Production Structure and Productivity of Japanese Agriculture

The Japanese economy experienced rapid development during the mid-1950s through to the early -1970s, with a compound annual average growth rate of higher than ten per cent. Although the labor productivity of the agricultural sector increased fairly sharply, the non-agricultural sectors enjoyed much higher growth rates of labor productivity during the same period of time. This resulted in big income gaps between the agricultural and non-agricultural households. To reduce such income gaps between the two sectors, the Ministry of Agriculture, Forestry, and Fisheries (MAFF) enacted the Agricultural Basic Act in 1961 and started enforcing various policies for agriculture. These representative policy measures have been the output price-supports, in particular rice, the output-mix change, the set-asides, the input subsidies, and the research and extension (R&E) programs. In Volume 2 the (crops-livestock) multiple-product translog variable profit function is used to quantitatively investigate the impacts of the output price-supports, the set-asides, the input subsidies, and the R&E programs on the important economic indicators from 1965-97. The most important finding based on such quantitative analyses is that the agricultural policy measures introduced by the MAFF played a vital role in restricting land transfers from small- to large-scale farms for more efficient and productive farming on larger-scale farms contrary to expectations.