A government panel proposed on Wednesday, May 14, measures to reform the nation’s agricultural cooperatives, including letting primary agricultural co-ops run their businesses with a freer hand instead of being supervised by the Central Union of Agricultural Co-operatives (JA-Zenchu), their umbrella body.
The Council for Regulatory Reform also said the mutual aid and credit businesses of agricultural cooperatives, known as JA or “nokyo,” should be transferred to the Norinchukin Bank and the Mutual Insurance Federation of Agricultural Cooperatives, and that non-farmer members’ use of nokyo businesses should be limited to a half of farmer members in terms of value.
These measures are apparently aimed at splitting up JA’s businesses and reducing the influence of JA-Zenchu, thus increasing business chances for private enterprises in the agricultural sector.
The proposal is expected to draw fire from farmers and the ruling Liberal Democratic Party which is heavily backed by JA, as these reform measures, if put into practice, can shake JA to its roots and go against the original purpose of reform, which is to increase farmers’ incomes.
The proposal by the council’s agricultural working group will not necessarily be adopted by the government as it is. It depends on the LDP, which plans to compile its proposal in early June, whether the revised version of the government’s growth strategy to be released in June will include measures which better reflect farmers’ needs.
The group’s proposal includes 35 suggestions concerning three organizations, namely JA, agricultural production corporations and agricultural committees.
It suggested that JA become a kind of a think tank to promote agriculture and also act as an agent for mutual aid and credit businesses after the services are transferred to the JA group’s financial institutions.
As for agricultural committees, mainly consisting of farmer representatives who act as gatekeepers for farmland transactions, the council proposed that the National Chamber of Agriculture, their umbrella organization, should be abolished to increase autonomy and independence of the committees. The council also said the representatives should be selected by heads of municipalities instead of through elections.
The council also proposed that private enterprises which do not meet requirements to become agricultural production corporations should be allowed to own farmlands if they meet conditions such as engaging in farm business for a certain period of time and receive permission from an agricultural committee.
Requirements for agricultural production corporations should be eased or abolished, according to the proposal. Currently, for example, more than half of such corporations’ directors should be engaged in farming on a full-time basis, but the council suggested that the rule should be eased to require one or more directors or main employees to be full-time farmers. Moreover, under the current rules, private firms’ ownership ratio of such corporations is restricted to 25 percent or less, but the council proposed that the limit should be raised to 50 percent.
Gist of proposals by the Council for Regulatory Reform’s agricultural working group
Revising agricultural committees
*Abolishing the election system and recommendation from agricultural organizations in selecting representatives
*Abolishing the legalized National Chamber of Agriculture and prefecture-level supervising committees
Revising requirements for setting up agricultural production corporations
*Abolishing business requirements
*Requiring one or more directors or main employees to be full-time farmers
*Requiring more than half of investors with voting power to be engaged in farming. No requirements to be set for the rest of investors.
*Allowing private enterprises which do not meet the requirements to become agricultural production corporations, provided that they have been engaged in farming for a certain period of time, maintaining harmony with local communities, and that they have received approval from an agricultural committee
Revising the agricultural cooperative system
*Abolishing the legalized system of JA-Zenchu supervising primary agricultural co-ops
*Turning the National Federation of Agricultural Co-operative Associations (JA Zen-Noh) into a corporation
*Transferring JA’s credit business to Norinchukin Bank and the Prefectural Associations of Agricultural Credit Cooperatives
*Transferring JA’s mutual aid business to the National Mutual Insurance Federation of Agricultural Cooperatives and making JA act as an agency
*Requiring more than half of directors to be farmers certified by municipalities as ambitious or those having experience and achievements in private business management
*Limiting non-farmer members’ use of agricultural cooperative services to a half of farmer members
(May 15, 2014)