Aust-Japan EPA negotiations - Change of time, Wipeout. A trying time for the farmers. Feb 6, 2011, 01:59
Negotiation between Japan and Australia heading to the conclusion of Economic Partnership Agreement (EPA) will begin on the 7th after 10 month absence. For Kan administration who is considering joining Trans-Pacific Partnership (TPP), this is a first touchstone to answer the critics of its resolution to open up the market. The focus is on abolishing the tariff for sugar and beef, which Australia has demanded and Japan has refused. I went to see the frontline of production.
Early February, at the Okhotsk seaside town of Mihoro , Hokkaido . Under the sky of sub zero temperature, white smoke rises from the 50-plus years old factory along with the drifting of sweet smell. Mihoro processing plant of Japan Sugar Beet Co. Locally harvested sugar beets travel on the conveyor belts and are processed one by one.
This prominent factory employs about 250 farmers during the off-season. The manager, Mr. Ohta (58) laments, “If cheap sugar enters the market from overseas by free trade, we will tread the same path as the coal industry. I wonder how long we can survive.”
For a few years, the wholesale price of domestic sugar has been around 170 yen per kilo. The Australian sugar, in comparison, is 50 yen and the difference is as wide as three times plus. The reason for making it this far rests on the tariff that can be set as high as 328% and the “adjustment cost” which can be claimed to the tune of 50 billion yen annually from domestic confectionary manufacturers who buy imported materials. This cost had filled the gap between the two prices.
There is no difference in quality between the domestic and imported sugar so it is difficult to compete by the adding of value. The Ministry of Agriculture, Forestry and Fisheries is predicting that when the protection is gone, annual production, including the sugar canes from Okinawa and Kagoshima Prefectures, worth 150 billion yen will become zero and 35,000 sweet crop farmers around the country will be wiped out.
However, not all items seem to disappear due to the abolishing of tariffs. For example, restriction on beef import had been abolished in 1991. Tariff rate was gradually lowered to the current 38.5%. Number of cattle farms around the country decreased to a third of what use to be. In 1991, there were 221,000, now (2010) there are 74,000. The progressive farmers are accelerating their efforts on cost cutting and move to high quality.