A group of university professors calling for Japan’s immediate withdrawal from the Trans-Pacific Partnership free-trade talks said on Friday, July 5, that if a tariff on rice is abolished, even large-scale rice farmers will suffer large deficits, if subsidies are excluded.
“If Japan enters the TPP negotiations, it will become financially difficult even for farmers working more than 10 hectares of land to continue farming,” said Satoshi Daigo, professor emeritus of financial accounting at the University of Tokyo, who heads the group.
The group’s estimates, the second report following the one announced in May, this time focuses on possible impacts of the TPP scheme on farmers growing four products – rice, wheat and barley, beans and potatoes. They calculated the impacts based on the government’s simulation of possible reduction in domestic production if tariffs on the products are eliminated. As for rice, for instance, the government estimates that 30% of domestic production will be replaced by imports, and that prices for the domestically-grown rice will drop.
Japan is scheduled later this month to join the TPP talks, where participants are discussing tariff eliminations among other issues, and although the Japanese government has expressed its determination to protect agricultural products, the four products could be subject to tariff cuts.
According to the group’s calculations, if tariffs on the four products are abolished in the TPP negotiations, revenues from selling the products will be cut by 755.4 billion yen nationwide. As a result, farmers’ incomes, excluding subsidies such as the individual household income support system which offers rice farmers 15,000 yen per 10 ares, will drop by 313.6 billion yen, the group said.
In terms of income of each farm excluding subsidies, farmers of all sizes, including large-scale farmers with more than 10 hectares of land, will be in the red, indicating that they will have difficulty continuing business without receiving subsidies.
Currently, farmers working more than a hectare of land are in the black. If farmers expand their production, they can reduce production costs, but at the same time, the impact of price drops will be bigger. As for farmers with more than 10 hectares of land, tariff cuts will lead to 8.65 million yen drop in revenues per farm, according to the estimates.
Meanwhile, as for farmers with a hectare or less of land, which occupy 73% of all farmers, their incomes will be in the red if tariffs are eliminated, even with the help of subsidies. Farmers with larger scale of land will also suffer large drops in income, which means the government will have to allocate more budgets to support farmers, while it will become more difficult to secure financial resources for subsidies, as tariff revenues will decrease if tariffs are abolished.
The group also announced the estimated impacts of tariff elimination on agricultural production and income by each prefecture, and said it plans to announce estimates on farmers of other crops and livestock breeders in the near future.
(July 6, 2013)