Agricultural Policy Monitoring and Evaluation 2022

17. Japan

Support to agriculture

Japan gradually reduced its support to agriculture during the last ten years, but the level of support plateaued more recently. Support to producers (PSE) as a share of gross farm receipts (41% in 2019-21) remains more than twice the OECD average. The total support estimate to agriculture (TSE) represented 0.9% of Japan’s GDP in 2019-21, most of which was direct support to producers.

Market price support (MPS) remains the main element of Japan’s agriculture support due to high border measures, particularly for rice, pork and milk. Consequently, average producer prices overall are still 60% higher than world reference prices. The share of potentially most-distorting support (MPS, support based on output and variable input use without input constraint) declined but still accounts for 84% of PSE in 2019-21. Budgetary support to producers is mostly payments based on area and income.

Expenditures for general services (GSSE) are 22% of Japan’s total support to the sector. Compared to the size of the sector, GSSE corresponds to almost 13% of the agricultural value of production, higher than the OECD average but less than in the 1990s. Over 80% of the GSSE goes to the development and maintenance of agricultural infrastructure, irrigation in particular, while 10% goes to financing the agricultural knowledge and innovation system.

Recent policy changes

In May 2021, Ministry of Agriculture, Forestry and Fisheries (MAFF) released the Strategy for Sustainable Food Systems, called MeaDRI (Measures for Achievement of Decarbonisation and Resilience with Innovation), a strategy to transform Japan’s food systems and increase sustainability and productivity by 2050 by enhancing engagement of stakeholders at each stage of food supply chains, and promoting innovation to reduce environmental load. The strategy includes 14 Key Performance Indicators (KPIs) and a road map for developing and implementing innovative technologies and production methods by 2050. The agriculture-related KPIs include targets for the reduction of chemical fertiliser and pesticide applications as well as for increasing land under organic farming.

In October 2021, Japan set a Nationally Determined Contribution (NDC) target of reducing greenhouse gas (GHG) emissions by at least 46% relative to 2013 levels by 2030, with the long-term goal of achieving net-zero by 2050. In line with the MeaDRI, MAFF revised the 2017 climate change mitigation plan for the agriculture, forestry and fisheries sectors, and raised the emission mitigation target from a total of 38.8 MtCO₂eq to 49.5 MtCO₂eq by 2030. This accounts for 3.5% of the reduction pledge made in the NDC. In the mitigation plan, forest land plays a significant role as a carbon sink to meet the GHG reduction targets, while various payments and credits schemes are being implemented to incentivise GHG emission reductions in agricultural production.

The Regional Comprehensive Economic Partnership (RCEP) with 14 countries in the Asia-Pacific region entered into force in January 2022. RCEP is the first Economic Partnership Agreement (EPA) that Japan has with the People’s Republic of China (hereafter “China”) and Korea. Japan eliminated tariffs on 56% of agricultural imports from China, 49% from Korea, and 61% from ASEAN, Australia and New Zealand. Sensitive agricultural products such as rice, wheat, beef, pork, dairy products, and sugar and starch are exempt from tariff reductions.

Assessment and recommendations

• Japan’s share of GHG emissions from agriculture relative to total emissions is the lowest among OECD countries. However, the agricultural sector is responsible for nearly 80% of total methane (CH₄) emissions, mainly due to rice cultivation and livestock enteric fermentation. Thus, policies seeking to minimise CH₄ emissions from rice paddy fields and livestock production will be particularly effective in reducing GHG emissions originating from the agricultural sector.

• Japan has made progress in reforming agricultural support policies since the early 2000s, but support to producers remains more than twice the OECD average and continues to be dominated by MPS, which distorts markets. Further improvements should be envisaged to reduce MPS and eliminate measures impeding market signals.

• The annual value of agriculture, food, forestry and fishery exports continued to increase in recent years. While this signals a move towards a more market-oriented agricultural sector, the exclusion of key products from trade agreements, including RCEP, limits the economic gains of opening the country to international trade. A gradual reduction of trade barriers on agricultural products would contribute to structural change and further productivity growth in the Japanese agri-food sector.

• Japan’s new systemic approach, MeaDRI, is a promising sector-wide initiative to increase the sustainability and productivity of its food systems, but will require complementary measures to be effective.

• MeaDRI’s 14 KPIs and the road map for sustainable transition to enhance engagement of stakeholders in food supply chains are welcome initiatives. The government should improve or develop policies to incentivise farmers and other stakeholders to take up innovative technologies and production methods through R&D, networking, capacity-building, strategic advice and multi-actor partnerships.

• MeaDRI prioritises R&D in new technologies to reduce environmental impact and enhance agricultural productivity. Skills development and knowledge transfer should be reinforced to reap the benefits of technological innovations. Agricultural education, training and extension systems should also improve to upgrade famers’ skills and knowledge concurrently with technology and industry developments.

Figure 17.1. Japan: Development of support to agriculture

 

 

 

 

 

Source: OECD (2022), “Producer and Consumer Support Estimates”, OECD Agriculture statistics (database), http://dx.doi.org/10.1787/agr-pcse-data-en.

 

Source: OECD (2022), “Producer and Consumer Support Estimates”, OECD Agriculture statistics (database), http://dx.doi.org/10.1787/agr-pcse-data-en.

 

Source: OECD (2022), “Producer and Consumer Support Estimates”, OECD Agriculture statistics (database), http://dx.doi.org/10.1787/agr-pcse-data-en.

Table 17.1. Japan: Estimates of support to agriculture

Million USD

	1986-88	2000-02	2019-21	2019	2020	2021p
Total value of production (at farm gate)	72 767	76 354	82 291	81 560	83 675	81 638
of which: share of MPS commodities (%)	68.36	63.81	67.80	67.97	67.84	67.59
Total value of consumption (at farm gate)	94 458	107 904	117 593	119 286	120 541	112 952
Producer Support Estimate (PSE)	44 611	43 955	37 070	37 245	40 331	33 634
Support based on commodity output	40 996	40 828	31 016	31 669	33 681	27 698
Market Price Support1	39 458	38 471	28 963	29 987	31 281	25 622
Positive Market Price Support	39 458	38 471	28 963	29 987	31 281	25 622
Negative Market Price Support	0	0	0	0	0	0
Payments based on output	1 539	2 358	2 053	1 682	2 399	2 077
Payments based on input use	1 434	976	877	949	1 000	681
Based on variable input use	403	85	9	10	8	9
with input constraints	403	85	0	0	0	0
Based on fixed capital formation	890	724	597	656	732	404
with input constraints	403	85	0	0	0	0
Based on on-farm services	142	167	270	284	260	268
with input constraints	0	0	0	0	0	0
Payments based on current A/An/R/I, production required	621	613	2 211	1 875	2 825	1 933
Based on Receipts / Income	0	0	194	222	183	178
Based on Area planted / Animal numbers	621	613	2 017	1 653	2 642	1 755
with input constraints	0	0	1 555	1 194	2 172	1 299
Payments based on non-current A/An/R/I, production required	0	0	0	0	0	0
Payments based on non-current A/An/R/I, production not required	1 560	1 538	2 967	2 752	2 826	3 322
With variable payment rates	0	0	0	0	0	0
with commodity exceptions	0	0	0	0	0	0
With fixed payment rates	1 560	1 538	2 967	2 752	2 826	3 322
with commodity exceptions	1 560	1 257	2 729	2 515	2 588	3 084
Payments based on non-commodity criteria	0	0	0	0	0	0
Based on long-term resource retirement	0	0	0	0	0	0
Based on a specific non-commodity output	0	0	0	0	0	0
Based on other non-commodity criteria	0	0	0	0	0	0
Miscellaneous payments	0	0	0	0	0	0
Percentage PSE (%)	57.42	53.61	40.98	41.93	43.50	37.52
Producer NPC (coeff.)	2.24	2.07	1.60	1.64	1.66	1.52
Producer NAC (coeff.)	2.35	2.16	1.69	1.72	1.77	1.60
General Services Support Estimate (GSSE)	8 769	12 141	10 581	10 410	12 592	8 740
Agricultural knowledge and innovation system	514	861	1 030	1 075	1 060	954
Inspection and control	55	66	110	89	119	121
Development and maintenance of infrastructure	7 747	10 620	8 749	9 040	10 418	6 790
Marketing and promotion	152	248	568	90	869	745
Cost of public stockholding	301	345	124	116	126	130
Miscellaneous	0	0	0	0	0	0
Percentage GSSE (% of TSE)	16.29	21.66	22.19	21.84	23.79	20.62
Consumer Support Estimate (CSE)	-53 525	-49 474	-41 309	-43 115	-43 692	-37 120
Transfers to producers from consumers	-38 964	-38 460	-29 468	-30 627	-31 417	-26 360
Other transfers from consumers	-14 520	-11 100	-12 429	-13 056	-12 826	-11 407
Transfers to consumers from taxpayers	-108	35	6	6	6	6
Excess feed cost	68	51	583	562	546	640
Percentage CSE (%)	-56.73	-45.81	-35.12	-36.15	-36.25	-32.87
Consumer NPC (coeff.)	2.31	1.85	1.55	1.58	1.58	1.50
Consumer NAC (coeff.)	2.31	1.85	1.54	1.57	1.57	1.49
Total Support Estimate (TSE)	53 272	56 130	47 657	47 660	52 929	42 381
Transfers from consumers	53 485	49 559	41 898	43 683	44 243	37 767
Transfers from taxpayers	14 308	17 670	18 189	17 033	21 512	16 020
Budget revenues	-14 520	-11 100	-12 429	-13 056	-12 826	-11 407
Percentage TSE (% of GDP)	2.10	1.24	0.94	0.93	1.05	0.85
Total Budgetary Support Estimate (TBSE)	13 814	17 659	18 693	17 673	21 647	16 759
Percentage TBSE (% of GDP)	0.54	0.39	0.37	0.34	0.43	0.34
GDP deflator (1986-88=100)	100	105	97	97	98	97
Exchange rate (national currency per USD)	147.09	118.19	108.52	109.05	106.76	109.77

Note: p: provisional. NPC: Nominal Protection Coefficient. NAC: Nominal Assistance Coefficient. A/An/R/I: Area planted/Animal numbers/Receipts/Income. 1. Market Price Support (MPS) is net of producer levies and excess feed cost. MPS commodities for Japan are: wheat, barley, soybean, rice, sugar, milk, beef and veal, pig meat, poultry, eggs, apples, cabbage, cucumbers, grapes, mandarins, pears, spinach, strawberries and Welsh onions.

Source: OECD (2022), “Producer and Consumer Support Estimates”, OECD Agriculture statistics (database), http://dx.doi.org/10.1787/agr-pcse-data-en.

Description of policy developments

Overview of policy trends

Agricultural land reform was implemented immediately after World War II, transferring farmland ownership from landlords to previously tenanted farmers in order to improve their economic and social position. It restricted sales of farmland to non-farmers and strongly protected farmers’ rights. This policy applied until 2009, when the Agricultural Land Act was revised to allow non-agricultural companies to lease farmland. Japan also invested in agricultural research, extension services, and land infrastructure to recover from the devastation of the war. At the same time, the government kept controls on rice procurement – from production to distribution to consumers – under the Food Management Law in order to secure food supply.

To address the rising disparity in living standards and productivity between agriculture and other sectors, Japan implemented the Agricultural Basic Act in 1961 to increase farmers’ incomes by promoting the modernisation of agriculture. From the mid-1950s to the mid-1990s, agricultural policies focused on price and marketing control, including tariffs for key products, particularly rice, to ensure affordable food prices for consumers while increasing farm income in rural areas.

In 1993, at the conclusion of the Uruguay Round trade negotiations, Japan agreed to a preferential quota on rice imports. The Food Management Law was repealed in 1995, introducing market mechanisms to rice distribution. Following the replacement of the GATT with the WTO in 1999, Japan converted non-tariff border measures to tariff rate quotas (TRQs) for major commodities, including rice.

Rapid globalisation of the economy, together with the continued decline in farming population and farmland area adversely impacted Japanese farming communities. In response, the Agricultural Basic Act was replaced by the Food, Agriculture and Rural Areas Basic Act in 1999 to establish four basic principles: (1) a stable food supply; (2) the desired multifunctional roles of agriculture; (3) sustainable development of agriculture; and (4) development of rural areas. Under the act, ten-year agricultural policy plans, named the Basic Plan for Food, Agriculture and Rural Areas, have been formulated since 2000.

Recent agricultural policy reforms were aimed at helping the sector become more competitive and resilient. These reforms involved the promotion of farmland consolidation and the re-organisation of agricultural co-operatives. Japan also introduced the revenue insurance programme to diversify farmers’ risk-management tools. Moreover, Japan abolished the government-administered rice production quota system in 2018. Further, to capture increasing demand for Japanese food products overseas, agricultural and food exports became a key policy goal. In 2021, to increase the sustainability and production potential of Japan’s food systems, the “Measures for Achievement of Decarbonisation and Resilience with Innovation (MeaDRI)” Strategy was developed. MeaDRI is a sector-wide initiative to improve environmental, social, and economic outcomes throughout supply chains by 2050.

In parallel, Japan improved market access through large-scale trade agreements in recent years, including the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in 2018, the Japan-EU Economic Partnership Agreement (Japan-EU EPA) in 2019, the Japan-US Trade Agreement in 2020, and the Regional Comprehensive Economic Partnership (RCEP) in 2022.

Table 17.2. Japan: Agricultural policy trends

Period	Policy directives	Changes in agricultural policies
Prior to1960	Eradication of rural poverty and securing food supply	Agricultural land reform implemented to help farmers own farmland Arrangements to increase food production (Agricultural Co-operatives Act of 1947, Agricultural Disaster Compensation Act of 1947, Agricultural Land Act of 1957) Policy priority given to increasing rice production to solve serious food shortage (Food Management Law of 1942, Five Year Food Production Increase Plan of 1952)
1960-1980	Reduction of income disparities between agriculture and other industries	Basic Agricultural Act (1961) to increase farmers’ income by increasing farm size, improving farmland, adopting agricultural machinery and technology and shifting from rice and wheat-based production to livestock, vegetables and fruits. Rice policy goal changed from increasing rice production to managing quantity as full self-sufficiency achieved in 1967 Rice production adjustment control introduced in 1971
1980-2010	Adjusting towards internationalisation, bringing market principles to the agricultural sector, and integrating concepts of ‘rural area’ and ‘food’ into agricultural policies	Agricultural Management Framework Reinforcement Act (1993) systematises support for qualified farmers Act on Stabilization of Supply, Demand and Prices of Staple Food (1994) changes the role of government in rice state trading; government only purchases for stockpiling purposes Quantitative quotas of rice replaced by tariff rate quota (1999) Act on Food, Agriculture and Rural Areas (1999) aims to establish stable agricultural structure in the new economic and social conditions; food self-sufficiency goal and direct payments for farmers in mountainous areas introduced
2010-Present	New agricultural reforms to enhance competitiveness and resilience	Farmland reforms (2009 revision of Agricultural Land Act to allow leases, 2013 Act on Promotion of Agricultural Land Intermediary Management to facilitate agricultural land consolidation) Amendment of Agricultural Co-operatives Act (2015) Abolition of rice production quota system (2018) Introduction of the revenue insurance programme (2019) Large-scale trade agreements (CPTPP, Japan-EU EPA, Japan-US Trade Agreement, RCEP) and export promotion of agricultural and food products Formation of MeaDRI strategy with sustainability and food related goals (2021)

Support to farmers declined from close to 57% of gross farm receipts in the mid-1980s to less than 38% in 2015, but stabilised around 41% in recent years. The share of market price support also declined but, while Japan provides a range of budgetary forms of producer support, higher domestic prices continue to provide the majority of transfers to producers, accounting for close to 80% of PSE in 2019-21 (Figure 17.4).

 

Notes: A/An/R/I:Area planted/Animal numbers/Receipts/Income.

Payments not requiring production include Payments based on non-current A/An/R/I (production not required) and Payment based on non-commodity criteria. Other payments include Payments based on non-current A/An/R/I (production required) and Miscellaneous payments.

Source: OECD (2022), “Producer and Consumer Support Estimates”, OECD Agriculture statistics (database), http://dx.doi.org/10.1787/agr-pcse-data-en.

Main policy instruments

The Basic Plan for Food, Agriculture and Rural Areas revised in 2020 (hereafter the 2020 Basic Plan) sets Japan’s agricultural policy direction for the next decade. The Basic Plan aims to continue necessary agricultural policy reforms both to make the sector competitive and manage issues facing the sector, while putting an increased emphasis on rural communities, smart agriculture and digitalisation, and risk management (e.g. with respect to natural disasters). The Basic Plan also aims to ensure a stable food supply and improved food self-sufficiency.

Japan maintains a system of high border protection and domestic price support for key agricultural products. On average, tariffs on agricultural products amounted to 15.8% in 2020, compared to 2.5% for non-agricultural products. However, agricultural tariffs vary considerably, with over 35.7% of tariff lines duty-free and 3% of them above 100% (ad valorem equivalent), while 13.3% of agricultural tariff lines have non-ad valorem tariffs (WTO, 2021[1]). Tariff rate quotas with high out-of-quota tariffs apply to some commodities, like starch and dairy products.

Rice import happens through state trading, fulfilling Japan’s minimum-access commitment under the WTO Agreement on Agriculture. A TRQ of 682 200 tonnes (milled) applies. The maximum mark-up (collected by the government when importing and selling on domestic markets) for rice imports is set at JPY 292 (USD 2.7) per kg, and the out-of-quota tariff-rate is JPY 341 (USD 3.1) per kg.

A revenue-based payment is available for farmers meeting certain requirements and producing rice, wheat, barley, soybean, sugar beet and starch potato, if revenues from these crops drop below historic average revenues. Ninety per cent of the difference between current revenue and the past average is compensated by the government (75%) and the farmers’ reserve fund (25%).

The direct support payment for upland crops (wheat, barley, soybean, sugar beet, starch potato, buckwheat and rapeseed) is based on the combination of area and output. The government provides area payments based on current planting, and output-based payments according to the volume of sales and the quality.

A crop diversification payment goes to farmers who switch their use of paddy fields from table rice production to other crops (wheat, soybeans, or rice for feed and processing). This payment is area-based, but output is also taken into account for rice for feed and flour. Within this crop diversification programme, a payment is also provided to municipal governments if the production area employs high-yield rice variety for feed and processing, or cultivates buckwheat or rapeseed.

The Livestock Stabilisation Programme, known as Marukin, provides support payments to beef cattle and hog producers when the average sales price falls below the average production cost. Ninety per cent of the difference between costs and sales prices are paid to producers, to which the government contributes 75% and the rest are provided by the producers’ reserve fund. Output-based compensation also goes to producers of raw milk used for dairy processing.

Commodity insurance is voluntary and available for a range of commodities (rice, wheat, barley, livestock, fruit and field crops) and horticultural facilities. It covers yield losses and damage to facilities from pests and natural disasters. Degradation of crop quality is also insured for rice, wheat, barley and fruit. Government support covers around 50% of the insurance premium. In 2019, Japan launched the revenue insurance programme to provide a safety net for farmers in case of revenue loss. The programme compensates the loss of farm revenue stemming from both market and natural causes, relative to a benchmark based on the previous five years’ revenues. The government supports 50% of the insurance premium and 75% of the reserve fund. Farmers can participate in either commodity insurance or revenue insurance programme to avoid duplicate payments.

Japan provides financial support to young farmers (under 50 years old) during a training period (maximum of two years) and during the initial operation period (maximum of five years). Other annual subsidies are available for agricultural co-operation to compensate the training cost of young farmers.

The Agricultural Land Act establishes Agricultural Committees in municipalities to manage agricultural land use. Purchasing, selling and leasing of agricultural land need to be approved by the Committee. In 2014, Farmland Banks1 were established in all prefectures to reinforce the intermediary role of the government in land transactions. The banks improve farmland conditions and infrastructure (e.g. expansion of plot size and investment in drainage facilities) if necessary, and then lease the consolidated farmland to business farmers. Subsidies are provided to landowners and regional authorities that lease farmland to the banks.

Public investment in rural and agricultural infrastructure is a core agricultural policy, including farmland, agricultural roads, dams and irrigation, and drainage facilities. The government also invests in the prevention of natural disaster and restoration of farm infrastructure, and in construction of public health and recreational facilities associated with agriculture.

Hilly and mountainous areas represent about 40% of both total agricultural land and total agricultural output in Japan. Area-based direct payments go to farmers in these areas to compensate for the physical disadvantage imposed on agricultural production, and thus to avert the abandonment of agricultural land. Other payments are available to support collective engagement of local stakeholders in maintaining the multifunctional roles of agriculture. Direct payments for environmentally friendly agriculture are provided to farmers who conduct activities effective in preventing global warming or conserving biodiversity.

Japan currently has 20 Economic Partnership Agreements (EPAs) and other trade agreements in force with Singapore, Mexico, Malaysia, Chile, Thailand, Indonesia, Brunei Darussalam, the Association of Southeast Asian Nations (ASEAN), Philippines, Switzerland, Viet Nam, India, Peru, Australia, Mongolia, CPTPP, the European Union, the United States, the United Kingdom and RCEP. In addition, Japan is engaged in EPA negotiations with Colombia and Turkey, and China and Korea for the plurilateral free trade agreement.

Climate change mitigation policies in agriculture

In 2019, total emissions from agricultural in Japan amounted to 31.7 MtCO₂eq, accounting for 2.6% of Japan’s total emission (Greenhouse Gas Inventory Office of Japan, 2021[2]). The land use, land use change and forestry (LULUCF) sector was a net sink of -50.1 MtCO₂eq in 2019. Forested land was a large net sink and captured -55.1 MtCO₂eq in 2019, while grasslands and croplands emitted about 1.0 and 5.2 MtCO₂eq, respectively.

In its Nationally Determined Contribution submitted to the UNFCCC in October 2021, Japan committed to an economy-wide reduction in GHG emissions of at least 46% relative to 2013 levels by 2030, an ambitious target aligned with the long-term goal of achieving net-zero by 2050. All UNFCCC national inventory sectors are covered by this commitment, including the agriculture and LULUCF sectors, although sector-specific targets are not given.

Under the Measures for Achievement of Decarbonisation and Resilience with Innovation (MeaDRI) adopted in 2021 (see below), MAFF set several targets linked with GHG mitigation. These include reductions in carbon dioxide emissions, and in chemical fertiliser and pesticide applications.

In line with the MeaDRI, MAFF revised the 2017 climate change mitigation plan2 for the agriculture, forestry and fisheries sectors and raised the emissions reduction target from 38.8 MtCO₂eq to 49.5 MtCO₂eq by 2030. The new target represents a higher share of the emissions reductions pledged in the NDC, 3.5% compared to 2.8%.

In the revised mitigation plan, LULUCF plays a significant role as a carbon sink to meet the GHG reduction targets. MAFF is taking action to sequester 38 MtCO₂eq in forest sinks while supporting cropland and grassland management (e.g. application of compost and green manure, and use of biochar) to sequester 8.5 MtCO₂eq above 2013 levels. In total, the expected removal of carbon from the atmosphere accounts for 94% of 2030 GHG reduction targets (46.5 MtCO₂eq).

Besides sequestration strategies, the mitigation plan also aims to reduce GHG emissions from agricultural and fishery production up to an additional 3 MtCO₂eq beyond 2013 levels by 2030. These reductions are set to come from improved energy efficiency in horticultural greenhouses (1.5 MtCO₂eq), reduced emissions from agricultural machinery (7 900 tCO₂eq) and reduced N₂O from crop production (0.2 MtCO₂eq). Reduction of CH₄ emission from rice cultivation is accounted for 1.0 MtCO₂eq through, for example, extending the period of mid-season-drainage in paddy fields.

GHG mitigation efforts in agriculture are conducted mostly via support payments, grants or credits. For instance, direct payments for environmentally friendly agriculture are provided to farmers who conduct GHG mitigation activities, such as applying compost and extending the period of mid-season-drainage. These activities must be in conjunction with reducing the use of synthetic fertilisers and pesticides by more than half relative to conventional farming practices in the region. The government provides investment support for farmers to introduce climate-smart technologies such as renewable energy and biomass-based greenhouse heating systems in horticulture.

In the livestock sector, dairy farmers with more than a certain size farmland for feed production (0.4 ha/dairy cow in Hokkaido and 0.1 ha/dairy cow in other regions) and who conduct environmentally-friendly practices (e.g. no tillage, chemical fertiliser and pesticide application reductions) can receive area-based payments. Livestock farmers can receive support to invest in green infrastructure, such as biogas plants and composting facilities for better manure management and clean energy production.

The J-Credit scheme was implemented in April 2013 as a carbon credit certification for domestic activities. Under the scheme, the government certifies and grants a credit for the GHG emissions reduced through energy-saving technologies and sequestered through forest management. The credit can be sold to companies, event organisers and other entities to utilise for offsetting. As of January 2022, 387 projects were registered, with expected emission reductions or avoidance totalling 15.3 MtCO₂eq. Among these, 107 projects (accounting for 1.5 MtCO2eq) were from the agriculture, forestry and fisheries sectors.

Research and development (R&D) and knowledge transfer programmes complement these mitigation efforts. R&D and knowledge transfers are a high priority to achieve the MeaDRI long-term goals of net-zero carbon emissions while maintaining productivity, as explained in the next section.

Domestic policy developments in 2021-22

Food systems sustainability

MAFF released the Strategy for Sustainable Food Systems, MeaDRI, in May 2021. The MeaDRI is a 2050 strategy to transform Japan’s food systems and increase both sustainability and productivity potential by (1) enhancing engagement of stakeholders at each stage of food supply chains, and (2) promoting innovation to reduce environmental load. The strategy is based on policy discussions with multiple agricultural stakeholders. MAFF promotes this strategy as a new initiative model for sustainable food systems in the Asia Monsoon region which is characterised by hot and humid climate and paddy field farming.

The strategy includes 14 Key Performance Indicators (KPIs) and a road map for developing and implementing innovative technologies and production methods by 2050. The agriculture-related KPIs include:

• Zero CO₂ emission from fossil fuel combustion in agriculture, forestry and fisheries

• 50% reduction risk-weighted use of chemical pesticides3 by dissemination of the Integrated Pest Management and newly-developed alternatives

• 30% reduction in chemical fertiliser use

• Increase of land under organic farming to 1 Mha (equivalent to 25% of farmland)4

• At least 30% enhancement in productivity of food manufacturers (by 2030)

• Sustainable sourcing for import materials (by 2030)

MAFF allocated JPY 2.5 billion (USD 22.8 million) of the 2021 budget to MeaDRI measures, with a plan of an increased budget in 2022 linked to more enhanced conditionality in relation to environmental and climate objectives. The measures include a new R&D and demonstration programme, supporting two main objectives: (1) accelerating the development and the implementation of Smart Agriculture5 and (2) promoting the R&D of innovative technologies by scaling up competitive research funds. Second, they support activities at local level or in food supply chain networks, where multiple actors collaborate to facilitate the transition to sustainable food production and distribution. For instance, a new subsidy supports municipalities to promote organic agriculture in various ways. Third, the government also offers support for the training of local action groups, consisting of multiple actors (e.g. extension services, farmers, companies of fertilisers, pesticides and machinery vendors, ICT vendors, and farm co-operatives), that will jointly engage in dissemination of green practices.

Innovation and digitalisation

Accelerating the implementation of Smart Agriculture and digitalisation is one of the key visions within the 2020 Basic Plan. The October 2020 Smart Agriculture Comprehensive Policy Package was revised in February 2021. The document identifies the necessary measures to reach the goal of having “most of key agricultural producers in Japan practice data-driven agriculture by 2025.” The measures range from conducting pilot studies to providing training opportunities.

In November 2021, the Prime Minister led the first meeting of the Council for the Digital Denen-Toshi Vision.6 The focus of the vision is to use increased digitalisation to revitalise rural economy while enjoying the benefits of rural living such as well-being and sustainability. To accelerate digitalisation, a five-year action plan to train 2.3 million digital professionals was announced in December 2021. In the agricultural sector, professional training to acquire new IT and digital skills in smart agriculture is to be provided to 30 000 people per year in agricultural schools.

Rural development

One of the key policy objectives for Japan is to revitalise rural areas to cope with the impacts of an aging population and associated labour shortages. The 2020 Basic Plan defined three pillars essential for rural policies: (1) securing income and employment opportunities, (2) improving living conditions of rural areas, and (3) creating new momentum and vitality in rural communities. In June 2021, MAFF released the Plan’s mid-term report, written based on discussions with external experts about future visions for rural policies corresponding to these three pillars.

In conjunction with the report, multiple schemes were developed and implemented in 2021-2022:

• The rural innovation initiative is a new scheme, aiming to support economic diversification in rural areas. Drawing earnings from two or more sources rather than from agriculture alone can stabilise incomes and secure more job opportunities. Multiple income sources vary such as agro-tourism, food processing, and renewable energy production. Inter-sectoral collaboration through utilisation of local resources is the key to success.

• To improve living conditions particularly in hilly and mountainous areas, MAFF launched the Region Management Organization for rural areas (RMO) projects. RMOs are expected to play vital roles in supporting community members, for instance, those who are unable to fulfil their shopping needs, and in preserving rural landscapes to maintain resilience and sustainability of rural communities. MAFF provides financial supports to communities planning to establish the RMOs. By 2027, the RMOs are to be established in more than 100 regions.

• Increasing investment in human capital is essential for rural vitality. MAFF launched the rural animator training programme in May 2021. The rural animator is expected to initiate and sustain community activities related to the local economy, supporting the creation of development plans, and showing leadership. The training programme comprises of online courses and practical studies.

Risk management

A series of torrential rains hit Japan in July and August 2021. They triggered severe flooding and landslides in southern, western and eastern Japan, leaving extensive damage to agriculture, forestry and fisheries. Total estimated damages amounted to JPY 129.6 billion (USD 1.2 billion). The government earmarked supplementary budgets of JPY 83.6 billion (USD 0.8 billion) for the restoration efforts in the sector, mostly intended to support the recovery of farmland and agricultural facilities and to conduct work to rehabilitate damaged roads and land subject to landslides.

Trade policy developments in 2021-22

Japan signed the Regional Comprehensive Economic Partnership (RCEP) on 15 November 2020 with 14 countries in the Asia-Pacific region, and the trade agreement took effect on 1 January 2022. RCEP is the first EPA that Japan has with China and Korea. On agricultural goods, Japan eliminated tariffs on 56% of imports from China, 49% from Korea, and 61% from ASEAN, Australia and New Zealand respectively. Japan’s sensitive agricultural products such as rice, wheat, beef, pork, dairy products and sugar and starch are exempted from tariff elimination and reduction.

Japan’s annual export value of agriculture, food, forestry and fishery products exceeded JPY 1 trillion (USD 9.1 billion) in 2021. It took 15 years to achieve the export target of JPY 1 trillion which was first mentioned in 2006. To accelerate this trend, Japan renewed the 2020 Strategy of Export Expansion of Agricultural, Forestry, Fishery Products and Food in December 2021. The renewed strategy includes, for instance, the revision of the Act on Facilitating the Export of Agricultural, Forestry and Fishery Products and Food to stipulate the commodity associations for 28 major commodities. They include beef, apple, yellowtail, and scallops. The commodity associations group together different stakeholders within a marketing chain for the purpose of developing overseas markets. To promote Japan-made products, they are expected to create brand standards, determine the quality and production methods of products, and unify sales methods.

Contextual information

Japan is the world’s third largest economy after the United States and China with relatively small land area and high population density (Table 17.3). The country has experienced slow economic growth and deflation for most of the past two decades, but has one of the lowest unemployment rates among OECD countries (Figure 17.5). Agriculture constitutes 1% of GDP and 3% of employment in 2020 (Table 17.3), yet the sector accounts for 9% of GDP if all food-related industries are considered (MAFF, 2022[3]). In value terms, livestock accounted for more than one-third of total agricultural production, followed by vegetables (25%), rice (18%) and fruits (10%) in 2020 (MAFF, 2022[4]).

Two-thirds of the country area is covered by mountains, leaving only 12% of the total land area for agriculture, more than half of which are rice paddy fields. Total agricultural land has decreased from 4.8 million hectares in 2000 to 4.4 million hectares in 2020 (MAFF, 2021[5]) due to the abandonment and conversion of farmland to non-farm uses (e.g. residential, industrial, or commercial uses). The agricultural workforce declined by more than half since 1980 to 1.9 million in 2021, and the pace of this decline has accelerated in the last decade (MAFF, 2021[6]). There are 1.03 million commercial farm households, which is less than half the number in 2000. The average farm size increased from 1.4 hectares to 3.2 hectares between 1990 and 2021 (MAFF, 2021[7]), but still remains small compared to other OECD countries. The average age of farmers is 67.8 years in 2020 and about 70% of farmers in Japan are over 65 years old (MAFF, 2021[6]).

Table 17.3. Japan: Contextual indicators

	Japan		International comparison
	2000*	2020*	2000*	2020*
Economic context			Share in total of all countries
GDP (billion USD in PPPs)	3 461	5 251	8.7%	4.8%
Population (million)	127	126	2.9%	2.4%
Land area (thousand km2)	365	365	0.4%	0.4%
Agricultural area (AA) (thousand ha)	4 830	4 397	0.2%	0.1%
			All countries1
Population density (inhabitants/km2)	340	337	53	63
GDP per capita (USD in PPPs)	27 285	41 775	9 281	20 929
Trade as % of GDP	9	13	12.3	14.0
Agriculture in the economy			All countries1
Agriculture in GDP (%)	1.5	1.0	2.9	4.9
Agriculture share in employment (%)	5.0	3.0	-	-
Agro-food exports (% of total exports)	0.3	1.0	6.2	8.5
Agro-food imports (% of total imports)	9.7	9.2	5.5	7.7
Characteristics of the agricultural sector			All countries1
Crop in total agricultural production (%)	68	64	-	-
Livestock in total agricultural production (%)	31	36	-	-
Share of arable land in AA (%)	93	94	32	34

Note: *or closest available year.

1. Average of all countries covered in this report.

Sources: OECD statistical databases; UN Comtrade; World Bank, WDI and national data.

Japan is one of the world’s largest importers of agro-food products, and the United States is the biggest source of agricultural imports. The food self-sufficiency rate was 37% in 2020 on a calorie basis, meaning that more than 60% of Japanese calorie supply depended on imports. Agro-food exports are much smaller than imports, but the export value in 2020 increased by 11.6% from the previous year, reaching its highest level at JPY 655 billion (USD 6.1 billion). It is about three times higher than that of 2000 (MAFF, 2021[8]; MAFF, 2021[9]). Most of Japan’s agro-food exports are directed at final consumers (Figure 17.6). Processed food products such as alcohol and beverages, sauces and seasonings, and snacks account for the majority of Japan’s agro-food exports. Among the unprocessed products, apples, beef and green tea are the most exported.

 

Sources: OECD statistical databases; World Bank, WDI; and ILO estimates and projections.

 

 

Note: Numbers may not add up to 100 due to rounding.

Source: UN Comtrade Database.

Japan’s agricultural Total Factor Productivity (TFP) growth averaged 1.7% a year between 2010 and 2019, which is slightly above the global average (Figure 17.7, Table 17.4). Recent TFP growth in Japan’s primary agriculture has allowed some modest output growth, despite reductions in the use of primary production factors, in particular labour, and intermediate inputs.

Japan’s nitrogen and phosphorus balance are among the highest in OECD countries (Table 17.4). The high and increasing nitrogen balance is due to a combination of high fertiliser use, and livestock production on limited pasture land. The high phosphorus balance, in contrast, is partly a result of soil characteristics: the reaction of soil in Japan, particularly Andosols, in which inorganic phosphate renders the phosphate almost insoluble and unavailable for uptake by plants, requiring more intensive phosphorus use by the agricultural sector (OECD, 2019[10]; Shindo, 2012[11]). Agriculture’s share of total energy use is below the OECD average, as is its share in GHG emissions. Methane (CH₄) from rice cultivation accounted for the largest share of agricultural emissions (38%), followed by CH₄ from enteric fermentation (24%), CH₄ and nitrous oxide (N₂O) emissions from manure management (19%), and N₂O from agricultural soils (18%). The volume of agricultural water use has remained stable for the past few decades. In 2018, the Japanese agricultural sector used 67.6% of water of which 94% was directed for paddy field irrigation (MLIT, 2021[12]). As a consequence, while average water stress in Japan has fallen somewhat, it remains much higher than the OECD average.

 

Note: Primary factors comprise labour, land and capital (livestock and machinery). Intermediate input comprises materials (feed and fertiliser).

Source: USDA Economic Research Service Agricultural Productivity database.

Table 17.4. Japan: Productivity and environmental indicators

	Japan		International comparison
	1991-2000	2010-2019	1991-2000	2010-2019
			World
TFP annual growth rate (%)	1.0%	1.7%	1.7%	1.4%
			OECD average
Environmental indicators	2000*	2020*	2000*	2020*
Nitrogen balance, kg/ha	170.8	179.3	32.1	30.0
Phosphorus balance, kg/ha	72.0	56.8	3.4	2.9
Agriculture share of total energy use (%)	1.2	1.2	1.7	2.0
Agriculture share of GHG emissions (%)	2.5	2.6	8.6	9.7
Share of irrigated land in AA (%)	54.7	54.4	-	-
Share of agriculture in water abstractions (%)	65.8	67.7	46.3	43.7
Water stress indicator	20.7	18.9	9.7	8.6

Notes: * or closest available year. Data for nutrients balance refer to the year 2016.

Sources: USDA Economic Research Service, Agricultural Productivity database; OECD statistical databases; FAO database and national data.

References

[2] Greenhouse Gas Inventory Office of Japan (2021), National Greenhouse Gas Inventory Report of JAPAN 2021, Center for Global Environmental Research, Earth System Division, National Institute for Environmental Studies, Japan, 2021.

[3] MAFF (2022), GDP calculation for agriculture and food related sector (in Japanese), https://www.maff.go.jp/j/tokei/kekka_gaiyou/keizai_keisan/r2/index.html.

[4] MAFF (2022), Total agricultural output (national estimate) (in Japanese), https://www.maff.go.jp/j/tokei/kouhyou/nougyou_sansyutu/attach/pdf/index-5.pdf.

[7] MAFF (2021), Agricultural structure statistics 2021 (in Japanese), https://www.maff.go.jp/j/tokei/kouhyou/noukou/attach/pdf/index-1.pdf.

[6] MAFF (2021), Agriculture and Forestry Census 2020 (in Japanese), https://www.maff.go.jp/j/tokei/kekka_gaiyou/noucen/2020/index.html.

[9] MAFF (2021), Agriculture, Forestry and Fisheries Import and Export Statistics (in Japanese), https://www.maff.go.jp/j/tokei/kouhyou/kokusai/attach/pdf/houkoku_gaikyou-44.pdf.

[5] MAFF (2021), Arable land area as of 15 July 2021 (in Japanese), https://www.maff.go.jp/j/tokei/kouhyou/sakumotu/menseki/attach/pdf/index-12.pdf.

[8] MAFF (2021), Export promotion of agriculture, forestry and fishery products and food (in Japanese), https://www.maff.go.jp/j/shokusan/export/e_info/attach/pdf/zisseki-3.pdf.

[12] MLIT (2021), Water resources in Japan, https://www.mlit.go.jp/mizukokudo/mizsei/mizukokudo_mizsei_tk2_000014.html.

[10] OECD (2019), Innovation, Agricultural Productivity and Sustainability in Japan, OECD Food and Agricultural Reviews, OECD Publishing, Paris, https://doi.org/10.1787/92b8dff7-en.

[11] Shindo, J. (2012), “Changes in the nitrogen balance in agricultural land in Japan and 12 other Asian Countries based on a nitrogen-flow model”, Nutrient Cycling in Agroecosystems, Vol. 94/1, pp. 47-61.

[1] WTO (2021), World Tariff Profiles 2021, https://www.wto.org/english/res_e/booksp_e/tariff_profiles21_e.pdf.

Notes

← 1.  Officially called the Public Corporations for Farmland Consolidation to Core Farmers through Renting and Subleasing.

← 2.  Officially called the Plan for Global Warming Countermeasures of the Ministry of Agriculture, Forestry and Fisheries.

← 3.  The risk-weighted use of chemical pesticides is estimated with the Acceptable Daily Intake (ADI) basis.

← 4.  As of 2018, total land under organic farming is 23 700 hectares (equivalent to 0.5% of farmland).

← 5.  According to MAFF, Smart Agriculture uses robot technology and ICT to achieve ultra-labour-saving and high-quality production.

← 6.  Officially called the Council for the Realisation of the Vision for a Digital Garden City Nation. “Denen” and “Toshi” mean countryside and city, respectively, in Japanese.