by Yoshito Matsumoto, Manager, China Marketing, Satake Corporation

 

In 1974, Japan produced their largest yield of 14.3 million tons of brown rice and ever since then, rice production has been steadily reducing every year. In 2019, the production volume of brown rice was approximately 7.2 million tons, which was almost equal to that of 1907.

When Japan suffered food shortages after World War Two, increasing food production was a national goal, so the nation did not starve. Following the achievement of this goal in the 1970s, after the first Tokyo Olympics, Japanese agricultural policy shifted to reducing its rice production. Since then, this trend has been continuing.

I started with the old story of Japan because I believe the situation at that time was quite similar to the situation in China from around the time of the Beijing Olympics in 2008 to the present day.

Agricultural policy in Japan has accelerated the transformation of the social structure, whilst also having a great influence on the food situation in Japan. The current agricultural policy makers in China are fully aware of both the agricultural policy in Japan and the consequences thereafter, which is why they are continuing to carefully and actively managing China's agriculture. In this article, I will explain the agricultural background, similarities between Japan and China.

It should be noted that the absolute values comparison cannot be shown because brown rice consumption in Japan is compared with paddy production in China. This difference is due to the difference in supply chain of the two countries.

More harvest means more income

After World War Two, General Headquarters (GHQ) was established by the allied forces in Japan. GHQ speculated that one of the causes Japan got into the war was that local landlords supported the military government.

Therefore, the GHQ ordered Japanese government to establish a policy to distribute farmland to tenant farmers so that they can reduce economic and political powers of local landlords. Rice cultivation was handed over to farmers with their crop land (average 8a) with the exception of Hokkaido, the most northern island.

This made the farmers not only happy that they could now own the land that their ancestors have cultivated for long time, this also motivated them to produce crops with higher yields. Because the more they could harvest, the more income they could generate for themselves, not for the landlords.

A dramatic recovery

The agricultural industry made dramatic recovery and Japanese government began to acknowledge the importance of commerce and industry as the foundation of Japan's economic development. However, the economic disparity between farmers and other industrial workers gradually increased.

The rice production increase was backed up by the mechanisation and the more widespread use of chemical fertilisers. The government assisted the farmers to achieve mechanisation with subsidies. Eventually, the farmers deviated themselves from otherwise competitive economy. Mechanisation has been credited of the graded increase in agricultural production and product price, which is greatly controlled by the market demand eventually failed to catch up.

Following mechanisation, the cost of farming continued to increase, as did that of other consumer goods. This was the beginning of a period for agriculture with little or no benefit. It soon became common for the farmers to continue farming just because they have been doing so for generations who would feel guilty if they were to stop.

As non-agricultural income increased, male farmers, typically the father of a family, moved out from agriculture to other industries. '3-Chan agriculture' was the buzzword at that time because only 3 'chan's, Ji-chan, Ba-chan, Ka-chan, Japanese words for grandfather, grandmother and mother were available in the family to engaged in agriculture.

Meanwhile the price and distribution of rice were controlled by Staple Food Control Law, which was a system that saw the Japanese Food Agency buy from farmers and sell to rice wholesalers, and basically no other distribution channel.

Purchase price of the government was 4,162 Yen (US$39) per 60 kg in 1960, but it became 8,269 Yen (US$77) in 1968, approximately doubling to compensate income gaps to other industries under constant consumers' price increase.

The increase in the government's purchasing price stimulated willingness of farmers to produce more rice, which resulted in tons of rice in reserve. In addition, while rice cost was raised, rice price in the consumer market had lagged for several years in order to mitigate the impact on them.

The country suffered from the inverse of buying high from farmers and selling it low to rice wholesalers. The government had to respond to excess supply from farmers because it could cause a chronic risk.

The similarities that I see between Japan and China are land, government support for rice production, the existence of a structural system to control rice production volume and pricing and the migration of the agricultural work force to the other sectors of the society.

The farming land was recognised as being the property of the farmers, increases in production are encouraged with government support and leadership, which resulted in increased popularity of farming equipment such as cultivators, harvesters and dryers.

Further similarities include an established system for the purchase rice from farmers at a certain price and finally, male farmers moving to other industries.

In the next article, I would like to illustrate the structural challenges of agriculture, the transformation of product qualities of rice, and the product sales strategies of enterprises, that is, various companies are currently making decisions based on their analysis of consumers' preferences in both countries.

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