Article – A Japanese Hamlet Is Now an Economics Lab

17 July 2014
Keiko Ujikane
Business Week
Tomiyoshi Kurogoushi sighs as he looks over the terraced rice fields that generations of his family tended in the mountains of central Japan. Most are now covered in weeds and grass. The area of land Kurogoushi still farms in Yabu, Hyogo prefecture, has shrunk to a small plot around his house where he and his wife, Yoko, grow potatoes, cabbages, and carrots to feed themselves and his mother. Rather than sow rice, the 66-year-old Kurogoushi works at a ski resort as a general manager.
“Farmland is deteriorating as people here are getting old,” says Kurogoushi, whose two daughters have married and moved away. “Even though we have the land for farming, we can’t really keep doing it. Paddy fields have to be tilled or they’ll be ruined.” The amount of abandoned arable land throughout Japan has almost doubled in the past 20 years.
Although many villages and towns in Japan are imperiled by these trends, Yabu has gotten a second chance. This sleepy community was thrust into the national spotlight in March when it was chosen by Prime Minister Shinzo Abe’s administration as a testing ground for economic policies to revive the nation’s declining provinces. Along with five other regions—the Tokyo area, the Kansai area, Fukuoka City, Niigata City, and Okinawa—Yabu, 600 kilometers (373 miles) west of Tokyo, was designated as a strategic special zone where the regulations and laws governing farming, commerce, and land can be loosened or removed to attract investment and workers. If these experiments succeed, they might be applied nationally.
Yabu is located in a little-known semi-mountainous region. It has a past that includes silk farming, tin mining, and rice growing—unlike the other five special zones, which are established centers of industry, agriculture, or tourism. “Now is the last chance to revive agriculture,” says Sakae Hirose, the mayor of Yabu. “In three to five years the old farmers will lay down their plows, the farmland will be left uncultivated, and Yabu will fall into decline. We have to create an environment where new entrants can easily come in.”

Kurogoushi, a part-time farmer, stands in his abandoned fields. Most of his land is left uncultivated. He works at a ski resort and tends a small plot.

PHOTO: Kurogoushi, a part-time farmer, stands in his abandoned fields. Most of his land is left uncultivated. He works at a ski resort and tends a small plot.

Emigration and a falling birthrate have hollowed out most provincial towns. By 2060 the government estimates 4 out of 10 people in Japan will be 65 or older, up from a quarter now. In Yabu it’s already a third, according to the 2010 census. Yabu’s selection as a special zone was prompted by the determination of Hirose to restructure farming practices and reverse the decline, says Heizo Takenaka, a professor at Keio University and a member of a central government council on the special zones.
The chief economic problem for Yabu is the snail’s pace at which farmland is bought and sold. A local committee of farmers regulates the purchase of land, but the process is so drawn out that outsiders shy away from investing in cropland. Hirose wants to transfer the power to authorize the sale and purchase of land to city hall. Also, companies that want to own farmland must set up special agricultural corporations subject to complex rules. Those rules may now be loosened.
If Yabu’s status as a special zone clears the way for change, the area’s farmers may discover a way to switch from rice to more profitable crops while adding food processing and packaging to generate more employment. “It’s a good thing that the name of Yabu has become known nationwide” as a special zone, says Yukio Umetani, 65, a full-time farmer who grows rice and a local pepper berry called Asakura sansho. Speaking of the changes afoot, he adds, “I’m all for it if new entrants work out well with local people.”
Fear of an influx of outsiders runs deep for locals such as Yasunari Uegaki. At 48, he’s one of Yabu’s younger farmers. He breeds Tajima cattle to produce Kobe beef and cultivates organic rice. Ducks that swim in his paddies are turned into smoked meat to sell online. “The city administration is too far ahead on the special zone and is leaving farmers behind,” Uegaki says. He adds that he worries that big companies may move in and out with little concern for local farmers’ interests.
Even before Yabu won its special status, one company had been using the town to test new farming methods. A unit of the real estate arm of Orix, a financial-services provider, converted an abandoned school gymnasium to grow lettuce under artificial light. Plant manager Hiroki Yoshida says he’s hired 14 locals and expects the special zone status to boost Yabu’s appeal as a place to do business.
Courtesy of Business Week

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