【Editorial】 Strengthening JAs’ management based on self-reform (Jan. 27, 2015)


The focus of the government’s agricultural co-operative reform has been on revising the auditing system of primary agricultural co-ops by the Central Union of Agricultural Co-operatives (JA-Zenchu). If the goal of revising the system is to strengthen management of primary JAs, the JA group has already come up with a solution. In its self-reform plan compiled in November last year, the group listed measures to enhance governance and management under JA-Zenchu’s auditing. The government and the ruling Liberal Democratic Party must discuss reform carefully, taking into consideration the JA group’s self-reform plan and farmers’ voices.

Regarding primary JAs’ board of directors, the government’s action plan on deregulation released in June last year proposed that more than half of the board members be large-scale farmers certified by municipalities, farm product dealers and management professionals. It stated that such a rule should be introduced so that the board will be diversified, can respond to farmers’ needs and make use of management knowhow. It also suggested that primary JAs work strategically on assigning more women and young people to the director’s post so that management can be handed down to younger generations more smoothly.

There is some truth in what the government’s plan says, but JAs are autonomous organizations made up of members. Based on this principle, the Agricultural Co-operative Society Law states that at least two-thirds of directors should be farmers.

Primary JAs’ management and operations certainly need some improvement, but they have been offering comprehensive services – supervising farmers, selling farm products, supplying farming materials and working as financial institutions – to support regional economies. The International Co-operative Alliance highly evaluates the variety of services provided by Japanese agricultural co-operatives. JAs’ role is increasing amid widening gaps brought about by financial and economic globalization and shrinking public services due to mounting national debts.

However, the government undervalues primary JAs’ management audited by JA-Zenchu, stating that JA-Zenchu’s auditing is equivalent to the central union offering consulting services to primary JAs annually, and that it is preventing JAs’ directors from maintaining a sense of responsibility and self-awareness as managers. Based on such illogical reasons, the government ignores the characteristics of primary JAs as co-operatives which provide comprehensive services, and insists on introducing audits by outside accountants.

On the other hand, the JA group’s self-reform plan includes down-to-earth measures to strengthen governance. The measures include: 1. Establishing and expanding quotas for women and representatives of producers’ associations, agricultural production corporations and youth associations in primary JAs’ board of directors, and revising regional quotas. 2. Assigning full-time directors in charge of services related to supervision of farmers, sales of farm products and supply of agricultural materials, and create committees to support them. 3. Asking for advice from academics and other experts well-versed in a variety of areas such as sales and management. 4. Entrusting operation of some facilities or services to farmers’ associations and outside firms.

The plan includes deregulatory measures which would facilitate JAs’ investments to expand their business. It calls on the government to relax conditions for getting authorities’ approval to revise JAs’ articles, so that it will become easier for them to take measures such as setting up a new quota in the board of directors. It also asks the government to ease rules restricting non-members’ use of JAs’ facilities, so that primary JAs can jointly use their facilities.

The government’s reform plan looks as if it is making light of management ability of primary JAs’ heads and trying to weaken the JA group. The government should not rush to conclusions and turn a blind eye to future troubles. It is necessary to discuss the issue carefully, taking into account farmers’ needs and the JA group’s self-reform proposal.

(Jan. 27, 2015)

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