How much money do rice farmers need to make from farming?
The Trans-Pacific Partnership trade agreement, which Japan endeavors to join, continues to be controversial, though most people in Japan only have knowledge about the broadest arguments. If Japan joins TPP, it’s the end of Japanese agriculture; if it doesn’t, Japan will not have access to one of the biggest markets in the world.
Several recent articles in the Asahi Shimbun at least give some idea of what rice farmers stand to lose or gain from the agreement. Two farmers are profiled, one in Fukui Prefecture, the other in Aomori prefecture. The Fukui farmer works a one-hectare paddy that he inherited from his father about 15 years ago. The paddy yields about 96 hyo (1 hyo = 60 kg) a year and ¥1.47 million in revenues, which breaks down to ¥1.1 in sales and the rest in government subsidies. When the Democratic Party of Japan became the ruling party, it threw out the old Liberal Democratic Party subsidy system, which basically discouraged farmers from growing rice. The DPJ subsidy, called kobetsu shotoku hosho (individual income compensation), pays them to grow by making up for any losses they might incur due to low market prices.
The Fukui farmer’s annual expenses for cultivating his paddy run to about ¥1.77 million, which includes ¥520,000 for outside labor. It’s implied that the paddy owner himself does very little actual farming. On his tax return he also lists in the loss column ¥600,000 in depreciation for his farm equipment. All in all, the farm in 2010 lost ¥300,000. However, he says it doesn’t really bother him. His main job is working for an electrical parts maker, which pays him a salary of ¥5.3 million. His wife also works, earning ¥2.8 million.
After subtracting rice that he will use for his own consumption, he sells half of the remainder to friends for ¥18,000 per hyo. The rest goes to JA (Japan Agriculture), the union of agricultural cooperatives, which buys it for ¥12,000 per hyo, or ¥200 per kg. There are two reason why he continues rice farming even though he doesn’t make a profit. One is that he wants to keep the land, and the other is that he prefers eating rice he grows himself. He told the Asahi that he doesn’t like TPP, but is resigned to accepting it. “If you don’t grow rice, the land deteriorates, and that bothers other farmers in the area,” he says.
The other farmer profiled, the one in Aomori, does make a profit, simply because the size of his land is bigger: 5 hectares. This farmer is a public servant whose job pays an annual salary of ¥5 million. In his case, the land has been in his family since his grandfather. He works the land himself with his wife and mother, mainly on weekends and holidays. He sells the rice he grows for a little less than ¥6 million, and receives a subsidy of ¥1 million. After expenses and depreciation, he’s left with ¥1.7 million.
Both of the farmers are technically part-timers, since they make the bulk of their income with non-agricultural jobs. There are 1.63 million farmers in Japan who sell their produce, and 80 percent are part-timers. The average income of farmers who grow only rice was ¥4.41 million in 2010, and about 90 percent of that income is from non-agricultural sources, including pensions. What’s important to remember is that the government now spends ¥560 billion a year on farm subsidies. Without those subsidies, the average rice farmer would record a loss from agricultural activities, but it doesn’t mean he’d be financially in the red, since most have income from other sources. As it stands, rice is the most inefficient crop in Japan, mainly because most farmers only cultivate small plots of land. Almost all the agricultural subsidies paid in Japan last year went to rice farmers.
As far as what these farmers may face if Japan joins TPP, the U.S. brand Calrose, which is now subject to high tariffs, costs about ¥2,000 for 5 kg through internet sales, which is a little more than the price of regular Japan rice (¥1,800) but quite a bit less than premium organic Japanese rice (¥3,400). Calrose, it should be noted, has become very popular since the Fukushima nuclear accident for obvious reasons. According to the Asahi article, if the rice tariff is eliminated, it is estimated that 4 million tons of foreign rice will be imported, or about half Japan’s yearly consumption, and the wholesale price will drop to about ¥83 per kg for Calrose and ¥116 per kg for California koshihikari, which everyone says is pretty tasty.