New Zealand’s decade-long struggle to secure a free-trade deal with Asia’s second-largest economy took a huge step forward last month when the 11 countries negotiating the TPP agreed to accept Japan into the talks.
But there is vehement opposition from Japanese farmers and the country’s politically influential agricultural lobbies, as well as parts of the government bureaucracy.
They fear such a deal will spell the end for tariff barriers, which shield local farmers from the full force of imported competition.
The country’s aging farming population faces an uncertain future even if Japan doesn’t sign up to the deal.
Domestic demand is in slow decline and is forecast to contract further as the country’s population falls from 127 million now to 86m by 2060.
But an Auckland University study, paid for by Fonterra, argues the TPP could be the saviour for Japanese agriculture.
Academics Hugh Whittaker, Robert Scollay, and John Gilbert have modelled the effects of tariffs being scrapped over the 7-10 years envisaged by the countries negotiating the TPP.
They forecast increased farm production of $US4 billion as the country’s most efficient farmers respond to increased consumer demand stoked by falling prices for food and animal feed.
Production of vegetables, oil seed crops, and animal feed increase, although dairy, beef and rice fall.
Output from food-processing companies rises $US6 billion, with the authors predicting increased imports of raw materials for further processing and export as a result of the eventual elimination of tariffs.
The study’s findings contrast to those from the Japanese Ministry of Agriculture, Forestry and Fisheries (MAFF), which estimates bigger declines in dairy, rice, and beef and smaller gains for other sectors.
Those behind the Auckland study say they have incorporated new assumptions, including Japanese consumers’ preference for locally produced food.
It also points to claims MAFF is one part of an “iron triangle” in the country with a vested interest in maintaining the current system of protectionist policies.
Fonterra’s director of policy and advocacy Sarah Patterson said the study countered claims Japan’s involvement in the TPP would be a disaster for its farmers and food-processing companies.
She hoped the analysis would be useful for NZ’s negotiators in achieving an ambitious outcome from the talks, which are scheduled to wrap up later this year.
Some estimates suggest signing Japan up to the TPP could be worth up to a $1b to NZ agriculture by 2025.
Related story: TPP could revitalise Japan’s agriculture sector