Japanese Farmers Get Ready for Sticky Competition From Foreign Rice

As negotiators grope for a new world trade pact, Japan's leaders are trying to build a consensus at home to open their rice market to imports. Experts say that Japanese farmers will eventually have to face the free market.

NEAR Tokyo International Airport, where dark shadows of flying jumbo jets flash across the rural landscape of small green paddies, Tasuku Kanesaka is trying to push the rice farmers of his cooperative into the 21st century ... from the 19th century.Insect spraying will soon be radio controlled on the Inbanuma cooperative. Seedlings will be planted by machines, plots enlarged ten-fold per tiller, and total work time from sowing to reaping will be reduced ideally to 2 hours from 50. Mr. Kanesaka, a cooperative director, is in a hurry. Like a growing number of Japanese farmers shielded for decades from cheaper imports, he assumes the government will soon decide to partially lift its once iron-clad ban on foreign rice, perhaps by mid-July when leaders of seven industrialized nations meet in London. "We aim to be competitive with imports when the market is open," says Kanesaka. "The co-ops in Japan have run an old system too protective of old ways." In a country of high technology and high wages, Japanese rice farmers operate on the same scale of cultivation as farmers in China's Hunan province, says Keijiro Otsuka, economics professor of Tokyo Metropolitan University. Protected by guaranteed high prices, Japanese farmers have had little incentive to be as efficient as the huge rice farms in the United States and have had a big incentive to help keep the Liberal Democratic Party (LDP) in power for 35 years.

New hybrids help US farmers Improvements in rice production spurred by new hybrids developed in the 1960s have increased the chances of rice-exporting nations, such as Thailand and the US, to break into protected markets such as Japan, Taiwan, and South Korea. A much-anticipated decision by the Japanese government to partially open the rice market threatens to trigger rural upheaval, possibly depress land prices, and is likely to produce a political backlash against the LDP, observers say. Opponents of liberalization contend it would rip out the roots of an ancient Japanese way of life, wreak havoc on the environment, and add to unemployment. "The protectionists are on their last defenses," says Yoshi Tsurumi, business professor of New York's Baruch College, on a visit to Tokyo. Avoiding possible political fallout, Prime Minister Toshiki Kaifu called for a gradual consensus-making in late May, although his recent statements continue to call for Japan rice self-sufficiency.

Bush to pressure Kaifu Mr. Kaifu meets President Bush in Kennebunkport, Maine on July 11, and Mr. Bush is expected to pressure Kaifu for concessions on the import ban. The LDP hopes its slow retreat on a promise never to import "a single grain of rice" will help curtail the expected backlash from rural voters in an upper house election next year. The pace of consensus-making is speeding up, however, as the US increases pressure on Japan to compromise on rice this month as a way to help resolve a deadlock over agricultural barriers at the Uruguay Round of multilateral trade talks under the General Agreement on Tariffs and Trade. "The Uruguay Round presupposes free trade," says former LDP Secretary-General Ichiro Ozawa. "Its principle will break down if one country places rice as sacrosanct. We should attempt to support free trade and the rest is up to negotiations." US officials warn of possible trade retaliation against Japanese consumer goods if American rice cannot be sold in Japan. The US Rice Millers' Associations is threatening to use a 1988 trade law to seek economic sanctions. That has fired up Japanese big business to weaken the influence of the farm lobby on the LDP. "The rice issue could become Tokyo's trump card," says Gaishi Hiraiwa, head of the Federation of Economic Organizations, a business group. "Japan's decision [to open the rice market] will have no small impact internationally." Over the past year, the government has slowly begun to deregulate the home rice market in hopes of making Japanese rice more competitive. At present, Japanese consumers pay three to six times more for home-grown rice than the foreign rice they can buy when abroad. Average consumption has slipped nearly 10 percent since 1980 as the nation's diet has broadened beyond rice as the basic staple. Fewer and fewer young people take up rice farming, forcing the nation's aging farmers to mechanize and work larger plots. "About one out of a thousand families pass on their farming to their sons," says Kanesaka. He estimates that the reforms under way at his cooperative can cut the price of its rice in half in three years. In mid-June, the agriculture ministry decided to cut the government's purchase price of rice by 3 to 5 percent, a move that angered farmers. Last year, the first private wholesale auction of rice was opened as a way for the government to determine real market prices. But in March, the Food Agency bought rice for government-controlled stocks from the free market for the first time in 12 years. The move was seen as a way to bolster Japan's argument that it must maintain a minimum stock for food security. Japan wants the Uruguay Round to acknowledge a country's right to maintain food security. But, says US Ambassador to Japan Michael Armacost, "To argue the merits of food security is one thing. To insist this requires an absolute ban on all rice imports is another. Appreciation of this distinction has grown, and that is welcome news." The US is irritated that Japan's tactic has been to wait for the European Community and the US to strike a deal on agriculture at the Uruguay Round. Such a tactic "does not enhance Japan's reputation as a nation that is prepared to do its share in reshaping the global trading system for the benefit of all," Mr. Armacost says. "I hope the Japanese government will not wait too long or bid too low in playing its cards on the rice issue," he adds. Rather than making a unilateral concession, Japanese officials want the US to concede on some of its own agricultural barriers, such as restrictions on cotton imports. And some officials say Japan can only allow rice imports to take 3 to 5 percent of the Japanese market over the next 10 years.