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On Japan’s farms, a weakening yen is adding to slow-burning discontent

YAMAGATA, Japan, June 27 (Reuters) – Japanese farmer Kiyoharu Hirao has started adding more rice to the mix he gives to his cattle to further stretch his money as a falling yen lowers the cost of imported corn, the used as animal feed.

That makes him concerned about the quality of his prized Wagyu beef and, along with several other farmers facing similar hardships across the country, angry at the ruling Liberal Democratic Party (LDP), which once held an almost steadfast grip on rural Japan .

“I don’t know how much more people can take, myself included, as the prices of feed and other products keep going up,” 73-year-old Hirao told Reuters at his farm on the outskirts of the city of Yamagata, while classical music pours in from speakers his barn. For years he has used music to calm the cows and ensure tender meat. Now he fears the rice is damaging their gut bacteria.

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The yen’s fall to more than two-decade lows this year has hit Japan’s farmers hard, making the already high cost of imported feed, fuel and fertilizer even more difficult to pay for. Some, like Hirao, are cutting costs or taking out loans. Some are talking about giving up farming altogether.

The situation has added to the quiet discontent in Hirao’s Yamagata Prefecture, a mainly agricultural region some 400 km (250 miles) north of Tokyo known for rice, beef and cherries.

Reuters spoke to two dozen farmers, officials and policy experts across Japan, including a dozen farmers in Yamagata, at least ten of whom described their dissatisfaction there or in other farming regions, exposing cracks in the LDP’s rural base.

Polls show Prime Minister Fumio Kishida is expected to lead the LDP to victory in the July 10 upper house election, but the combined impact of inflation and a weaker yen could cost him key rural votes and weaken his grip on the recalcitrant party.

Once a staunch LDP supporter, Hirao said he had begun to quit the party because he felt it was not serving the peasants enough. His opposition hardened under former Prime Minister Shinzo Abe, who championed free trade and unleashed monetary stimulus to end deflation and raise wages. In the coming elections, he tends more towards the incumbent candidate, who comes from the opposition.

Prices are rising now, but wages have not moved in decades. The Bank of Japan, run by an Abe envoy, maintains ultra-low interest rates, although raising interest rates tends to increase the value of a country’s currency.

“It’s just low interest rates and more low interest rates and we kind of get by with it, but eventually the younger generations get stuck with the burden,” Hirao said. “I hate all the people Abe appointed. None of them are good.”

About 1.3 million people, less than 2% of the labor force, work mainly in agriculture in Japan. Still, farmers are a powerful political force because the electoral system disproportionately favors rural voters and because the agri-cooperatives known collectively as the JA Group form a powerful lobby.

Some farmers in Yamagata told Reuters they felt betrayed by the LDP because over the past decade it has prioritized free trade over farmers, scaled back support measures and opened up the Japanese market more to foreign competition. They want to return to the days of strong state support and a more protectionist stance, which were a pillar of LDP policy for decades but have now been partially dismantled.

To win back such disaffected rural voters, the LDP will be forced to deliver more for farmers, said Kazuhito Yamashita, a former agriculture ministry bureaucrat and now research director at the Canon Institute for Global Studies think tank.

“As fertilizer, pesticide and fuel prices rise, farmers will earn less and become increasingly dissatisfied. Their support for the LDP will gradually wane,” he said. “The LDP doesn’t want to make an enemy of the farm lobby, so in terms of elections they will have no choice but to support the policies that the farm lobby want.”

In response to questions from Reuters, a spokesman for the LDP did not directly address the issue of farmers’ support for the party. The spokesman said the LDP is working to ensure that all citizens understand its policies, not just those working in agriculture, referring Reuters to its election manifesto, which includes a promise to look at the impact of higher fuel, feed and fertilizer prices to mitigate without giving further details.

“The rise in energy and commodity prices is worrying,” Toshiaki Endo, chairman of the LDP’s election strategy committee and a representative of Yamagata’s lower house, told party supporters in April. “We have an extremely tough fight ahead of us.”

Public support for Kishida recently fell to a four-month low of 48.7% and more than 54% disapprove of his handling of inflation, a Jiji Press poll showed this month.

“MAXIMUM RESPONSIBILITY”

Abe’s acceptance in 2013 of a landmark trans-Pacific trade deal that Japan formally signed five years later damaged support for the LDP in the rice-growing region in the north, farmers and analysts said. Yamagata is one of the few prefectures that does not have LDP MPs in the upper house, although all three of their lower house representatives are from the party.

“Farmers and farming groups have traditionally been strong supporters of the ruling party. But in the last 10 years, there are more people who think that relying only on the LDP is not good,” said Toshihiro Ooyama, a 12th-generation farmer who heads the agricultural cooperative in the city of Yamagata .

The cooperatives champion their members and invest farmers’ savings through Norinchukin Bank, which has assets of $756 billion and is a major player in global financial markets.

JA Group declined to comment on farmers’ support for the LDP. Rising costs for fuel, raw materials and animal feed would cause “increasing concern” among agricultural producers. It referred Reuters to a seven-page policy proposal released last month that called for measures to ease the burden on farmers, including government support to expand domestic production of crops used as animal feed.

Japan has reduced support for agriculture in recent decades, yet 41% of farmers’ income still comes from government subsidies, more than double the average for wealthy nations in the OECD group. According to the OECD, between 2018 and 2020, Japanese farmers charged 60% more than international market levels for their produce.

Some economists say aging Japan can no longer afford to provide farmers with full support. But without that support, the LDP could lose control of a key constituency.

“The LDP will only hit a wall in Yamagata” if it stops helping farmers, said 57-year-old Kazuharu Igarashi.

At his pigsty in Tsuruoka, near the Sea of ​​Japan, he too adds rice to animal feed and is concerned his pork will be drier. So far, he said, customers have not noticed. About 80% of its 10 million yen ($75,000) monthly earnings now go into animal feed, which is above its breakeven point of about 60%. He said he took out a loan from a prefectural emergency fund but was concerned other farmers would not survive financially.

Like Hirao, he said he is leaning towards incumbent candidate Yasue Funayama of the centrist Democratic Party for the People in the upcoming elections. As a former official at the Ministry of Agriculture, she advocates guaranteed minimum incomes based on the European model for rice farmers.

“The government says rice is at the heart of our culture and people’s staple food, but production has been liberalized,” Funayama told Reuters in an interview at its Tokyo office. “The government has given up its greatest responsibility.”

Given Funayama’s popularity, the LDP considered not running a candidate against her, a person familiar with the party’s mindset told Reuters. She named just one, about six weeks before the July 10 vote. The LDP declined to comment on whether it had considered not running a candidate in the upcoming Yamagata elections.

Of course there can be many issues affecting how farmers vote, given that 70% of them are aged 65 or over.

“There are so many disparities among the farming community,” said Kay Shimizu, a research assistant professor of political science at the University of Pittsburgh who co-authored a book on Japanese agriculture and JA cooperatives.

“On the one hand, they have an interest in their well-being, in their livelihood, in farming, but they also have other interests. Many of them are much older, they have social concerns.”

Kazuyuki Oshino, a rice farmer in central Yamagata, said he was asked by three different farmers to take over management of their paddy fields because of rising costs.

“If conditions continue as they have been, it will be difficult,” he said. “So they quit.”

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Reporting by Daniel Leussink in Yamagata Additional reporting by Sakura Murakami and Yoshifumi Takemoto in Tokyo Editing by David Dolan and Bill Rigby

Our standards: The Thomson Reuters Trust Principles.

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