The Contradictions of Neoliberal Agri-food By Kae Sekine and Alessandro Bonanno

Posted By on Jun 7, 2017 in Japan | 1 comment

4.5 stars (out of 5)

Book Review

Target audience: academics, policy makers, NGOs, those interested in agriculture.
How about DN members and advisers? Anybody in the food business would find this insightful. Dole is mentioned as a successful foreign investor in agri-food (broccoli).
Style: academic but generally clear.
Credible? Yes. Critical of neo-liberalism but never becomes a rant.

The argument is that neo-liberal policies inflicted by Japanese policy-makers on Japanese agriculture have destroyed it. Since the neo-liberal revolution of Nakasone, Ronald Reagan and Margaret Thatcher in the 1980s, every indicator in Japan agriculture is worse now than before: number of farmers (down), average age (up), incomes (down), land under cultivation (less), number of farms (down), food self-sufficiency ratio (down).

The authors estimate that the unsurmountable problem is that the government’s goal of making Japanese agriculture world-beating is quite unachievable.

US and EU farms are much larger (yields are lower, but economies of scale make them more profitable), more heavily subsidised and they receive government backing for exporting cheaply to Japan. Japanese farms simply can’t compete.

This is the conundrum that the Japanese government has failed to solve by providing a new vision of agriculture.

But what is “neoliberal”? The authors argue neo-liberalism privileges companies as wealth creators. The state’s role is not to pick winners and protect the weak. It is to establish efficient and transparent markets, which encourage production and trading. Neo-liberalism favours individualism and self-help. neo-liberalism is as much a moral as economic vision of how people should interact, and is rooted in anti-totalitarianism. The authors say Japan’s rural traditions of cooperation and solidarity are at the opposite end of the neo-liberal vision. However, unfortunately, they give no evidence of how this cooperation works in practice.

Is neo-liberalism the same as globalization? In the sense that globalization implies the creation of a global market, yes. Globalization and neo-liberalism are against national boundaries as an obstacle to business. Thus Japanese policy makers have reduced agricultural tariff protection ever since Prime Minister Nakasone. Accession to the Trans Pacific Partnership (TPP) would have been another step in globalization/neo-liberalism.

How have corporate investors done in Japan?
They have collided with the post-WW2 system established by the Americans which tried to establish family-owned farms – not absentee landlords – as the main producers. The US introduced elected farmers’ committees and kept out outsiders. Land could only be traded between farmers. This policy was successful in creating an agricultural sector which could feed the country, supported the newly democratic political establishment, and absorbed millions of war veterans. The countryside also provided a pool of internal immigrants to work in the new, urban factories.

But since the Yasuhiro Nakasone era (prime minister 1982-87), these rural privileges have been eroded. As of today, any kind of company may now invest in agriculture. Agricultural committees are also being sidelined in favour of local government structures. This removes the direct control Japanese farmers had over their lives.

Is this a bad thing?
The authors seem to have an ideal of community-based family farmers, who act as stewards of the Japanese countryside. (See our columnist David Hulme’s warm endorsement of this view, via his personal experience). The authors believe these communities will be broken up by companies which have no qualms in using investment and job creation as a stick with which to bully local communities.

The authors argue that corporate investors do not generate high value jobs. Rather, they automate and upgrade technologically as much as possible, while “dumbing down” the labour. Even these workers are often brought in from elsewhere, rather than being local hires. In addition, these investors have been unable to generate profits, despite trying to “vertically integrate” the value chain, which usually means buying land off farmers and using hired workers instead.

But the authors suspect many of these firms are only interested in agri-food as a pretext for penetrating the countryside. They actually intend to move into infrastructure and real estate where profits are much higher.

They also say that companies are uninterested in any socio-economic improvement of the communities in which they invest. They will leave at the first sign of trouble, or in search of higher profits elsewhere. In that sense, long-term state subsidies and investments are far superior. But these funds have become much smaller over the decades, since neo-liberalism equates “progress” with “profitability”.

Do the authors offer any alternative to neo-liberalism? Do they want to return to the way things were in the 1950-70s, when farmers’ lifestyles and incomes were protected and Japanese governments felt a strong sense of national responsibility?

Yes, I think they feel that the earlier, nation-based system was better at protecting the countryside, narrowed income differentials between urbanites and farmers, and ensured the survival of beneficial Japanese cultural habits, such as solidarity and mutual support.

They also complain that neo-liberalism does not provide enough space for a more imaginative use of the countryside. They would like to see more experimentation with organic food and teikei (community supported agriculture) and the preservation of Japan’s natural beauty and historic habitats. They say that the neo-liberal response at the failure of its policies is “more neo-liberalism”.

The 3/2011 disaster was seen as a way of “resetting” many aspects of Japanese society. Did this apply to agriculture?

This part of the book is the most unsettling. The authors claim through case studies that 3/11 was used by the government to push through neo-liberal policies in the affected areas. For example, the authors claim that the government (as it had done after previous earthquakes) provides large sums of public money to companies and introduced special economic zones. These zones gave enhanced right to corporate investors to increase sales and acquire assets such as land.

In addition, income tax was raised for individuals by 2.1 percentage points (pp) for 25 years. Companies got off lightly, with a raise of 2.4pp but only for 2 years, and after tax rates had already been cut by 5pp.

Yet while companies were being paid to invest in mega-projects like Sendai airport, much less effort was made to re-house people who had lost their homes.

METI, for example, was given a budget of 300 billion yen to attract corporate investment to the damaged locations, but only 6% was spent in the damaged locations and 80% was provided to Japanese blue chips like Toyota, Canon and Toshiba.

The authors are not shy of comparing what happened in Japan to the arguments advanced by Naomi Klein in her famous book The Shock Doctrine. The latter state that natural catastrophes are exploited by neoliberal governments, often to the detriment of the very people who have just experienced such a disaster.

Indeed, the authors convey the sense that the government views 3/11 as a useful pretext to accelerate the removal of economically unproductive units (old people, small farms), who can be replaced by golf courses, casinos, hotels and convention centres.

What are the 5 quotes which summarize the book?

“The task of improving Japanese farming is difficult. Large farms remain few, consolidation is slow, and investment low. Most farms can hardly compete…but other realities could be practiced – civic agriculture, community farming and organic farming, whose development is more compatible with current conditions…but they remain largely unpracticed and unreported by mainstream policies”.

“Reforms (to make agriculture globally competitive) cannot take place without significant disruptive and unwanted social consequences…inadequate attention is paid to the important cultural issues associated with the lives and practices of farmers and fishermen…neo-liberalism calls for self-help, but local rural residents seek community solidarity through the established practices of creating cooperation and achieving consensus in decision-making.”

“Despite pronouncements about being the solution, neo-liberalism engenders results that contradict expectations. The lack of correlation between corporate profit and community socio-economic development is most evident…corporate investments have not created the promised jobs…employment that has been created is part-time, precarious and staffed by marginal workers”.

“The introduction of mechanical and chemical innovations prompted a sharp increase in (Japanese farm) productivity, but this was insufficient. Declining production characterized rice, livestock, fruit and vegetables that were once protected by the state…in 2019 the number of farms stood at 2.5 million down from 6 million in 1955. Two-thirds of these farms are run by part-timers, as declining farm incomes pushed farmers out…the reduction in cultivated land brought it to a total of 3.4 million hectares, down from 5.2 million in 1955…agricultural incomes peaked at in 1975 at 2M yen per household but declined to 1 million yen in 1990. In 2010, 35% of all farmers were identified as subsistence farmers” (!)

One may see the terrible state of Japanese farming in a new light. Not the result of an inevitable decline, but the effect of deliberate government policy.