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Politics

Japan's farm co-ops set for biggest shake-up in 60 years

TOKYO -- The organization in charge of Japan's agricultural cooperatives has agreed to cede centralized control in the most profound change to sweep the politically powerful body in the postwar era.

     The Central Union of Agricultural Cooperatives, also known as JA-Zenchu, relented Monday after initially fighting the government's proposal for transforming it.

     "We intend to embrace reform with a view to increasing the income of farming households," JA-Zenchu President Akira Banzai told reporters.

     In a parliamentary statement Thursday, Prime Minister Shinzo Abe is expected to say the plan is to "abolish" JA-Zenchu. The government will propose revisions to farming cooperative law during the current legislative session.

     Gripped by food shortages in the early years after World War II, Japan made increasing rice cultivation the top priority of its farm policy. Local cooperatives became responsible for collecting rice harvests from growers, including the patchwork of small holders. JA-Zenchu has sat at the apex of this pyramid, overseeing the work done at the bottom.

     But since the 1970s, Japan has struggled not with a lack of rice but an overabundance of it. Gradually exposed to free trade, domestic farm goods have lost ground to cheaper imports. The Abe government wants to unleash innovation at the local level to find ways of reducing costs and broadening sales, including in overseas markets. By making farming more profitable, the government hopes to nurture it into a growth industry.

    Under Tokyo's plan, JA-Zenchu would transform into a general incorporated association by the end of March 2019, losing the power to audit and issue "guidance" to local organizations. The co-ops in turn would gain greater management freedom and be audited by independent accountants, as ordinary corporations are.

     Significantly, JA-Zenchu would stop collecting dues worth some 8 billion yen ($67 million) a year from regional cooperatives. It would also lose its privilege of weighing in on farm policy in face-to-face meetings with senior agriculture ministry officials -- a tool by which it has exercised political leverage.

     The National Federation of Agricultural Cooperative Organizations, or JA Zen-Noh, which collects members' harvests and sells them, will be allowed to become a joint stock company. In this way, successful member co-ops would be able to gain a greater say in raising their ownership stake.

     The government is already planning to end, in 2018, a long-running policy of restricting rice cultivation. Tokyo is thus digging down to the very bedrock of farm policy -- rice and the JA group.

     In a concession that helped bring JA-Zenchu around, the government proposed allowing the organization to play representative and coordinating roles within the JA group. Some worry that it will retain some control over local cooperatives.

(Nikkei)

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