Agricultural co-ops must continue efforts to augment main business

The Yomiuri ShimbunEfforts to streamline the management of agricultural cooperatives and boost the income of farming households through originality and ingenuity are halfway through. Reform initiatives should never slacken.

The five-year period set by the government for intensive promotion of agricultural cooperatives’ reform came to a close at the end of May. The reform of agricultural cooperatives was put forward by the government in 2014 as a centerpiece of its growth strategy following a recommendation by the Council for Regulatory Reform.

The reform called for rectifying the top-down structure that has the Central Union of Agricultural Cooperatives (JA-Zenchu) at the top, and enhancing individual cooperatives’ freedom of management, thereby aiming to encourage a shift to “aggressive farming.”

The aging of farming households has progressed and the number of farmers has declined. Assistance by agricultural cooperatives is essential to reduce costs and increase the sales of agricultural products. It is important to sum up the results of the five-year reform drive and carry them over to the next reform.

According to JA-Zenchu, the value of farm products handled by the union increased by about 8 percent from ¥4,326 billion in fiscal 2014 to ¥4,684 billion in fiscal 2017. Production and sales methods to meet the needs of consumers are said to be bearing fruit.

The National Federation of Agricultural Cooperative Associations (Zen-Noh), which assumes the role of selling materials, has introduced a bidding system for procuring fertilizers for which prices were criticized as being relatively high. It has also reduced the amount of brand items it handles and lowered prices by 10 percent to 30 percent.

As for tractors, Zen-Noh asked a machinery maker to develop function-limited and low-price models, thus making them available at prices 20 percent to 30 percent lower than conventional ones.

In its report on recommendations for this year, the Council for Promotion of Regulatory Reform expressed appreciation for the series of reforms, saying that “progress has been made to a certain degree.”

Farmers must feel benefits

There were about 700 agricultural cooperatives across the country five years ago. The number has been reduced to about 600 due to the progress of realignment. In five prefectures, including Nara and Okinawa, the goal of limiting the number of agricultural cooperatives to one per prefecture has been realized. Further streamlining efforts are called for.

It is a matter of concern that many farming families cannot actually feel the progress of reform.

The Agriculture, Forestry and Fisheries Ministry conducted a questionnaire survey of agricultural cooperatives and farming households last year. In answer to a question about reexamining sales methods for agricultural produce, the percentage of respondents who answered that they “launched a concrete step” was 93 percent for agricultural cooperatives and 38 percent for farming families.

Eighty percent of agricultural cooperatives suffer deficits in their business operations, including the selling of agricultural products. They make up for the deficits with profits they earn through credit businesses and mutual-aid operations. Isn’t it the case that such an earning structure delays reconstruction of the main business?

The government calls on agricultural cooperatives to transfer their credit businesses to superior organizations such as the Norinchukin Bank and merely retain over-the-counter services. But the number of agricultural cooperatives complying with this request amounts to no more than 10.

Amid a negative interest rate policy, the environment for credit businesses has become severer as in the case of regional banks. Now is the time to focus on strengthening business operations.

Agricultural cooperatives are called on to promote self-reform constantly so that as many farming families as possible can actually feel the benefits of reform.

(From The Yomiuri Shimbun, June 7, 2019)Speech


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