A reform plan of the Agricultural Co-operative system is the major agendum in the current session of the Diet. The Abe administration regards these reforms as ‘the third pillar’ of his economic policy. But the Central Union of Agricultural Co-operatives, better known as JA-Zenchu, resists the government’s initiative, which leads to a conflict between the two, combined with hot debates by the ruling and opposition parties. What is the problem? How will a reform be carried out?


DISMANTLEMENT OF CO-OPERATIVES IN THE NAME OF ‘REFORMS’


The government announced in the Council for Regulatory Reform held last spring: ‘a role of the Central Union has ended’, referring to reforms to be made in the group of Agricultural Co-operatives. The authority has proposed an integration policy in the agricultural sector by way of reforming the co-operative system. The first step is to deprive a function of the Zenchu, mandate to audit and supervise the 694 local co-operatives across the nation. The government will submit relevant bills to the Diet in March to abolish regulations in the Agricultural Co-operatives Law which defines the role of Zenchu.


Prime Minister Abe Shinzo regards reforms in the system as important as other ones in the social services and employment and is determined firmly to drill ‘rock?hard regulations. He expressed his resolve on January 16 to fulfill the policy, requesting the JA-Zenchu to ‘keep a low profile’. Chairman Banzai Akira had told on the previous day in the press meeting, referring to the reforms: ‘the proposal is too abrupt for me to understand rightly’. The premier meant to react harshly to resistance of the leader of Zenchu.


Doubling Farmer’s Income


The Abe government’s initiative to reform the co-operatives is to dismantle the organization. In addition to a removal of auditing authority of the JA-Zenchu, the administration requests: (1) to limit affiliating members of the co-operatives to use the group’s programs, (2) to convert the National Federation of Agricultural Co-operative Associations (=Zen-noh) into a business entity, and (3) withdrawal of the JA from the comprehensive activities of co-operatives. Excited debates are held on the proposals between supporters and opponents.


Prime Minister Abe and the Ministry of Agriculture, Forestry and Fisheries insist that the agricultural sector should be profitable so that farmers could double incomes by the year 2020 though reforms. But the authorities cannot explain well how the decisions will work for a farmer to earn more; to remove the mandate of the JA-Zenchu and to limit associated members to benefit from the organization.


As for the JA’s withdrawal from the comprehensive activities, the government disregards relationships of co-operatives with local communities. Opponents are dissatisfied with the Council of Regulatory Reform as it tries to impose their decisions as the final policy.


Opponents claim: the Council’s position is as identical as that of the US Chamber of Commerce in Japan which submitted a letter of opinions supporting the organizational reform plan of JA Group. The chamber goes a step ahead of the TPP free trade pact. Whom will the reform policy help? Distrust grows against the ministry.


9.96 Million Co-operative Members


Let’s explain the JA’s organization to help readers to understand better. The JA is composed of 4.60 million farmer members and 5.36 million non-farmer members who invest in the group, with participants of 9.96 million in total. They join a respective local co-operative. Each co-operative has several business sectors locally: finance (savings and loans), mutual-aid programs (insurances for life and loss), purchases (chemicals, fertilizer, equipment and materials for living) and guidance & sales (supervising on production and selling products).


Every section has its own national headquarter, which plans business, supervise on production and coordinate the entire activities. The national centers are: the No-rin-Chu-kin (=the Norinchukin Bank) for the financial sector, the Zenkyoren (=the National Mutual Insurance Federation of Agricultural Cooperatives) for the mutual-aid programs and the Zen-noh (=the National Federation of Agricultural Cooperative Associations) for purchasing goods, supervising the industry and selling products.


The JA-Zenchu audits all the sectors (supervising, accounting and managing) pursuant to the Agricultural Co-operative Law and from a position to promote cooperative movements.


February 10, 2015