1. 〔農業水産経済研究 第14号 2014. 3〕
Transformation of Japanese Agriculture Cooperative
Toward Trans Pacific Partnership
IMRAN, Zulhamsyah＊・YAMAO, Masahiro＊＊・
HOSONO, Kenji＊＊・HIRATANI Kenshi＊＊＊
Abstract:
Neo-liberalization system has affected to Japan Agriculture Cooperatives (JA-Co-ops) since
Japan Government formally agreed to entire into the General Agreement on Tariffs and Trade
(GATT) in 1961. To explore what the effect of GATT to JA Co-op, this paper will present JA Co-op
role and transformation policy in facing neo liberalization system. This paper was supported by using
literature review and secondary data. As a result showed that JA Co-ops has done transformation
through merger, re-structuralization amalgamation, and create innovative concepts to establish and
maintain in serving farmer and developing their business. Recently, JA Co-ops has challenge to
overcome issues Trans Pacific Partnership (TPP) as part of neo-liberalization system on pacific
region. As a conclusion, neo-liberalization system has both a positive and negative impact on
sustainability of JA Co-ops in the future.
[Key words] Neo-liberalization, JA Co-ops, transformation, innovation concept
I Introduction
Post World War II (WW II) in 1945, Japan government has had a commitment to reconstruction
economic growth as a major economic power. Japan economic recovery had begun during the
occupation by United State of America until a peace treaty in 1951. In period 1950-1970, Japan had
raised a rapid economic growth which establishment of Japan’s economic policy centered on
achieving economic self-reliance. Finally, Japan has emergence the giant economic during period
1970-2000 which has determined within industry revolution policy. However, Japan had
experienced a disastrous decade of economic stagnation and deflation from 1991 to 2001 after
bubbles in its stock market and land market collapsed (Makin, 2008).
During the period 1991-2001, Japan has also faced and solved the land and capital reform,
economic system changing, oil crisis and shock, food crisis, agriculture development, and financial
crisis. In contrary, Japan Government could get success to develop industrialization to support
economic growth; however, it has challenged to reduce gap between industry and agriculture sector.
Teruoka (2008) remarket that Japan obtain to overcome numerous difficulties to maintain a relatively
high rate of growth, increase its trade and fiscal surpluses, and become an even greater economic over
than heretofore in period 1970-2000 which were supported by enormous technological innovation in
the core industrial sectors feeding consumer demand; thorough restricting of employee; and a thorough
shift based on the above two factors to a low labor, low waste style management. However, Japan’s
nominal GDP growth rate was below zero during 1997-2001, with most of its positive real growth
resulting from the technical application of GDP deflators averaging about -1.5 percent (Makin, 2008).
＊ Graduate School of Biosphere Science, Hiroshima University, and Lecturer of Bogor Agricultural University
＊＊ Hiroshima University ＊＊＊ Graduate School of Biosphere Science, Hiroshima University

2. ― 14 ―
Even though Japan’s economics had growth progressively during 1945-2000, the agriculture
sector had got pressure through the international economic system changed and domestic condition.
Agriculture development had begun which performing of land reform during 1945-1947 and it had
achieved for rice production in 1955, and then the government made a policy, “Agriculture Basic
Law,” in 1961 to address agricultural issues developing from the achievement of high economic
growth and participation in the General Agreement on Tariffs and Trade (GATT) system (Teruoka,
2008). Even, Japan Government had continued to breakdown and retraction through composite
agricultural policy that modified the Basic Law Agricultural Policy. Indeed, Japan Government
produced several packet policy for developing agriculture and increase food production and self-sufficiency
until now. As known, Japan’s economic development throughout period could not ignored
by how Japanese Agriculture Cooperatives have interesting played role to stimulate and accelerate
economic growth and perform transformation in facing liberalization and neo-liberalization system.
After WW II, JA Co-op activities have contributed to improve agricultural productivity and
farmer’s socio-economic conditions were indispensable factor for the economic development in Japan
(Yamada, 2012). He added an explanation that JA Co-op transaction values in 2009 reached about 53
billion US dollars (4.2 trillion yen) of collective sales, 38 billion dollars (3.0 trillion yen) of collective
purchases, trillion dollars (85 trillion yen) of saving deposits and 4 trillion dollars (320 trillion yen) of
long-term insurance.
Meanwhile, JA Co-op has used its tremendous political clout, backed by the nation’s rural
communities, to block agricultural reform in Japan for the past half century (Yamashita, 2009). It
succeeded in keeping rice prices artificially high during the years when the government set rice
prices under the staple food control system, achieving average annual increases of almost 10%
during the 1960s, in particular. And since the passage of the Agricultural Basic Law in 1961, it has
opposed all policies to reform the industry structurally through the creation of large-scale farms and
the encouragement corporate-style farming. Food Control, High Prices, and the Rise of JA Co-op,
expanded its reach and influence by capitalizing on the government’s system for controlling
distribution and pricing of staple foods. Rice, wheat, and barley accounted for 70% of all produce
marketed by JA Co-op through sales volume at the outset, and the system for controlling these foods
was integral to JA’s activities from the beginning.
JA Co-ops has also play role for facing the changing of economic globalization system to neo-liberalization
system. It had performed transformation of institution to protect the farmer and
maintain food production and self-sufficiency. During the period 1950-2010, JA Co-op had stipulated
and implemented various transformations in facing open market system. According to problem and
challenge as explanation above, this paper will depict what is the JA Co-op role and transformation
policy in facing neo liberalization system. This paper comprise to four part, namely: (1) introduction,
(2) neo-liberalization affected to Japanese Agriculture and agriculture cooperative, (3) transformation
of Japanese Agriculture Cooperative in facing neo-liberalization system, and (4) conclusion.
II Neo-Liberalization Affected to Japanese Agriculture and Agriculture Cooperative
Japan’s Agriculture has performed consistent policy protection and support since the end of
WW II and at least until now. Japan’s farmers have been facilitated much policy protection and
received more support than any farmers in development countries. Many scholars agreed that

3. Transformation of Japanese Agriculture Cooperative Toward Trans Pacific Partnership ― 15 ―
Japan’s nominal protection rate for agricultural commodities is one of the highest among developed
nations. But also the others scholar say that Japan’s nominal protection rate for agriculture
commodities are very low around the world.
JA Co-op has contributed to evolve agriculture commodities. For examples, It share of the
farm input market has been more than 30% over the past 30 years (Figure 1). Figure 1 also points
out that it has not changed the ratio of the share of JA Co-op to increase farmer participation on its
market. Advanced farmers develop their own channel market and they get material from others
source for farming activities (Yoshihisa, 2001). On the other hand, many small-scale farmers still
depend on JA Co-op and they offset the decreasing of the share of this institution.
In fact, Japan’s farmers have faced the dilemma since Japan Government has made decision to
follow GATT and neo-liberalization system in period 1955-2000. One hand, Government of Japan
(GOJ) has continued to protect the farmers and their product; on the other hand, GOJ must follow to
neo-liberalization economic system which is promoted by the government of Margareth Tatcher
(1979-1990), Ronald Reagand (1981-1989), and Yasuhiro Nakasone (1982-1987). Due to privatization,
deregulation and liberalization, national economics and agricultural sectors became to be greatly
affected by capitalism market mechanism (Teruoka, 2008).
In addition, the pro-neo liberalization policy is aimed at putting agriculture in Japan on a
competitive footing, which will need to be reinforced by additional reforms that address the market
distortions that adversely affect the efficiency and competitiveness of the sector (Fabusoro et al.,
2012). Barriers to competition will need to be lowered, first among farmers themselves, and
ultimately with other economic sectors and internationally (OECD, 2009). And then, Fabusoro et
al. (2012) added that some of the pro-liberalization policies already implemented and affected the
structure and function of JA Co-op, such as:
(1) Financial liberalization: Financial liberalization came into effect in Japan in the late 1970s with
the Ministry of Finance, allowing greater competition in the financial sector and liberalizing
interest rates. The move was to remove policy supports that helped inefficient banking and
Figure 1. Nokyo’s share of services to farm household (per cent)
Sources: https://crawford.anu.edu.au/pdf/pep/pep-318.pdf

4. ― 16 ―
insurance institutions to thrive. The special interest rate allowance for JA’s Bank (Norinchukin)
was also removed. This policy affected JA’s financial structure and commenced the collapse of
the financial strength of JA.
(2) Implementation of Trade Agreements on import tariffs: The implementation of trade
agreements such as the Uruguay Round Agreement on Agriculture (URAA) and the Economic
Partnership Agreements (EPA) among others has brought a steady change in agricultural policy
in Japan. Under the URAA, Japan committed to reduce the tariff rate for agricultural goods by
36% on average and a minimum 15% for each commodity, between 1995 and 2000. Japan also
replaced all its quantitative restrictions on imports with tariff rate quotas including rice. The
EPAs were entered into to eliminate or reduce tariffs, and to introduce preferential tariff quotas
for several sensitive agricultural products such as poultry meat and fruits. EPAs have been
made with several countries among which are Singapore, Mexico in 2004, the Philippines,
Thailand, Malaysia, Indonesia, Chile, and Switzerland. The latest of such trade agreement talks
is the Trans-Pacific Partnership (TPP), which has wider applications and implications for
agriculture in Japan.
(3) Reduction of price support: Price support estimates (PSEs) showed a steady decline from
around 1986 with periodic increases in the early 1990s. The nominal value of the PSE declined
by 37% from JPY 7,236 billion in 1986-88 to JPY 4,541 billion in 2005-2007. The declining in the
level of PSE support is due to the domestic deregulation for rice and the reductions of tariff in
the URAA, particularly in the case of livestock products (OECD, 2009).
(4) Revision of the agricultural land ownership and land use system: This is to ensure that
farmland is used efficiently and to allow commercial farming. This is a consequence of the
yearly reduction in the total area of land used for agricultural purposes that has resulted largely
from an increase in farmland abandonment and conversion to other purposes.
(5) Liberalization of marketing of agricultural inputs and products: Until the mid-1980s, JA was
the sole marketer of agricultural inputs such as fertilizer, seeds, chemicals, and machinery. It
also had the monopoly for the marketing of agricultural products, collection of products from
farmers and their distribution across Japan. With deregulation, agricultural inputs and the
products market became open to competitors, forcing down prices and limiting the influence of
JA in most rural communities. Most farmers also have the opportunity to market their products
directly by themselves or join other cooperatives to market their products.
(6) Before the liberalization: JA was the only producer cooperative in Japan and all farmers were
conscripted as members. With the deregulation, farmers have liberty to resign their
membership and form other cooperatives. This gave many farmers opportunity to pursue
competitive farming and take advantage of the open market to earn more income than they
would have under the JA system.
III Transformation of Japanese Agriculture Cooperative on Facing Neo-Liberalization System
JA Co-op has a long history to support Japan Government on developing agriculture sector. As
known, it had run business in every village and almost 100% of farm households join the co-ops since
1900. Indeed, Ministry of Agriculture and Forestry established cooperatives around the nation since
the early 1930s, which covered various functions not only as credit unions but also as comprehensive

5. Transformation of Japanese Agriculture Cooperative Toward Trans Pacific Partnership ― 17 ―
agricultural service cooperatives (i.e.: procurement of supplies and marketing of produce). Japan
government combines the industrial cooperatives with the political groups representing rural
landowners to initiate “agricultural associations”, in order to maintain and control over all the households
in a certain area during WW II. In addition, in this period the JA Co-ops were forced to transform into
government control organizations and all farmers were obliged to join the organization to support the
wartime economy (Nonaka, 2006). He added that after WW II, JA Co-op was re-organized with a more
democratic style, known as the Rockdale style. The Agricultural Co-operative Society Act promulgated
in 1947, which is the basic regal background of today’s JA co-ops. It is based on the Rockdale style, as
a democratic control with each member one vote, freedom of joining, dividends per share and so on.
In same time, GOJ Government made a policy to turn those agriculture associations into
agriculture cooperative which has been called Nokyo. It has function to collect rice, wheat, and
barley from farmers. Because of it was established by the government, encompassed all farmers
throughout the country, and was comprehensive in its role, taking control of most of the economic
activities of Japan’s farming communities. Over 70% of agricultural cooperative sales turnover for
agricultural products was rice and cereals by using food control system at that time (Teruoka, 2008).
These conditions had continued before GOJ ratified The United State-Japan Mutual Security
Agreement in June 1960. Previously, Japan had also begun the process of trade and capital
liberalization with the GATT summit held in Tokyo in October 1959 and the formulation of trade
and currency liberalization plan in 1960. Finally, Japan jointed as one of the eleven GATT signatory
nations in February 1963. These systems had given positive impact for Japan’s economic growth.
Teruoko (2008) stated that after liberalization system Japan’s Economic rose to 41% and 93% on 1960
and 1964 respectively. Otherwise, GATT had also affected on declining of agriculture product, it
meant would influence to farmer, especially full time work in farming.
As a result, liberalization system have obvious continued in period 1970-2000 when negotiation
for GATT was conducted in Uruguay in 1986, including the collapse of the Soviet Union and the
Eastern European Socialist system around 1990 and the start of the World Trade Organization
(WTO) in 1995 and ending in 2000. Both of them have various impacted to agriculture and
agriculture cooperative development in Japan. Even, now a day, farmer and JA Co-op have faced
the Trans Pacific Partnership (TPP) as part of neo-liberalization system.
On facing these impacts, JA Co-op had arranged and done many policies to protect and serve
farmer in Japan. However, high levels of economic achievements some of the social values have
begun to erode (Prakash, 2000). There are new pressures which have been generated by the global
competitiveness which is forcing the country to undertake some structural reforms.
Prakash (2000) added that the JA Co-ops movement was striving hard to maintain and enhance
its presence in the market in spite of pressures of open market economy and the WTO regulations.
JAs are trying to align their business operations also in line with the changing food habits of the
people. Agricultural cooperatives have also taken steps to implement new strategies to enter the
21st century. There are six major reforms that are being undertaken by the Government: (1)
government expenditure reforms; (2) administrative reforms; (3) financial reforms; (4) economic
structural reforms; (5) welfare reforms; and (6) educational reforms.
JA Co-ops have also taken steps to implement new strategies to face neo liberalization and
enter the 21st century. These strategies are mainly designed to safeguard the interests of the
farmers and some of the measures being pushed by JA-Zenchu are as follows (Prakash, 2000): (1)

6. ― 18 ―
empowerment and participation of members; (2) mobilization of member-group movements in
cooperative enterprises; (3) dynamic and efficient restructuring of cooperative business practices; (4)
cooperative marketing business practices; (5) cooperative supply business practices; (6) cooperative
credit business practices; and (7) other cooperative business practices.
The interesting policy had taken by the Central Union of Agriculture Co-operative in Japan to
face import liberalization of agricultural product were promote mergers and structural
reorganization in 1988. Merger development was reorganization of three tiers system into a two
tier system (Tanaka, 2000). While Prakash (2000) added that transformation meant the three-tier
system is being steadily converted into a two-tier system by eliminating the prefectural tier to
improve efficiency in management, delivery of services and savings on administration expenses. It
is argued that by doing so the basic members will get greater economic benefits. It is also assumed
that members of primary cooperatives will be better served by the federal institutions.
Moreover, Tanaka (2000) explained that federation at the prefectural level organized by
function and classified into two categories, as follow:
(1) Those mainly composed of multi-purpose agricultural co-operative such as prefectural economic
(marketing and supply), credit, and mutual insurance federation; and
(2) A single purpose agricultural cooperative such as dairy and horticultural co-operative federation.
Tanaka (2000) added that reorganization had also meaning for each of the 47 prefectures in
Japan has a prefectural union whose members are primary societies and prefectural federations. In
addition, each prefectural federation has a national counterpart, such as the National Federation of
Agricultural Co-operative Association (ZENNO). And then, The Central Union of Agricultural C0-
operatives (ZENCHU), who membership is held basically by primary co-ops, prefectural unions and
federations, and various national federations, is a nationwide organization.
According to Tanaka, a number of JA Co-ops after merger and reorganization had fell sharply
from 1993 to 1998, and it had continued went down dramatically to 944 in 2003. During 2003-2012,
a number of JA Co-ops had constantly decreased to 713 in 2012 (see Figure 2). Currently there are
around 700 JA Co-op all of around Japan Nation (Yamada, 2012). Meanwhile, due to the open
market implications, a greater number of ageing farmers, inability to recruit or interest young people
to enter farming profession, and the growing needs of farmer-members to market their products fast
and with some economic advantage, the JAs appear to be facing problems. The consequences have
been: members prefer to have direct access to the market; members converting their farm lands into
non-farm purposes; members do not have excess funds for savings; and, the cooperatives prefer to
invest their funds in non-farm investments (even speculations) to earn higher incomes (Tanaka, 2000).
To solve these obstacles, JA Co-op has taken place amalgamation model as suggestion on
cooperatives report 2000 which provision by Dr. Laidlaw’s.
Prakash (2000) mentioned that amalgamation of JAs has been high on the agenda. The process
is viewed as very difficult, nerve-wrecking, highly diplomatic and time-consuming. This involves
the ego-power of local leaders, division of assets and liabilities and displacement and rationalization of
employees. From 12,000 agricultural cooperatives in 1960, the number went down to 2,300 in 1995
and 1,500 in 1999, and it is expected that the number of amalgamated cooperatives would still go
down to 550 by the end of the year 2000.
The main aim of amalgamation is to strengthen the JA group and to make the cooperatives
economically viable (Prakash, 2000). He explained that JA Co-ops have been following this program

7. Transformation of Japanese Agriculture Cooperative Toward Trans Pacifi c Partnership ― 19 ―
Figure ₂. A number of JA Co-op in Japan during 1₉₉₃︲₂₀1₂
3,012
1,833
944
794 713
3,500
3,000
2,500
2,000
1,500
1,000
500
-
1993 1998 2003 2008 2012
Number of JA
Year
with the following objectives: making the farming operations viable, making the cooperatives strong
and viable, and facing the market competitions bravely through a strong collective bargaining
power. The process has been slow and painful. Some of the problems faced by cooperatives in the
process of amalgamation have been: (1) division of assets and liabilities, (2) placement of personnel, (3)
diffi culties in arriving at consensus, and (4) egoistic attitudes of local leaders. The process is based
on consensus and with the agreement of all the members. Government directives or instructions
have no place in the process. Business organizations like the JA-ZENNO and JA-Zenkyoren are
already actively pursuing the process of amalgamation to consolidate their business and to provide
more effi cient services to their members.
JA Co-op has also created the several concept of cooperative in facing neo-liberalization.
Prakash (2000) stated that there are several concepts could be developed by ZENNO in Japan in
transformation policy (see Table 1).
Currently, agriculture sector and JA Co-op have also faced a regional free trade area which was
called Trans Pacifi c Partnership (TPP). As Prime Minister of Japan, Noda, explained that Japan
government followed the Kan administration’s agricultural policy plans with a “Basic Policy and
Action Plan for Revitalizing Japan’s Food, Agriculture, Forestry, and Fisheries”, which was designed
to facilitate Japan’s participation in the TPP negotiations (Araki, 2012). As consequence, industrial
sectors have taken a position as pro group; on the other hand, mainly agriculture sectors have taken
place as contra group no a day.
Meanwhile JA Co-ops were in the process of drawing up a vision of its future and a set of
policy proposals to strengthen the nation’s farming sector in facing TPP (Araki, 2012). She added
that these conditions had depend on how JA Co-ops tackle issues related to the TPP, however,
discussions in and outside the government could lead to a drastic review of the entire JA
organization. For example Miyagi Prefecture farmer recently told The Yomiuri Shimbun deeply
concerned about what lies ahead if JA Co-ops continue to cling to the status quo. Let we see what
kind of the transformation will be taken by JA Co-op toward TPP agreement if Japan Government
will agree and sign the agreement as one of TPP members.

8. ― 20 ―
Table 1 Several concept of JA Co-ops transformation in facing Neo-Liberalization
No. Concept Remark
1. Creation of a Corporate Identity A view to bring unity within the agricultural cooperatives and
to highlight the quality of JA products, the Movement adopted
a Corporate Identity – JA [representing the Japanese
Agricultural Cooperative]
A legal limitation on the agricultural cooperatives to carry out
business with non-members, the cooperatives have created
companies which are wholly owned and controlled by
cooperatives
3. The Concept of “Joint-Use The concept is widely implemented not only in the agricultural
cooperative sector but also in other industrial sectors This
concept implies joint purchasing, joint marketing, joint use of
capital, and joint use of facilities.
This concept is based strictly on the principle of pure business.
5. The Concept of One-Window Service It is generally observed that the office a primary cooperative is
alike a cooperative complex where the members transact their
business at one place.
6. Farm Guidance Activities This concept is not only to provide technical information to the
farmers on cultivation of various crops but also to assist their
farmer to increase their income
The RAPP not only produces a comprehensive agricultural
promotion plan, but also summaries a few other things e.g., the
quantity and quality of rice, barley, corn, fruits and vegetables,
the approximate requirements of fertilizers, farm chemicals,
farm implements
8. One-Village-One Product Concept The JAs have supported the members to specialize in their
respective products one village
JAs are not restricting themselves to produce rice and
vegetables alone.
10. Farm Management Centre These technical units are created to provide all services and
equipment related to farming to the farmer-members
11. Producer-Consumer Contact Markets The JA provides space to farmer-members to sell their
products [fruits, vegetables, flowers, potted plants etc.] directly
to the consumers without going through the process of
middleman or local markets
Business transactions are double- checked to avoid any error or
mishandling.
Members are encouraged to deposit their savings with their
cooperatives.
IV Conclusion
2. The Concept of Cooperative
Companies
4. Collaboration with Private
Enterprises
7. Regional Agricultural Promotion
Planning [RAPP]
9. Diversification of Agricultural
Practices
12. The Concept of Double-Check in
Accounts
13. The Concept of Savings with the
Cooperative
Sources: Prakash (2000)
Agriculture and JA Co-ops are affected and changed from monopoly market to open market
system in transaction of agriculture product to follow the liberation during period 1950-1970 and
continue following neo-liberalization system in period 1970-present. Because of Japan Government
and JA Co-ops has promote to pro-liberalization, as consequences many policies has already
implemented and affecting the structure and function of JA Co-op.
Both liberalization and neo-liberation system emerge a positive and negative impact to Japanese
Agricultural Cooperative. Merger and reorganization structure of JA Co-op perform on reducing of
employee, take cost and spend time on reformation system toward balance re-structuralization. On
the other hand, JA Coop also create innovation concept; so that, it can increase competitive attitude
within institution and among member of cooperative to resolve open market system.
TPP, as deferential of neo-liberalization system, is coming up issue that it will be faced by

9. Transformation of Japanese Agriculture Cooperative Toward Trans Pacific Partnership ― 21 ―
agriculture sector and JP Co-ops. It is needed to arrange new strategies and policy how to handle
and anticipate if Japan Government agrees to engage as one of TPP members.
References
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10. AGRICULTURAL AND FISHERIES
ECONOMICS OF HIROSHIMA
UNIVERSITY
No. 14 March 2014
CONTENTS
Articles
Village-based Group Farming Size and the Members’ Consciousness;
An analysis of the findings by the member survey
of three group farmings in Hiroshima prefecture
…………………………………… TANAKA, Hideki・YOSHIHIRO, Masaaki（１）
Transformation of Japanese Agriculture Cooperative
Toward Trans Pacific Partnership
…………………………………… IMRAN, Zulhamsyah・YAMAO, Masahiro
HOSONO, Kenji・HIRATANI, Kenshi（13）
Assessment for Rural Home Stay Experience by Students Going to
the Educational Trip and its Effects; According to the Questionnaire
Analysis to the High School Which Has Been to Ie Island Okinawa as
Educational Trip
…………………………… HOSONO, Kenji・KATO, Ai・NAITO, Shigeyuki（23）
Present Condition of Consumption of Processed Food
in China’s Urban Area: A Case Study in Chengdu City
……………………………………………… AMANO, Michiko・YANO, Izumi（33）
Book Reviews
ONO, S (2013) “Economic Analysis of Fishes Aquaculture”
……………………………………………………………… WATANABE, Arata（39）
TSURUI, K (2011) “Fishery Revival and Training for Bearer”
……………………………………………………………………… SATO, Yuka（43）
SHIBATA, A (2009) “National Wealth Theory for Rice”
……………………………………………………………………SASAKI, Satoshi（47）
The Farm Management Society of Japan (2011)
“Next-generation Land-extensive Farming and Corporate Management”
…………………………………………………………………… BABA, Yuzuru（51）
広島大学 農 業 水 産 経 済 研 究 第 十四 号 二〇一四年三月