Permalink : http://hdl.handle.net/2115/65930

The subject of this article is to examine the direct income compensation system from the viewpoint of production continuation and productivity improvement. The fixed payment part of the Farm Management Stabilization Program (FMSP) has had many problems. The fixed payment has inhibited productivity improvement. Because payments are based on past results they reinforce existing income disparities. Moreover, since the fixed payment program does not oblige the farmer to grow targeted crops, different crops are being produced, which runs counter the purpose of the subsidy and has therefore not been able to gain the support of those who bear the funding burden. The essence of the Individual-household Income Support System is to provide payments to cover shortfalls in farm income and is a return to the pre-2006 system. Although many of shortcomings of the FMSP have been resolved, there are problems. Many of the disbursements are fixed amount grants to paddy rice farmers and because of a shortage of funding resources the production reduction target for sugar beets has been reduced. A reduction of the financial burden will be necessary to bring about a national agreement on agriculture supports. Therefore, there are increasing demands for improvements in productivity to reconcile the interests of farmers with those who must ultimately foot the bill for this program.