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Home>News Articles>Agricultural News in Asia in 2015>Japan’s Drastic Farm Coop Reforms Accepted by JA-Zenchu
 February 10 2015

JA-Zenchu, the organizational reform of Japan’s Central Union of agricultural cooperatives, recently accepted a reform plan by the Abe administration which in essence will make the union of agri cooperatives lose its mandate to head the JA group’s management. The plan will also make JA-Zenchu a general non-profit foundation, and not a special entity specified by the Agricultural Cooperatives Law.

In a recent article by Reiji Yoshida of the Japan Times, it was reported that Japan’s main agricultural lobby recently approved a dramatic reform plan that will deprive it of the legal right to audit group cooperatives, thereby weakening its influence over how they operate. Prime Minister Shinzo Abe has argued the reform will give more independence to more than 690 Agricultural in Japan.

It was further reported that JA-Zenchu Chairman Akira Banzai met with senior leaders of the Liberal Democratic Party to accept the reform plan. In the said plan, each cooperative will be allowed to hire its own business consultant and play a greater role in which direction it wants to take. Chief Cabinet Secretary Yoshihide Suga was quoted as saying that “This is a reform designed to allow farmers and local individuals to play the main role in running their cooperatives. This is not designed to dismantle agricultural cooperatives. The average age of farmers is currently 66, and this is a reform the make agriculture attractive (for young people)”

Under Japan’s Cooperatives Law, JA-Zenchu monitors cooperatives’ management through an auditing function. Most farmers grow products under the guidance of the JA group and use the group’s distribution channels to ship the products to the market. Meanwhile, critics say the JA group’s main interest has been to make profits. This is why its primary concern has become its banking and its insurance businesses for non-farmers and part-time farmers and also one of the  reasons why the group has been slow to embrace streamlining reforms to improve productivity of farmers, as stipulated by the Agricultural Cooperatives Law.

According to the report, the JA group’s banking business boasts ¥92.5 trillion in deposits, which makes it one of Japan’s largest banks, rivaling the Mitsubiushi UFJ Financial Group with ¥125.1 trillion on deposits.

Under the reform plan, the government will allow the JA group to continue serving non-farmers, including the provision of financial services. This may help the JA group maintain its business focus unchanged.

Prime Minister Abe has been eager to push for organizational reform of JA-Zenchu, apparently because agriculture has been widely regarded as a typical example of Japan’s heavily protected, inefficient industrial sectors. The report further added that Abe and his aides appeared to be trying to play up the political battle with JA-Zenchu to highlight their efforts to remove “rock-hard” regulations with vested interests, although the agriculture sector in Japan accounts for only 1% of the country’s gross domestic product.

Akira Banzai (center), chairman of the Central Union of Agricultural Cooperatives (JA-Zenchu), walks through the Liberal Democratic Party's headquarters in Tokyo after accepting a major reform plan. Photo courtesy of The Japan Times