TT-712 -- JA is the Problem, Not Farmers. Ebiz news from Japan

* * * * * * * * * T E R R I E 'S T A K E * * * * * * *
A weekly roundup of news & information from Terrie Lloyd.
(http://www.terrie.com)

General Edition Sunday, June 02, 2013, Issue No. 712

+++ INDEX

- What's New -- JA is the Problem, Not Farmers
- News -- Highly effective new malaria vaccine
- Upcoming Events
- Corrections/Feedback: No rotation from debt to equity
- Travel Picks -- Hiking in Kamakura, Cosplay in Hiroshima
- News Credits

SUBSCRIBE to, UNSUBSCRIBE from Terrie's Take at:
http://mailman.japaninc.com/mailman/listinfo/terrie

BACK ISSUES
http://www.japaninc.com/terries_take, or,
http://mailman.japaninc.com/pipermail/terrie/

-------------------- DELTA AIR LINES -----------------------

DELTA LAUNCHES NEW TOKYO-HANEDA-TO-SEATTLE SERVICE WITH A FUN QUIZ AND A TRIP TO SEATTLE.

Want to win a trip to Seattle? Now’s your chance.

To celebrate the June 3rd launch of its new daily, nonstop service between Tokyo-Haneda(HND) and Seattle(SEA), Delta has organized a quiz with prize of trips to Seattle.

The quiz is called “Sleepless Nights in Seattle” and asks a variety of questions in a multiple-choice format. All you have to do is answer as many questions as you can correctly within one minute and you could win a pair of round-trip tickets from Tokyo-Haneda to Seattle, three nights hotel accommodation, a Seattle City Pass, and a special dinner for two.

Test your Seattle knowledge and you could soon be enjoying a sleepless night or two in the Emerald City.

Find out more at www.delta-new-route.com/Seattle/jp/en
-----------------------------------------------------------

+++ WHAT'S NEW

In the last issue of Terrie's Take prior to the 3/11 earthquake, TT-604, we covered the decision by the previous government, the DPJ, to break the status quo and join the Trans-Pacific Partnership free trade pact (TPP) talks. If you follow the media, you'd think this was a recent Abe-led initiative, but in fact, he is really just picking up the reins from Naoto Kan. Unfortunately for Kan, the earthquake and resulting nuclear crisis revealed the shallow roots of his government and he lost his hold on power.

There are a number of lobby groups in Japan that have been trying to hold back TPP, among them the medical, education, insurance, and legal sectors, but the one group with the greatest sway over TPP is the farming lobby. It's estimated by the government (if you can believe government figures, which many do not) that while Japan will increase its GDP by about JPY3.2trn on the non-agriculture side if it joins the TPP, on the other hand the agriculture, forestry, and fisheries sectors will suffer a corresponding 3trn drop if cheaper imports are allowed. Thus this zero sum gain gives the local side a good excuse to create bitter opposition to TPP -- if you measure overall economics alone.

However, in terms of the number of people who will benefit from TPP, the picture is a bit different. According to the Statistics Bureau of Japan, in 2012 there were just 2.33m people directly employed in agriculture and forestry in Japan, while there were 60m working in other industries. Forestry workers number around 50,000, so pretty much the other 2.3m are farmers. This 1:26 ratio of agriculture to non-agriculture shows just how lop-sided the ongoing influence of the farming sector is on politics in Japan.

[Continued below...]

----------------- Upgrade Your Website ---------------------

These days, your website is your most visible asset, and one that helps clients decide whether to do business with you. Japan Inc's Web Development Team is proud to announce its "WEB PARTNERS" program, whereby we create fully bilingual corporate or B2C websites with as much functionality as you need, plus year-round support.

Our customers to date include major international airlines, prestigious sports organizations, construction companies, and online stores for consumer products.

Program includes:
- Japanese/English website development
- Professional, patient design in collaboration with your staff
- Installation, configuration, and modification of core software (WordPress, etc.)
- Software development (PHP, mySQL, etc.)
- Daily changes to the site as an option
- Hosting, security, and backup

WEB PARTNERS is backed by a solid fully-bilingual team with strong credentials and a desire to please.

Contact: dai.tanaka@japaninc.com for details.
-----------------------------------------------------------

[...Article continues]

So why is the Central Union of Agricultural Cooperatives, aka, Nokyo (JA), the nation's largest farmer lobby group, so powerful? One reason is historical, as Japan is not that far removed from having been a predominantly agricultural nation. In 1948 Nokyo had 5.5m farming households as members, controlled 88% of registered food dealers, and more importantly controlled crop payments by the Ministry of Agriculture to farmers. Thus from the start it was part of the state and this deep penetration of government has persisted ever since. Even in 1990 JA had almost 8.5m farmers (99%) as members and was the largest political lobby group in Japan. There is a good book published in 2000, called "Politics of Agriculture in Japan", by Aurelia George Mulgan, which explains the power structure and the steady transition of JA from being a democratic representative organization of farmers to becoming a major "corporation".

Today JA has about 5m members, although since 2009 more than half of them are NOT farmers but instead are "Associate Members". We imagine these associates are middlemen and various hangers on who benefit from the JA cash cow. As a group Nokyo are highly organized and very well financed. JA's political arm can quickly put thousands of demonstrators on the streets, vote as a bloc, and while much smaller in numbers than in the past, help (mainly) LDP party members win power after a deal is struck. They are still an important constituency to the government and punch well above their weight.

Therefore in some ways, it's amazing that Abe has managed to overcome internal party pressure brought to bear by JA, to stop Japan joining the TPP talks. This one point started us wondering just how he managed to push TPP through with a minimum of demonstrations in Kasumigaseki. Then we were reminded of the old adage -- "follow the money". As with most unexplainable changes in Japan, the Abe-JA relationship appears to involve mountains of cash.

When it comes to the JA, there are two cash trails to follow. One is the pile being shovelled directly to farmers and is fairly transparent. The other, which is probably more interesting and certainly worthy of a proper press investigation in the future, is the control of the financial empire represented by the JA.

On the subsidies side of things, Japan already pays out 52% of its gross farm receipts as farm support, the 4th highest level in the OECD after Norway, Switzerland, and Korea, and well ahead of EU at 18%, the USA at 8%, and Australia at 3%. The Japanese government says its farmer income compensation program will pay out a relatively modest JPY690m this year (2012), but OECD figures say that in fact the overall value of producer support subsidies for Japan in 2012 was more like US$49bn a year. This is large gap and intimates that the government has plenty of other ways of funneling money to JA than those it's publicizing. Working the OECD numbers, these subsidies are equivalent to JPY2.1m for each and every farmer in the country.

Several months ago the government tried to allay TPP fears by saying it will create a new expanded primary producer subsidy program from April 2015. While they state that the initial budget for farmers (only) will be a reasonable JPY500bn, given that in totality the grants will now also cover the forestry and fishery sectors as well, we imagine that the real financial burden on the taxpayer will be much higher. Indeed, if the OECD numbers are correct, and considering the anticipated shortfall of primary producer earnings due to TPP, we think the government will try to move at least JPY1trn and possibly double that in subsidies across to farmers and fisheries.

The other cash trail is the financial holdings of JA. The organization directly and indirectly controls about JPY90trn in savings and other member deposits and securities, which makes it almost as large as Japan's largest city bank, the Bank of Tokyo Mitsubishi, which has JPY107trn in deposits. According to the Nikkei, most of the cooperative financial organizations that belong to JA have never been audited by the FSA. Instead they are audited by local government bodies -- which in rural communities does not comprise an arms-length relationship. There have been a number of failed efforts in the past to force JA to submit to proper audits or even to separate their banking operations. All have failed so far and once you see the size of the financial stake involved, it's easy to see why the incumbents are fighting tooth and nail to keep things as they are.

What's interesting is that without the rallying call of TPP, JA five years ago was on its way to becoming irrelevant to many of its members. For generations, and mostly for survival, farmers were forced or peer-group pressured into doing business through JA, which is why it is as powerful as it is. JA is exempt from the anti-monopoly law thanks to its cooperative structure, and so while the number of farming members and their income has fallen steadily, the parasitic structure of its many layers of middlemen extracting a piece of the action has meant that farmers have been paying more and more through the nose for agricultural chemicals, machinery, and products that they sell. This has inevitably created ill will with JA's core constituency.

Indeed, things got bad enough in the early 2000's that the Japan Fair Trade Commission (FTC) in 2007 felt it needed to issue to JA a set of guidelines on what behavior by the organization was acceptable and what wasn't. We presume this must have been prompted by farmers increasingly bypassing JA and shopping at the many home improvement chain stores popping up around the country.

So in conclusion, we think that the farmers themselves are not necessarily the enemy in the TPP negotiations. Rather, it more likely to be their representative organization, JA, and its entrenched professional managers and political allies. In fact, many farmers are pragmatic enough to realize that they need to change their ways in light of foreign competition and changing demographics. The newspapers frequently cover examples of how farmers are willing to incorporate, take loans and make major capital investments, lease land from other ex-farming families, and expand into value-added activities such as organic farming and processed food. It's just a shame that most of them are too busy looking after their crops and businesses to be properly represented in the political process.

...The information janitors/

***------------------------****-------------------------***

----------------- Partial Office for Sub-let --------------

Modern open-plan office used for incubating small international/start-up companies has a recently vacated space for a group of 3-5 people. Located just 200m from Roppongi Hills. JPY275,000 including furniture (desks and chairs), or JPY250,000 if you bring your own. Internet included on common (unsecure) connection. Separate charges for utilities, phones. Minimum 6-month contract. Deposit required. We can also supply bilingual (English-Japanese) back office services, such as HR and accounting, business mentoring, technology outsourcing, and other assistance as required.

For inquiries, contact terrie@lincmedia.co.jp
-----------------------------------------------------------

+++ NEWS

- Prospect of higher interest prompts re-financings
- International Accounting requirement put off
- Highly effective new malaria vaccine
- M&A by JP companies to continue
- Hideki Matsui to retire from big league

=> Prospect of higher interest prompts re-financings

Banks offering home loans are being inundated with home loan lenders seeking to refinance before interest rates go up much more. MUFJ has announced that it will raise mortgage rates in June, to reflect the higher interest rates the bank itself is paying. First to go up will be fixed-rate 5-year loans, which will increase from 1.05% annually to 1.2%. The 10-year rate went up recently, from 1.3% in December to 1.6% currently. About 46% of all home loans are variable rate loans, but as MUFJ has reported, over the last 12 months, 10-year fixed rate loans have doubled. (Source: TT commentary from e.nikkei.com, Jun 01, 2013)

http://e.nikkei.com/e/ac/tnks/Nni20130531D3Z05A02.htm

=> International Accounting requirement put off

Why are we not surprised? The Financial Services Agency (FSA) is apparently considering putting off the requirement for Japanese to move to international accounting standards (IFRS) for all Japanese listed companies. Originally the requirement to switch to IFRS was slated for 2011, starting with an initial wave of companies in 2010. However, to date, only 12 listed companies are using the international system, and so the FSA is likely to postpone mandatory usage of IFRS even beyond the current date of 2016. ***Ed: The reason given for the delay is the cost of conversion, however, we suspect that different treatment of amortization and other items are the real cause. With IFRS reporting standards, Japan might suddenly be looking at a lot more companies in trouble.** (Source: TT commentary from e.nikkei.com, May 28, 2013)

http://e.nikkei.com/e/ac/tnks/Nni20130528D2705A12.htm

=> Highly effective new malaria vaccine

Researchers at Osaka University have announced that they have developed a highly effective malaria vaccine, called BK-SE36, which protects up to 72% of those receiving it. The new vaccine comes from a genetically modified protein from the mosquito itself, and it has already undergone trials in Japan and northern Uganda. Malaria kills about 650,000 people a year, mostly kids under 5 on the African continent. ***Ed: Huge news if the vaccine turns out to be as effective as suggested. Another Nobel prize maybe?** (Source: TT commentary from geo.tv, Jun 01, 2013)

http://www.geo.tv/GeoDetail.aspx?ID=103385

=> M&A by JP companies to continue

The vice head of the Japan Bank for International Cooperation (JBIC), Hiroshi Watanabe, has said that he believes offshore M&A by Japanese companies will continue apace, despite the strong fall in the yen recently. He pointed out that Japanese companies still have strong opportunities to expand into SE Asia as well as buying profitable businesses in developed nations, and that the bank would be preparing additional credit lines for companies wanting to expand abroad. Japanese firms did US$112bn in M&A in 2012. (Source: TT commentary from bloomberg.com, May 31, 2013)

http://bloom.bg/10P9JYc

=> Hideki Matsui to retire from big league

Celebrated outfielder and batter, 39-year old Hideki Matsui has announced that he will retire from big league baseball this July. In what has to be an unusual arrangement, although he currently plays for the Tampa Bay Rays, he will be allowed to sign a one-day contract with the New York Yankees, so that he can officially retire as a Yankee. He played with the Yankees for 7 years under shirt number 55. His resignation comes as he is having a career slump with a batting average of just .147. ***Ed: The Japanese press say that he will return to Japan and start coaching with the Giants, whom he played with for 10 years.** (Source: TT commentary from france24.com, Jun 1, 2013)

http://f24.my/ZAQd6u

NOTE: Broken links
Some online news sources remove their articles after just a few days of posting them, thus breaking our links -- we apologize for the inconvenience.

***------------------------****-------------------------***

------ The Robert Grondine Memorial Scholarship Fund ------

In 2011, we lost a great friend and colleague, Bob Grondine. Bob made considerable contributions in Japan to the legal and business community as well as important civic and charitable efforts. Not only was Bob a wonderful friend, family man and mentor, he was also a role model as a leader in US-Japan relations.

Among a number of US-Japan causes, Bob was an important supporter and chair of the Japan Advisory Committee of the United States-Japan Bridging Foundation, an organization established to grow global leaders through a program providing scholarships to American college students to study in Japan. Students designated as Grondine Scholars will be selected for their ability to emulate Bob's intellect and spirit as well as his dedication to the US-Japan relationship. The fund will keep his mentoring spirit alive and memorialize his great legacy.

Donations of all amounts are welcome. To learn more, visit www.bridgingfoundation.org or click on the link below. Thank you.

https://donatenow.networkforgood.org/us-japanbridgingfoundation
-----------------------------------------------------------

+++ CANDIDATE ROUND UP/VACANCIES

=> BiOS, a leading bilingual IT services and resourcing company, is actively marketing the following positions for customers setting up or expanding in Japan, as well as other employers of bilinguals.

** HIGHLIGHTED POSITION

BiOS is urgently looking for an HR/Office Manager with experience in setting up organizational structures and regulations from back office perspective, at the client’s office in the Tokyo area. The candidate will be responsible for coordinating with Singapore and the US to set up and establish HR policies, process and procedures, as well as watching over the staff and coordinating with various HR and Finance related vendors while managing the day to day goings of the office. You will also be responsible for overseeing and managing all areas of HR and or outsource it to a third-party vendor while also managing those vendors.

Due to the technical nature and demanding work environment, this position is suitable for someone with solid experience in HR and office management in multinational corporate environment. In addition, since this role requires direct communication with bilingual staffs and clients in English and Japanese, fluent-level English and Japanese will be required.

Remuneration is JPY5.5m - JPY6.5m, depending on your experience and skill level.

** POSITIONS VACANT

- Field Support Engineer, global LCC firm, JPY 3.5M - JPY4.5M
- Corporate Assistant, BiOS, JPY3M - JPY3.5M
- Service Delivery Manager, global IT services provider, JPY5M - JPY7M
- Active Directory Engineer, Japanese IT services provider, JPY5.5M - JPY6.5M
- Desktop Support Engineer, global apparel firm, JPY4M - JPY5M

Interested individuals may e-mail resumes to: tomohiro.kimura@biosjp.com. Check out the BiOS web page for other jobs: www.biosjp.com/careers.php.

** BiOS Job Mail

Every 2 weeks BiOS sends out a regular communication to its job seeking candidates, called BiOS Job Mail. Every edition carries a list of BiOS’s current and most up-to-date vacancies, with featured entries containing a short job description and every job being linked to the main entry on the BiOS home page. Regardless of whether you are unemployed and searching, thinking about a career change, or just curious to know if there is something out there that might suit you better, the BiOS Job Mail newsletter is an easy and convenient way for you to stay informed. If you would like to register for the BiOS Job Mail, or to find out more, please email tomohiro.kimura@biosjp.com.
-----------------------------------------------------------

***------------------------****-------------------------***

+++ UPCOMING EVENTS/ANNOUNCEMENTS

------------------ ICA Event - June 20 --------------------
Speaker: Jean-Denis Marx , Lawyer for Baker & McKenzie

Title: "Practical Japanese Labor Law Guide for Employees"
Details: Complete event details at http://www.icajapan.jp/
Date: Thursday, June 20th, 2013
Time: 6:30 Doors open, Buffet Dinner included and cash bar
Cost: 4,000 yen (members), 6,000 yen (non-members)

Open to all. No sign ups at the door!!!!!!!
RSVP: RSVP by 5pm on Friday, June 14th. Venue is The Foreign Correspondents' Club of Japan.

http://www.fccj.or.jp/aboutus/map
-----------------------------------------------------------

------------- South Africa Food & Wine Week ---------------

The South African Embassy in collaboration with SA Tourism is organising South African Food and Wine Weeks in Osaka and Tokyo, in May and June respectively, to capitalise on the Official Working visit of our President, H.E. Mr Jacob Zuma to Japan, as well as attending the Tokyo International Conference on African Development (TICAD) V. The Food and Wine promotion weeks will be utilised to create awareness about South Africa’s culinary delights, concretise the friendship between the peoples of South Africa and Japan and, to establish South Africa as a preferred investment and holiday destination of choice.

The Promotional week in Osaka will be from 29 May to 03 June 2013 and the Promotional Week in Tokyo from 05 - 09 June 2013

Hospitality Partner in Japan: Hilton Hotels
Hospitality Partner in South Africa: TSOGO SUN Hotels (Executive Chef, Mr Lindsay Venn, and 2 other chefs from South Africa will visit Japan and cook authentic delicious culinary delights)

Airline Partners: South African Airlines (SAA) and All Nippon Airlines (ANA)
-----------------------------------------------------------

***------------------------****-------------------------***

+++ CORRECTIONS/FEEDBACK

In this section we run comments and corrections submitted by readers. We encourage you to spot our mistakes and amplify our points, by email, to editors@terrie.com.

=> In TT711 we covered a news item about doom and gloom visa vis Japan's ability to live past Abenomics. A reader makes a good point about how the writer of the doom and gloom piece is referencing the US experience rather than the Japanese one.

*** Reader:

I couldn't help myself from commenting on the "Demographics of Gloom" article you snipped. I have heard this guy talk a bit on the radio and he is always entertaining to listen to but I think he has missed the point on the Abenomics rally. (We all agree that the demographics issue is big/real.) It's just that the Japanese are not big owners of debt directly. So the only way the government could spread the pain around is to do it indirectly through deposits in banks and the post office. That means for a "great rotation" to be happening, the banks would have to be dumping bonds and buying equities on their depositors' behalf -- and that is not happening (and never will). Instead, the writer is describing what US investors would do and is getting confused.

To back up my gut reaction with data, I took a quick look and deposits in Japanese banks over the last three years. They have actually been increasing YoY in every quarter since Abenomics began. I must admit that surprised me, too. I'm sure a certain amount of that is cash that the corporates are depositing as they make record profits, but it is still a meaningful trend whereby the Japanese are still saving money and certainly not rapidly rotating from bank deposits/debt into the equity markets.

I know the article wasn't your "rant" but I figure that half of the fun in writing these is the responses you get occasionally!

***------------------------****-------------------------***

+++ TRAVEL DESTINATIONS PICKS

=> Mountain-sea views at Kamakura, Kanagawa-ken

The Kinubari-yama Course has a few fantastic view points, but is relatively unknown to foreigners. The starting point is the bus stop of Sugimoto-dera Temple. The first viewpoint is at the top of Kinubari-yama Hill. After a 30-minute walk along a mountain path, you’ll reach a nice residential district. Walking through it, soon you can see a sign saying “Panorama-dai”. The view from here is incredibly beautiful. Sagami Bay connecting to the Pacific Ocean, the hilly, green forms of Kamakura, and Mt. Fuji (if you are lucky) are all in your sight. Please get the course map before you start walking, because this course is a bit tricky.

http://en.japantourist.jp/photos/kamakura-kinubari-yama-hiking-cours

=> Cosplay at Yokogawa, Hiroshima

Yokogawa is an interesting town on the outskirts of Hiroshima city. A visit to this classic old-style town at any time of year is interesting. Especially if you are able to go during the Fushigi-ichi neighborhood festival in April, when you can also enjoy seeing local Cosplay- the performance art of wearing elaborate costumes to represent a favorite anime character. Many of these Cosplay performers spend countless hours in preparing the perfect look, and are happy to pose for photographs if you ask first. Whether you know any of the characters they represent or not, it is easy to appreciate their dedication and creativity.

http://en.japantourist.jp/photos/yokogawa-festival0

***------------------------****-------------------------***

***********************************************************
END

SUBSCRIBERS: 7,631 members as of June 02, 2013
(We purge our list regularly.)

+++ ABOUT US

STAFF
Written by: Terrie Lloyd (terrie.lloyd@japaninc.com)

HELP: E-mail Terrie-request@mailman.japaninc.com with the word 'help' in the subject or body (don't include the quotes), and you will get back a message with instructions.

FEEDBACK
Send letters (Feedback, Inquiries & Information) to the editor to terrie.lloyd@japaninc.com.

ADVERTISING INFORMATION
For more information on advertising in this newsletter, contact ads@japaninc.com.

SUBSCRIBE
Get Terrie's Take by giving your name and email address at http://www.japaninc.com/newsletters/free_sign_up, or go straight to Mailman at:
http://mailman.japaninc.com/mailman/listinfo/terrie

BACK ISSUES
http://www.japaninc.com/terries_take or, http://mailman.japaninc.com/pipermail/terrie/

Copyright 2013 Japan Inc. Communications Inc.

----------------- Japan Inc opens up Japan ----------------

J@pan Inc authoritatively chronicles business trends in Japan. Each posting brings you in-depth analysis of business, people and technology in the world's third largest economy.

Visit www.japaninc.com for the best business insight on Japan available.

______________________________________________

_______________________________________________
Terrie mailing list
Terrie@mailman.japaninc.com
http://mailman.japaninc.com/mailman/listinfo/terrie