunately, in this importation technology only the industries gained the successful, while agriculture was great unsuccessful due to the technology incompatible.

Learning from the previous unsuccessful story, government began to develop technology consistent with their local ecological condition. The Iterant Instructor System and the Experiment Farm for Staple Cereals and Vegetables (1885) began to diffuse seed varieties and more productive cultural practiced already in use by Japanese farmer. The agriculture education was also reoriented from British based to German style. Thus, education and research in which agriculture chemistry and soil science of von Liebig tradition were established. Even though, insufficiency of facilities and logistical supports always handicapped the development of experiment farm and research. The output and productivity of agricultural were accelerated at the beginning of the 19 century.

The indigenous technology development in seed selections such as in rice whose done by the rono, veteran farmers, then followed by the promotion of agriculture society were importance factors to this acceleration. While the agriculture society took responsibility for technology dissemination, the cooperation played important role on making better bargaining position of farmers and guarantee the agriculture product marketing and capital credit. The location-specific technology growth also motivated to the raised of land productivity. However, the application of fertilizer seems required to substitute the limitation of the land. Thus, the commercial scale of fertilizers began to growth such as the Tokyo Artificial Fertilizers in 1888. A relative well-develop land infrastructure from the Tokugawa period also made possible the application of seed-fertilizer technology. The Meiji government also promoted land-improvement project and special bank support to this project. The participation of landowner also became a compulsory in this era. As the expanding demand of silk, a number of technical and institution were also established. The summer-fall culture also develop, thus increase in efficiency of labor utilization by providing employment for seasonally idle labor.

The rapid agricultural growth in the later half of Meiji era might be consider driven by 1) the successful on the development of indigenous technology, 2) the feudal constrain reform, 3) good relationship among farmers (including innovative landlords), agricultural scientists, and agricultural supply firms together with 4) the proper guidance of the government. However, as the industry growth rapidly, the investment on nonfarm increased rapidly. The innovative landlords also shifted to this business and tend to become “parasitic landlords” (page 77), particularly in the late Meiji era and Taisho era (1912-1926). Thus, the political champagne of those landlords also move from agricultural productivity to agricultural protectionism. As a result, the indigenous technological potential exhausted exists and followed by deceleration of agricultural output and productivity (in 1910s). Unfortunately, this decline coincided with the boom of World War I, forcing farm price to rise to an unprecedented high level that caused social unrest and culminated in the Rice Riot (Kome Sodo) triggered by fishermen wives in 1918. Importing rice policy from Korea and Taiwan was chosen to overcome the riots. This program was followed by the “Sanmai Zoshoku Seisaku” policy in that high-yielding Japanese rice introduced to those colonies. This policy succeeded in increasing in the flow of colonial rice to Japan.

However, as the world recession (1920s) hit Japan and the aggravation deflationary policy, the serious agricultural crisis was existed. Thus, government began to adjust the rice supply in the market by 1) engaging in the rice purchase, sale, storage, and processing, and 2) restriction import from foreign countries (Rice Law of 1921), and 3) Rice Control Law that replaced the amendment Rice Law authorized the government to buy and sell unlimited quantities of rice at the floor and ceiling price. In the farm level, 4) government spend on rural infrastructure, 5) liquidation of farm debts from usury by releasing credits from the postal saving funds, and 6) promote self-sufficiency as well as the 7) agriculture cooperation. Since 1926, 8) government also promoted the tenancy system of the landlords land into owner cultivated area thus agrarian structure of Japan shifted. Even the whole agricultural performance in this period was stagnant, new potential agriculture technology was accumulated. The research institute were also reorganized, even the breeding (rice) still became the main focus.

After devastated by the World War II, Japan tried to secure food supplies from domestic agriculture through some program such as 1) several incentives schemes; 2) emergency land-settlement program; and 3) Differential Production Scheme in which fertilizer industry together with coal mining and iron steel industries was given high priorities; and 4) continuing land reform (1946-50) and the reorganization of the agricultural cooperative association.

To execute land transfers, an Agricultural Land Commission was established in each village, consisting of three representatives from the landlords, farmers, and tenants. The successful of this reform was related to the power of occupation force and the backlog of knowledge and experience of land-tenure system. This reform promoted more equal assets and income distribution among farmers, thereby contributing critically to the social stability of the rural sector. Reorganization of agricultural institution also contributed positive impact on agriculture growth. Nogyokai that was designed to share responsibility of controlling and mobilizing village economies for war purpose, transfer to agricultural cooperative association in 1947. Structurally, this cooperation covers the village, prefecture and national level, in which took a function as marketing, bank, insurance and political lobbying institution. Thus, agricultural production recovered rapidly from its 1945-47 botom. By 1952 direct government control on food commodities, except for rice, had been lifted, and the food shortages completely disappeared with the bumper crop of rice in 1955.

Technological potential accumulation since the 1930s under the Experiment System, the rehabilitation and improvement of flood controls and irrigation facilities, are some major factors underlying rapid growth in the post-World War II. This growth was further enhanced by the supply of new industrial inputs such as insecticides and pesticides, and the farm mechanization. Those factors were such type of response on the relative rise in farm wages, due to labor out migration from agriculture, particularly in the late 1960s.

Agriculture began to face the adjustment problem as the miraculous economic growth since 1950s. Since the agriculture worker output lag behind the industry sector, the level of income and living for this households lagged behind urban households. Thus, the major goal of agricultural policy shifted from an increase the production of food staples to reduction in the rural-urban income gap. The New Village Construction Program that was initiated in 1965 encouraged to promote the cooperative agricultural development plan in order to increase the production of commodities having high economy value such as livestock, fruits, and vegetables. This program was also supported by some credits scheme to rise the purchase of livestock, pasture improvement, etc.

The major constraint on the increase in agricultural productivity was the small size of the farm units. Thus, protection on farm-product price and restriction import was such type of farmer request to the government. In 1960, strong political pressure from farm organization finally resulted in a rice-price determination formula. The “Production Cost and Income Compensation Formula” that so-called formula were determined by the cost of production of the paddy filed, in which the wages for family labor are valued by nonfarm wage rates in order to guarantee fair returns for the labor of rice produces. This policy drove the increases in rice price and contributed to the reduction in the gap between farm and nonfarm income and wages (Table 22, page 92). Thus, after the enactment of the Agricultural Basic Law in 1961, the price at which the government purchased rice from producer increased very rapidly and was consistently higher than the government sale. The domestic production also expand, while consumption remained stable until 1965 and decreased rapidly there after, resulting in accumulation of surplus rice in government storage. Rice control program consumed a large percentage of central government budgets (Table 2-3, page 94). Disposal surplus-rice program succeed in eliminating the excess rice supply.

The international pressure (GATT Uruguay Round) to reduce the agricultural protection was another important factor that preventing rice price supports rising significantly in the 1980s. As the food self-sufficiency decline, import increase sharply in the last two decades particularly in nonrice cereals and soybean (Table 2-4, page 95). Although trade liberalization has progressed rapidly in Japan, it has not been satisfied the demand of agricultural exporting countries in the face of extremely rapid expansion in manufacturing exports from Japan.
Recently, the international friction concerning the agricultural commodities imports has become one of the most critical policy issues not only for the agriculture but also for the whole economy. The domestic agriculture efficiency is the long term answer to compete international. As mentioned previously, the challenges were 1) the limiting of land size that become barrier to the agricultural growth particularly in the last three decades, while 2) the agricultural workers declined sharply (Table 2-5, page 98). Even the Land Law was amendment in 1962 and has removed 3 ha ceiling on land ownership, it was not so effective in stimulating the land market due to farmers prefer to wait for the windfalls gains from the possible conversion of their land for factories. Thus, income equalizing with the nonfarm families were challenging. The expansion in part-time farming even seem as factor inhibiting expanded operational scale for full time farmers, this activity has also helped to equalize agricultural and nonagricultural and has contributed importantly to social stability by preventing rural depopulation and urban overcrowding. Thus, as the industrialization achieved high level, agricultural protection tend to increase including in Japan.

(Picture: Paddy field and infrastructure in Ami-machi, Ibaraki)

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