N.Z. must look for its trade allies among Japan’s power groups

Press, 13 April 1978, Page 17

N.Z. must look for its trade allies among Japan’s power groups

Japanese agricultural policy protects farmers at a high cost to the consumer, New Zealand’s trade in food suffers too. But New Zealand could make more use of Japan’s consumer groups, which are demanding cheaper food. This is the second in a series of three articles by LEONE STEWART.

New Zealand needs to devise a formula for access for its farm products and timber which is acceptable to the Japanese In the Japanese Government’s view, -we are the ones with the problem. So seems logical that we must provide the motivation for change.

But. according to Graham Kitson, senior economic researcher at Lincoln College, and long familiar with Japan, we have not been talking to the people who can help us devise such a formula. "We need to seek the ear of researchers working on economic policy committees within and outside the Government. We need to know much more about the formulation of Japanese agricultural policy,” he says

A step in that direction would be the appointment of an agricultural attache to our Embassy in Tokyo.

Changes, it seems, will require'radical thinking by New Zealand Developing relationships at all levels will require getting closer

to Japan’s emerging consumer groups. Although thev have nothing like the power of the agricultural lobbv. the Japanese consumer co-operatives are getting more assertive. Recently, they demonstrated their power with a boycott of a newly-devel-ooed animal feedstuff based on a by-product from the refinement process of oil Faced with the boycott, the development companies simply packed

up New Zealand governments have so far refused to deal openly with consumer groups because of the Left-wing politics of some of them. Such deal-

ings could, it has been felt, be construed as . interfering in Japan’s internal, political system. Attitudes may be changing in Wellington. The Leader of the Opposition (Mr Rowling) met representatives of consumer groups, including the influential Japan Housewives’ Association, in Tokyo last October. Graham Kitson considers that there is no valid justification for not seeking support from consumer groups for New Zealand’s case. “There have been occasions when they have been actively looking for dairy products that New Zealand could supply at prices the consumer would find attractive. The Dairy Board has done nothing to follow up this interest.”

In spite of her economic might, Japan still feels very vulnerable, particularly about her food supply. She feels the need for stable, reliable neighbours and trading partners. In the Japanese mind, cutting them out of our economic fishing zone could in the “unreliable class.”

The soya bean “shock” still rankles with the Japanese. In 1973. President Nixon stopped the export of American soya bean to Japan. The Japanese depend on imported soya bean from the United States. They will not readilv forget that their source of supply was cut off by the nation they considered their best friend. During his most recent visit to Japan last October and November, Graham Kitson found memories of the embargo frequently surfaced when New Zealand’s policy on fishing was discussed. While feeling is running

high in New Zealand that the Japanese are, to quote the Prime Minister, “the toughest thing on two legs” to deal with, the Japanese are expressing their disappointment with us. New Zealand says the concessions offered to us by the former Japanese Minister of Agriculture (Mr Zenko Suzuki) amount to very little. The Fukuda Government maintains that the intention behind their offer deserves more attention. To the Japanese, it is not so much what you do, but how you do it; not so much what you say, but what you don’t say, that matters.

The Japanese history of intense preoccupation with themselves, and suspicion of the foreigner, gives credence to its government’s policy of self-sufficiency in food. It is a policy a primary producing country such as New Zealand will have to learn to live with. Hope is held in various quarters that we could

turn self-sufficiency to our own advantage. During his research work in Japan, Mr Kitson has met many fellow’ researchers who want changes in their country’s agricultural policies. They argue that Japan should be less reliant on the United States, Canada, and Australia for the grains it must import to feed its cattle.

If more land were taken up growing grain — which seems feasible if the incorporation of small land holdings continues — there would be less capacity to proudce livestock products. This would necessitate more imports of the finished product, without damaging the return to the Japanese farmer.

Graham Kitson sees New Zealand’s failure to encourage the development of this policy as one of a series of lost opportunities.

Japan’s rural sector is quite unlike New Zea-

land’s farming country. The Japanese farmer has a small and, to the Japanese, priceless land holding. He generally supplements his income by holding down a city job, w'hile his wife and parents, or inlaws, work the farm. Successive Japanese governments have maintamed price support systems to ensure relative parity of economic status between the urban Japanese and the farmers. Even as Japan’s huge cities spill over into the rural sector, thus changing the nature of some country electorates, there seems little hope for New Zealand in a change of party government. If any part is to W'rest control from the conservative L.D.P., it will need the rural vote. Food price support systems are a major, and seemingly intractable, problem for New Zealand. It has been estimated that if the price of beef in Japan was reduced one per cent then its consumption would increase by 1.8 per cent. That is a lot of beef in a country with the population of Japan.

The same calculations apply to dairy products, which are among New

Zealand’s chief export worries. The amount of milk processed into dairy products within Japan depends on how much of the total yield the Japanese drink.

Japanese milk consumption — it is not a traditional food — had been rising steadily. New Zealand was becoming optimistic that this would continue, leaving room for it to make up the Japanese requirement for dairy products with our relatively cheap imports. Then, suddenly, in 1973, and again in 1974, the price — regulated by a government agency — went up: milk consumption went down. New Zealand’s best hope for increased imports of dairy products seems to lie with a lower price for domestic a 11 y-produced milk, which is certainly what the Japanese consumer wants.

Aurelia George, a New Zealander studying at the Australian National University, has written an analysis of the powerful vested interests that influence Japanese agricultural policy. It is an eyeopener. The farm lobby is organised, Japan-style, into one huge group — the Agricultural Co-operative Association (nokyo). Its membership is larger than any other organised interest group in Japan, uniting almost all of Japan’s five million farm households. Nokyo’s 11,000 local co-operatives have a staff of 450,000. Nokyo appears to be the fanners’ best friend. It markets agricultural products, buys farm and household supplies, and provides banking, insurance, technical guidance, and welfare facilities. Zenno is its big business arm.

Its combined activities make the Agricultural Cooperative Association one of the biggest monetary organs and leading trading firms, and the largest

insurance company, in Japan. Speh power ranged against New Zealand’s interests is depressing to contemplate. Nokyo has close connections with the government. Sometimes, in fact, it is hard to separate the two. Nokyo has the potential to mobilise more than seven million votes, most of these concentrated in electoral blocs. With its funds and campaign workers it' can be very helpful — or otherwise — during elections. While it may no longer be able to ensure the election of a candidate, it claims the power to ensure that he loses.

The farm spokesmen work in the Diet’s agriculture, forestry, and fisheries policy-making committees, acting as party pressure groups. They are well organised around their constitutents particular interests, becoming known collectively as the rice Dietmen, the peanut Dietmen, the grapefruit Dietmen . . . The livestock Dietmen are powerful enough to' operate as a lone pressure group within the Diet.

The livestock producing areas of Japan have generated some powerful politicians who have risen to national prominence through their membership and leadership of various producer pressure groups.

The National Beef Cattle Association and the Central Livestock Association are other major promotion organisations. Their structure enables them to act as middle-men between the politicians and the producer organisations — a power enhanced by their ability to steer their funds in the right political direction.

Tomorrow’s article examines the controversy surrounding Japan’s importing and distribution of livestock products, and New Zealand moves for the future.