Tuesday, November 26, 2013

Free trade lives!...

I think this development in Japan is a pretty good indicator that agriculture has lost its untouchable status in global trade policy. 
Japan and 11 other nations including the U.S., Australia and Vietnam are in talks for the TPP. The U.S. and Australia are ranked first and seventh for coarse-grain exports while Vietnam is the second-largest rice shipper, U.S. Department of Agriculture data show.The Agriculture Ministry will halve gentan subsidies starting in the fiscal year from April 1, 2014, and end all payments by March 31, 2019, said Takashi Amou, a director of the policy planning division. Farmers who grow rice for livestock feed will receive subsidies that increase by as much as 31 percent under the changes announced today, according to Amou.“Ending the gentan policy is a first step in making Japanese rice farming efficient,” said Takaki Shigemoto, a commodity analyst at research company JSC Corp. in Tokyo. “The government has more to do if it wants Japanese farmers to be competitive against agricultural exporting countries.”Wholesale prices of the locally grown cereal averaged 276 yen a kilogram in the nine months through May, compared with 181 yen paid for milled short-grain rice from the U.S. and 152 yen for the same variety from Australia in import tenders last month. These prices included shipping and inspection costs. [More]

The Japanese defense of rice farmers was formerly considered rock-solid, but perhaps the combination of elderly farmers and pressure from manufacturers desperate for a stronger economy prompted the government to re-rank priorities. 

While as the numbers above indicate, it may not help US producers directly - we're still too expensive - it does make the international rice market a little more open, and could trigger more countries to rethink protectionist barriers.

All in all, while the economic outlook seems to be overcast by gloom, trade talks around the world are grinding out grudging reform toward freer trade. Maybe it is the dire forecasts that are propelling it, but for whatever reason, agreements are inching forward.

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