Japan announces major farm policy shakeup

Japanese Prime Minister Shinzo Abe on Tuesday announced that his government would shake up a decades-old system to protect rice farmers, a key part of Tokyo's pledge to open up the agricultural sector. The major policy shift would end production quotas in the year starting March 2018 and abolish across-the-board cash handouts to farmers, Abe said. Tariffs on rice imports run at almost 800 percent in Japan, and the staple food is seen as a potent symbol of the country's revered farm sector. Washington has been calling on Tokyo to open up the sector as part of wider free-trade negotiations. Abe wants Japan to join the US-led Trans-Pacific Partnership, which aims to end tariffs among a dozen member nations which account for about 40 percent of the world economy. Major reforms, including shaking up the farm industry, are also cornerstones of Abe's policy blitz, dubbed Abenomics, to reinvigorate the world's third-largest economy. But any move to tear down walls around the sector is certain to be met with heavy resistance from an agricultural lobby that wields considerable political power. "We will proceed with major reforms in our agricultural policy," Abe told a cabinet meeting Tuesday. "We will revise the production quota system that is more than four decades old, so that (farmers) can produce crops based on their own management decisions," he added. Rice quotas were introduced to limit production and keep prices from dropping as demand slowed. Under the new rules, farmers would not face the same production constraints. The new system would see targeted cash handouts to certain farmers, including those who produce rice for animal feed. Ending the quotas and limiting cash subsidies are aimed at stoking change in an industry that would struggle to compete on the world market without protection, advocates say.