【Opinion】 Are agricultural co-ops old-fashioned? (July 14, 2015)


Senior special writer, Masaru Yamada

“Agricultural co-ops are old-fashioned and do not contribute to strengthening agriculture. It is necessary to get the help of private companies.” This is what supporters of the ongoing agricultural co-operatives reform apparently think. But when we turn our eyes abroad, we see a different landscape. Many industrialized countries are pushing to empower farmers’ organizations. Are they going in the wrong direction, or is Japan going the wrong way?

The Australian government released the Agricultural Competitiveness White Paper on Monday, July 6, and outlined initiatives and commitments by the government on five priority areas to ensure a stronger farm sector. At the top of the list was not building infrastructure or preparing for drought, but “a fairer go for farm businesses.” It states the need for farmers to strengthen their competitiveness in farm product markets controlled by a few giant supermarket chains and pledges to help farmers establish alternative business models including co-operatives and manage contract negotiations. It sets aside budgets specifically for supporting organizing by farmers and creating a new commissioner dedicated to agriculture in the Australian Competition and Consumer Commission to encourage fair trading.

Australia is one of the world’s most competitive exporters of agricultural items. In trade negotiations, the Australian government always urges for free trade, but the white paper clearly says that domestically, the government will support farmers organize themselves to fight the strong.

The European Union’s new Common Agricultural Policy introduced in 2014 set out to assist producers’ organizations, acknowledging that they can contribute to enhancing competitiveness of European agriculture. Measures are also adopted to encourage collective action by producers to cut costs and redress the imbalance of bargaining power along the food chain.

The United States is not an exception. In 2012, there were a total of 2,236 agricultural co-operatives in the U.S., helping farmers and ranchers market their products and acquire farm supplies, as well as meeting many other needs, such as supplying electricity, credit and financial services. The total sales by such co-ops amounted to $240 billion (at an exchange rate of JPY121 to the dollar) in 2012, doubling from $120 billion in 2000. The U.S. Department of Agriculture highly evaluates agricultural co-operatives, saying they are “a driving force in the nation’s thriving farm economy.” This year, it allocated $5.8 million in the Rural Cooperative Development Grant Program to help expand and improve rural co-operatives. The program, with application deadline set in the end of this month, offers a maximum grant of $200,000 each to nonprofit corporations and institutions of higher education for developing business plans and providing training to assist individuals and businesses in rural areas.

None of the countries mentioned above have the idea that farm co-ops hinder agricultural competitiveness. The governments strongly believe in co-operatives which have worked under the banner of mutual aid and unity. Their stance is to utilize co-ops further in areas with problems difficult to be solved by private enterprises. The ongoing debate in Japan on agricultural reform, with unusually strong dependence on the private sector, definitely seems out of place from a global point of view.

(July 14, 2015)

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