FY2011 Annual Report on Food, Agriculture and Rural Areas in Japan. Summary

FY211 Annual Report on Food, Agriculture and Rural Areas in Japan Summary Ministry of Agriculture, Forestry and Fisheries Japan, 212

The FY211 Annual Report on food, agriculture and rural areas in Japan is based on Items 1 and 2 of Article 14 of the Food, Agriculture and Rural Areas Basic Act (Law no. 16 for 1999).

Contents FY211 Annual Report on Food, Agriculture and Rural Areas in Japan Foreword 1 Special Topic: A year of reconstruction from the Great East Japan Earthquake -- Towards reconstruction steps -- 2 Chapter 1: Improving Japan's food self-sufficiency ratio 7 Chapter 2: Securing stable food supply 1 Chapter 3: Sustainable development of agriculture 15 Chapter 4: Promoting and revitalization of rural areas 25 Summary of FY212 Measures for Food, Agriculture and Rural Areas 28 Definitions 29

Acronyms and abbreviations ASEAN APTER DI GAP HACCP JAS JFC MAFF TEPCO Association of Southeast Asian Nations ASEAN Plus Three Emergency Rice Reserve Diffusion Index Good Agricultural Practice Hazard Analysis and Critical Control Point Japan Agricultural Standards Japan Finance Corporation Ministry of Agriculture, Forestry and Fisheries Tokyo Electric Power Company Symbols ha kl a kg t Hectare Kilolitre Are Kilogram tons

Foreword The Annual Report on Food, Agriculture and Rural Areas in Japan is submitted to the Diet every year under the Food, Agriculture and Rural Areas Basic Act. At present, the restoration and reconstruction from the Great East Japan Earthquake are the top priorities for the government. Most of the disaster-damaged areas are rural. It is important for Japan to restore and reconstruct the disaster-damaged areas, including the Tohoku region, one of Japan s leading food supply bases, as soon as possible. In addition to earthquake and tsunami damage, the disaster triggered a nuclear power plant accident that brought the unprecedented havoc of massive radioactive contamination. Particularly, Fukushima Prefecture was seriously damaged. Prompt and thorough responses are required for the damage. Given such a situation, this report begins with a special topic titled A year of reconstruction from the Great East Japan Earthquake -- Towards reconstruction steps, describing a wide range of problems from the impacts of the earthquake-tsunami disaster and the nuclear plant accident on agriculture to changes in consumer sentiment, food industry trends and the disaster-damaged areas agriculture restoration and reconstruction efforts. Through interviews with disaster-affected farmers and persons engaged in food industry, we have tried to grasp and convey the real conditions of the disaster-damaged areas. FY211 was the second year for the Basic Plan for Food, Agriculture and Rural Areas, which was reformed in March 21. The basic plan positioned the food, agriculture and rural area policy as one of Japan s national strategies to make a major policy shift and create the society where agriculture and rural areas are supported by every citizen, based on the following background: (1) The food supply-demand balance has grown tighter due to increasing resource and food consumption accompanying the population and economic growth in developing countries and due to the diversification of the uses of farm products as indicated by expanding biofuel production. Even in the face of these changes, Japan s agriculture has failed to fully meet consumer and food industry needs, and the food self-sufficiency ratio has worsened. (2) As Japan s economic society has matured and citizens values and lifestyles have diversified, rural area agriculture s multifunctional roles, including water recharging and contribution to national land conservation, have become important. (3) On the other hand, agriculture and rural areas face tough conditions including a substantial decline in agricultural income and serious shortages of motivated farmers. The basic plan puts forward three agriculture policy principles backing farmers by introducing the Income Support Direct Payment Program for Farmers, switching to a production system to meet consumer needs including high quality, and safety and consumer confidence, and reviving vigorous rural areas through collaboration between primary, secondary and tertiary industries. Based on these principles, it calls for implementing various measures integrally and steadily. It aims to increase Japan s food self-sufficiency ratio to 5% on a calorie supply basis (7% on a production value basis) in FY22 on the precondition of stakeholders maximum efforts to overcome challenges. Given that two years have passed since the Basic Plan for Food, Agriculture and Rural Areas was reformed, this report verifies degrees of achievement for major policy measures provided by the basic plan. Based on the verification, this report describes efforts and their achievements over the past two years as specifically as possible. The great earthquake-tsunami disaster has prompted citizens to once again recognize the food-supplying agriculture-forestry-fisheries sector as being very significant to their lives. We hope that this report will help citizens deepen their interest in and understanding of food, agriculture and rural areas. 1

[Special Topic] A year of reconstruction from the Great East Japan Earthquake -- Towards reconstruction steps -- (1) Earthquake-tsunami disaster s damage to agriculture-forestry-fisheries sector and impact on the food industry, etc. The Great East Japan Earthquake caused a staggering 2,426.8 billion yen in damage to the agriculture-forestry-fisheries sector (including 947.6 billion yen for agriculture sector), some 18 times as large as the 133 billion yen for the Niigata Chuetsu Earthquake and about 27 times as large as the 9 billion yen for the Great Hanshin/Awaji Earthquake. Section Agricultural land, facilities,etc. Agricultural crops, etc. Total Main damage (Damage to Agriculture sector (as of March 5, 212)) Total number of damage Amount of damage (1 million yen) Main disaster area (Prefecture) Damaged agricultural land 18,174 areas 4,6 Aomori, Iwate, Miyagi, Akita, Yamagata, Fukushima, Ibaraki, Tochigi, Gunma, Saitama, Chiba, Kanagawa, Damaged agriculture facility,etc. 17,52 points 4,835 Nagano, Shizuoka, and Niigata Subtotal 35,676 points 8,841 Agricultural crops, livestock, etc. Agricultural livestock production facilities, etc. Subtotal 635 142 Aomori, Iwate, Miyagi, Akita, Yamagata, Fukushima, Ibaraki, Tochigi, Gunma, Chiba, Yamanashi, Nagano, 493 and Niigata (ha) Prefecture Cultivated Estimated area of farmlands washed Share for Breakdown by category away or flooded by tsunami area (21) damaged area Paddy fields Upland fields Aomori 156,8 79.1 76 3 Iwate 153,9 1,838 1.2 1,172 666 Miyagi 136,3 15,2 11. 12,685 2,317 Fukushima 149,9 5,923 4. 5,588 335 Ibaraki 175,2 531.3 525 6 Chiba 128,8 227.2 15 122 Total 9,9 23,6 2.6 2,151 3,449 9,476 (Estimated area of farmlands washed away or flooded by tsunami (March 211)) A drainage pumping station crippled by tsunami waves (Natori City, Miyagi Prefecture) Farmlands that were washed away or flooded by the tsunami are estimated to include 2,2 hectares in paddy fields and 3,4 hectares in upland fields. The three Tohoku prefectures of Iwate, Miyagi and Fukushima account for most of the damaged farmlands. Sources: MAFF (Earthquake-tsunami disaster s effects on food industry (January 212)) Farmland flooded by the tsunami and buried in rubble (Natori City, Miyagi Prefecture) The food industry was seriously affected by production drops, business suspensions, distribution ruptures, etc. due to damaged plants, rolling blackouts, packaging material production shortages, gasoline shortfalls, etc. Still affected at present Affected Unaffected at present Unaffected Unknown Japan 35.2 35.8 22.5 6.5 Hokkaido 35.2 34. 24.7 6.2 Tohoku (entire) 47.9 34.6 13.6 3.9 Tohoku (Iwate, Miyagi, Fukushima) 63.9 28.6 7.6 Tohoku (excluding Iwate, Miyagi, Fukushima) 34.1 39.9 18.8 7.2 Northern Kanto 56. 28.6 1.1 5.4 Southern Kanto 42. 4.3 15.9 1.7 Koshinetsu/Hokuriku 32.2 38.5 23.4 5.9 Tokai 3.6 41.7 19.1 8.5 Kinki 32.9 35.2 24.1 7.8 Chugoku 21.2 36.7 31.8 1.2 Shikoku 27.3 34.7 29.8 8.3 Kyushu 29. 3. 32.9 8.1 % 1 2 3 4 5 6 7 8 9 1 Sources: JFC Survey on Movement of the Food Industry in the Second Half of FY 211 (March 212) 2

(2) Emergency responses to the earthquake-tsunami disaster, and restoration/reconstruction efforts While it was very difficult to secure food and drink in the disaster-damaged areas, the MAFF food procurement team procured food and other goods by requesting support from food makers and others. Agriculture cooperative organizations, private companies and others provided food and other goods in their emergency response to the disaster. MAFF implemented the following emergency measures for the agriculture and food industries: 1) Restoration of ffarmlands, agricultural lfacilities, i etc. (emergency measures for drainage pumping stations and other facilities, creation of a mechanism for central and prefectural governments to implement salt removal, farmland restoration and other measures on behalf of municipal governments, etc.) 2) Restoration of means of production and distribution functions (restoration of agricultural production facilities, support for restoration of wholesale markets, etc.) 3) Support for business continuation and resumption (financial aid to collaborative groups for regional agricultural recovery in disaster-damaged areas, Japan Finance Corporation's disaster recovery loans with zero-real-interest, etc.) MAFF and the Tohoku Regional Agricultural l Administration i ti Office formed local l support teams to help resume farming in disaster-damaged areas as widely as possible (Goods procured by food procurement team, etc.) Period Aid goods Procurement volume Food 25.84 million packs March 11- Formula milk for infants 53 thousand cans April 2 7.62 million bottles Drinks (3.81 million liters) March 17- Fuel oil 8 kiloliters April 6 Diesel oil 42 kiloliters March 17- Charcoal 26 tons April 6 Braziers 1,3 sets March 17-29 Wood stoves burners 113 units completion/farming resumption Seawater-damaged farmland Flooding for removing salt Salt removal (Salt removal procedures) Constructing temporary diversion canals or creasing channels Reverse plowing/soil crushing (Wholesale market restoration: Iwaki City Central Wholesale Market) Pouring lime soil conditioner Mole draining March 12: A slope collapsed just June 21: Filling cracks in September 2: Laying blue sheets after the earthquake. emergency slope restoration in emergency slope restoration On August 26, MAFF published the Basic Guidelines for Reconstruction of Agriculture and Rural Communities after the Great East Japan Earthquake (revised on November 21), specifying a farmland restoration schedule (restoration within about three years) and measures required for the restoration. On December 7, 211, the Law for Special Zone for Reconstruction (special reconstruction zone system) was enacted, providing for special regulation and procedural measures for special reconstruction zones where farmlands and residential lands can be reconstructed integrally. (Area of tsunami-damaged farmlands available for farming resumption) Prefecture Farming resumed in FY211 Farming to be resumed in FY212 Farming to be resumed in FY213 Farming to be resumed in FY214 Others (Unit: hectares) Total Iwate 1 31 3 38 73 Miyagi 1,22 5,39 5,45 1,97 31 14,34 Fukushima 6 61 2,67 2,12 5,46 Total 1,29 6,31 5,48 4,64 2,81 2,53 Share 4% 26% 22% 13% 1% Aomori, Ibaraki, 81 14 95 Chiba (Special measures for land-use realignment in tsunamidamaged areas) Easing approval standards under the Agricultural Land Act and other laws One-stop procedure for zoning, approval and project planning *Image of land-use realignment 3 Before reconstruction project implementation Devastating damage Residential lands and farmlands are mixed. [Concentrating ti houses in safe zones] Residential lands After reconstruction project implementation [Realigning land uses] Farmlands

(3) FY 211 agriculture conditions in disaster-damaged areas Salt removal has been completed or launched for 39% (8,31 hectares) of tsunami-damaged farmlands (at the end of March 212). Of tsunami-damaged farms, 4% (about 4,9 farms) have resumed farming (as of March 11, 212). Farming resumption has been supported by various parties including local governments, agricultural cooperatives, private companies and volunteers. (Agriculture restoration conditions after the Great East Japan Earthquake) (%) Item Damage Progress in restoration Notes Farmlands Farms Major drainage pumping stations Coastal farmlands Rural community sewerage Tsunami-damaged farmlands in six prefectures (Aomori, Iwate, Miyagi, Fukushima, Ibaraki and Chiba): 21,48 hectares Tsunami-damage farms (in six prefectures: Aomori, Iwate, Miyagi, Fukushima, Ibaraki and Chiba): about 1,2 farms Major drainage pumping stations available for provisional restoration in three Tohoku prefectures: 72 points Priority restoration zones with considerations given to importance of hinterlands: 7.3 kilometers Number of disaster-affected districts in 11 disasterdamaged prefectures from Aomori to Nagano:42districts i t 2 4 6 8 (About 4,9 farms have resumed farming.) 1 Salt removal has been completed or launched for 39% (8,31 hectares) of tsunami-damaged farmlands (at the end of March 212). About 4,9 farms that have resumed farming include those that have resumed part of agricultural production operations or started preparations for them (as of March 11, 212). (Emergency response measures taken for 72 points) (Emergency response measures taken for 7.3 kilometers) (Restoration has been completed or launched for 37 districts (at the end of March 212) *As for tsunami-damaged farmlands, the Basic Guidelines for Reconstruction of Agriculture and Rural Communities after the Great East Japan Earthquake target complete restoration in about three years and resumption of farming by FY214. (4) The Great East Japan Earthquake s impact on citizens consciousness The earthquake-tsunami disaster prompted consumers to strongly recognize the importance of stable food supply arrangements. Of consumers, 7% recognize the need for food storage. The disaster prompted 3% of consumers to recognize this need. (Measures considered to be required for stable food supply) The agriculture-forestry-fisheries sector should be promoted to enhance food production capacity Infrastructure including roads, waterworks, electric grids and gas tubes should be enhanced Food wholesalers and retailers should secure emergency transportation routes. The food processers should build arrangements to expand production in emergencies Food wholesalers and retailers should secure sufficient inventories Japan should secure food inventories through imports The food service enterprises should secure sufficient food materials for emergency Others Nothing 62. 61.8 62.2 6.6 63.7 55.8 44.6 44.3 45.1 37.9 4.4 34.1 14.6 16.3 12. 11.6 12.1 1.8 Nationwide 7.1 8.3 Eastern Japan 5.3 Western Japan 1.3 1.1 1.4 76.1 75.2 77.5 2 4 6 8 (Changes in consciousness about need for food storage after earthquake-tsunami disaster) I have become conscious of need Nationwide Eastern Japan Western Japan I have remained conscious with need I have not been conscious with need 34.3 34.5 11.7 18.7 I have become unconsciouswith need 29.4 37.3 32.6 35.6 13.8 1.4 I don't know (neither) 15.9 23.1 % 2 4 6 8 1 Source:MAFF, Survey on Consciousness and Intentions about Food, Agriculture and Rural Areas, and Fisheries and Fishery Products (Conducted in January-February 212) Source:JFC, 1st Consumer Trend Survey in FY211 (July 211) 4

(5) The Effect of the accident at the Fukushima Daiichi Nuclear Power Plant of the Tokyo Electric Power Company (TEPCO) on agriculture and action taken by government responses Since just after the accident, MAFF has implemented the following measures to stably provide citizens with safe food. 1) Providing advice on creation of food inspection plans and supporting inspection equipment installations in relevant prefectures (since just after the accident) 2) Implementing technical guidance regarding feeding and management of livestock (March 19, 211) 3) Setting provisional tolerable levels for forage for producing milk and beef below the provisional regulation value for food (April 14, 211) 4) Implementing demonstration tests regarding radioactive decontamination of farmlands. Conducting radioactive decontamination of farmlands with new technologies to work out a practical operation manual (Since May 28, 211) 5) Implementing measures to reduce radiation levels through cultivation technology improvements and prevent crops from absorbing radioactive materials (since June 29, 211) 6) Implementing measures to ensure consumers confidence in safety of beef, including purchases of distribution beef inventories suspected of being from cattle given radiation-contaminated rice straw (July 26 and August 5, 211) 7) Setting provisional tolerable levels for fertilizers and feed for preventing radioactive contamination of farmland soil from expanding and for producing agricultural and animal products below the provisional regulation value for food (August 1,211) 8) Releasing a farmland soil radiation level map (August 3, 211). Updating the map to cover a wider scope and more details (March 23, 212) 9) Supporting emergency radiation inspections for rice in Fukushima Prefecture and conducting an analysis of factors behind radioactive contamination, after detection of rice over the regulation level (November 211). Implementing restrictions on rice planting for 212 based on the analysis (releasing a relevant policy on February 28, 212). 1) Revising provisional tolerable levels for producing animal and fishery products below the standards limits for radionuclides in foods (February 3 and March 23, 212) On August 5, 211, the government released interim guidelines for determining nuclear losses. On September 12, it established the Nuclear Damage Liability Facilitation Fund to support nuclear damages payments. By March 212, agricultural damages payments regarding the nuclear disaster totaled about 16.2 billion yen. (Farmland soil radiation level map (as of (Radioactive decontamination technologies according to radioactive cesium density levels in soil) Legend Farmlands Radioactive cesium levels of farmland soil at observation points (Bq/kg)*. *Considering churning of soil through plowing and depths of crop plant roots, we collected soil at the depth of about 15 centimeters from the surface for paddy fields and at the depth of up to 3 centimeters for upland fields and measured radioactive cesium density levels in the soil samples. Evacuation advisory and other designated zones March 23, 212)) Radioactive cesium density levels in soil 5, Bq/kg 5, 1, Bq/kg 1, 25, Bq/kg 25, Bq/kg Technologies for application Inventing plowing, radiation transfer reduction cultivation, topsoil removal (unplowed land) Top soil removal, inverting plowing, padding with water Topsoil removal Using soil hardner for topsoil removal Inverting plowing Padding with water 5 Basic topsoil removal Using soil hardener for topsoil removal

Radioactive cesium reduction in tea leaves Pruning (deep skiffing and medium level cutting) covering leave layers At non-pruned tea fields, branches are pruned to increase leaves for cutting. (Technologies to reduce radioactive materials in farm crops) Orchard decontamination methods Removal of rough bark The measure is applied for apple, pear and other fruit trees with rough bark. Older bark is removed. Underground part Harvest Deep skiffing Medium Near root level cutting cutting of tea trees High pressure washing The measure is applied for peach and other fruit trees having no rough bark. Radioactive cesium on the tree surface is washed away. Consumers tended to refrain from buying farm, livestock and other food products produced in areas where the effect of the accident at the Fukushima Daiichi nuclear power plant of TEPCO was feared. Due to foreign countries import controls, the value of Japan s farm and livestock product exports declined substantially, including those to China and other Asian countries. (Exports in the April-December 211 period plunged by 4.9 billion yen or 11.% from the year before.) The Minister of Agriculture, Forestry and Fisheries and other government officials made direct appeals to ministers and government officials of foreign countries and regions in a bid to recover confidence in Japanese farm, forestry and fisheries products and food. Such efforts brought about some achievements including Hong Kong s response that it would ease import restrictions based on scientific grounds. (Effects of TEPCO nuclear plant accident (multiple answers)) (Farmers) (Food industry personnel) Extra costs emerged for radiation tests and various certificates as requested tdby trading partners. 11.6 Entire Japan 2.3 Tohoku (excluding Fukushima Pref.) 41.11 Fukushima Pref. 17.4 Kanto/Tosan Extra costs emerged for radiation tests and various certificates as requested by trading partners. 23.3 Entire Japan 39. Tohoku (excluding Fukushima Pref.) 52.4 Fukushima Pref. 28.3 Kanto/Tosan 34.1 37.8 Sales slackened because consumers tended to refrain from buying food products 41. 78.6 Sales slackened because consumers tended to refrain from buying food products 43.9 81. 51.9 56.3 Income declined due to the abandonment of farm products and the relinquishment of manufacturing and production due to foreign countries' import controls and trading partners' refusal to import Japanese products 3. 4.1 8.9 We switched from agriculture, forestry and fisheries products in areas with radioactive contamination fears to those in other areas (in Japan) for our purchasing. 3.7 4.8 % % 2 4 6 8 2 4 6 8 1, Survey on Consciousness and Intentions about Food, Agriculture and Rural Areas and Fisheries and Fishery Products (Conducted in January-February 212) While one year passed after the Great East Japan Earthquake, various parties made restoration and reconstruction efforts. Nevertheless, restoration and reconstruction efforts for food, agriculture and rural areas for the earthquake-tsunami disaster and the nuclear plant accident are a top priority. In this respect, we must give consideration particularly to the feelings of people who have been forced by the accident at the Fukushima Daiichi nuclear power plant of TEPCO to give up using their farmlands that they had cultivated over a long period of time. At the same time, we must communicate information based on scientific basis in order to protect food safety from the effect of the accident at the Fukushima Daiichi nuclear power plant of TEPCO. Regarding communications, it is important to make sure that agriculture-forestry-fisheries sector people and other stakeholders are fully aware of relevant policy measures. Officials at regional agricultural administration and forest offices and relevant independent administrative organizations as well as MAFF must visit disaster-damaged areas frequently for this purpose. We should accurately address immediate challenges for food, agriculture and rural areas and proceed with systematic efforts while considering future prospects. 6 3.9 3.5 57.1

Chapter 1: Improving Japan s food self-sufficiency ratio (1) Food self-sufficiency ratio trends [Direction of policy measures as indicated by the Basic Plan for Food, Agriculture and Rural Areas (hereinafter, the basic plan )] - Raising the FY22 food self-sufficiency ratio to 5% on a calorie supply basis (7% on a production value basis) on the precondition of stakeholders maximum efforts to overcome challenges - Setting challenges and quantitative production targets for major products The food self-sufficiency ratio on a calorie supply basis declined by 2 percentage points from 41% in FY28 to 39% in FY21. The food self-sufficiency ratio on a production value basis rose by 4 percentage points from 65% in FY28 to 69% in FY21. The decline in the ratio on a calorie supply basis is attributable to a drop in production of wheat, sugar plants (sugar beet and sugarcane) and tubers (potato and sweet potatoes) under abnormal weather conditions. (Japan s food self-sufficiency ratio trends) (Unit: %) FY28 FY29 FY21 Calorie supply basis 41 4 39 Production value basis 65 7 69 (Product-by-product contributions to food self-sufficiency ratio changes on a calorie supply basis (FY28-21)) Contributions to food self-sufficiency ratio changes (points) 1.. -1. Total, Food Balance Sheet Rice Wheat Soybean Vegetables Fruits.4-1. Livestock products -.1 -.1 -.1 -.2 Fish products Sugar plants Fasts Tubers, etc. -2. -3. -2.4 FY29-1.2 -.2 -.6 -.1.... -.4.3 -.1 FY21-1.2.6 -.3. -.1 -.1 -.1 -.1 -.6 -.1 -.3 (2) Food self-sufficiency ratio improvement efforts [Direction of policy measures as indicated by the basic plan] - A quantitative production target is set at 5, tons for rice for flour and 7, tons for rice for feed. To achieve these targets, such challenges as building a stable supply system and diffusing high-yielding cultivars to improve yields must be solved. -.2 -.9.1 -.4 In response to the introduction of the Income Support Direct Payment Program for Farmers, production in FY211 expanded 4-fold from FY28 for rice for flour and 2-fold for rice for feed. 5 1, tons (Changes in production of rice for flour and feed) (Rice for flour) (Rice for feed) 4 4. 2 1, tons 18.3 3 2.8 15 2 1.3 1 8.1 1 5.1 2.3.8 FY28 FY29 FY21 FY211 28 29 21 211, Certification of Plans for New-use Rice 7

Mizuhochikara, a high-yielding rice cultivar suitable for rice-based bread, has been developed along with Momiroman and Hokuriku 193, high-yielding rice cultivars suitable for feed rice and WCS (Whole Crop Silage) rice. Expectations are high for their future diffusion. (Baking property of Mizuhochikara rice cultivar for rice flour) (Unit yields of high-yield rice cultivars for feed) 1 kg/1a 823 78 (Reference) 8 663 654 6 4 2 Volume ratio: 4.2 Volume ratio: 3.7 Mizuhochikara Akimasari as a staple rice cultivar Note:The volume ratio is the ratio of bread volume to dough volume. A larger ratio indicates a lighter texture. [Direction of policy measures as indicated by the basic plan] - The wheat production volume target is set at 1.8 million tons. To achieve the target, such challenges as the expansion of wheat production for bread/chinese noodles and the diffusion of double cropping for paddy fields through the cultivation of good-quality late maturing paddy rice varieties will have to be solved. While the wheat-planted area increased slightly from 28, production volume declined under bad weather conditions. The crop acreage for wheat for bread and Chinese noodles has increased gradually thanks to the development of new varieties. Production volume Crop acreage (Wheat production volume trends) (1, tons) (1, hectares), Crop Statistics 28 29 21 211 22 (target) 88.1 67.4 57.1 74.6 18 2.9 2.8 2.7 21.2 25, 2, 15, 1, 5, Momiroman Hokuriku 19 93 Nipponbare Koshihikari (Trends of crop acreage for wheat for bread/chinese noodles) ha 16,882 17,726 Sources: MAFF 2,21 21,55 28 29 21 211 [Direction of policy measures as indicated by the basic plan] - The soybean production volume target is set at 6, tons. To achieve the target, such challenges as organized aggregative farming of paddy fields and the diffusion of cultivation technologies contributing to improving and stabilizing unit yields will have to be solved. The soybean-planted area declined in Miyagi Prefecture (by 1,38 hectares) and Fukushima Prefecture (by 78 hectares) due to the Great East Japan Earthquake. The area expanded for the introduction of the soybean 3A technology and similar soybean technologies contributing to improving unit yields and stabilizing quality. (Area for introduction of Soybean (Soybean production volume trends) 3A Technology, etc.) 1 ha 4 Production o volume Crop acreage (1, tons) (1, hectares), Crop Statistics 28 29 21 211 22 (target) 26.2 23. 22.3 22. 6 14.7 14.5 13.8 13.7 8 35 3 25 2 15 1 5 21 Hokkaido 27 Chugoku Shikoku 32 28 29 21 Sources: MAFF Tohoku Kanto Hokuriku Tokai Kinki Kyushu

[Direction of policy measures as indicated by the basic plan] - Targets are set to increase production volume for buckwheat, rapeseeds, feed crops, etc. - For sugar beets, such challenges as the establishment of efficient production systems including direct seeding will have to be solved. - For sugar cane, such challenges as the development of work contractor and joint production organizations will have to be solved. - For feed crops, such challenges as the development of feed production organizations will have to be solved. - For fruits, such challenges as the acceleration of switching to higher-quality species or varieties will have to be solved. Buckwheat production volume increased from 28 thanks to the introduction of the Income Support Direct Payment Program for Farmers. Rapeseed production volume also expanded. Among feed crops, the crop acreage for rice for feed increased. However, production volume fell on unseasonable weather conditions including heat waves. Efforts to solve challenges are promoted for major crops: 1) Share for direct seeding for sugar beet production: 8% (28 crop) 12% (21 crop) 2) Share for work contractors among sugar cane producers: 4% (28 crop) 88% (21 crop) 3) Number of work contractor farms for feed crops: 1,657 (25) 3,128 (21) 4) Area for switching to higher-quality fruit species or varieties: 965 ha (FY28) 2,11 ha (FY21) (Production volume trends for other major crops) 28 29 21 211 22 (target) Buckwheat (1, tons) 2.7 1.7 3. 3.2 5.9 Rapeseeds (1, tons).1.2.2 1. Potatoes (1, tons) 274.3 245.9 229. (234.6) 29 Sweet potatoes (1, tons) 11.1 12.6 86.4 88.6 13 Sugar beets (1, tons) 424.8 364.9 39. 354.7 38 Sugarcanes (1, tons) 159.8 151.55 146.9 161 Vegetables (1, tons) 1,255 1,234 1,173 1,38 Fruits (1, tons) 344 338 294 34 Feed crops (1, TDNt) 435.6 418.8 419. 527 Milk (1, tons) 794.6 788.1 763.1 8 Beef (1, tons) 51.8 51.6 51.2 52 Pork (1, tons) 126. 131.8 127.6 126 Chicken (1, tons) 139.5 141.3 141.7 138 Eggs (1, tons) 253.5 25.8 251.5 245 Sources: MAFF, Crop Statistics and Food Balance Sheet (Accumulated area for switching to higher-quality fruit species or varieties) ha Other fruits 2,5 Other citrus 2,11 fruits 2, 184 1,441 411 1,5 13 965 3 653 Apples 1, 457 222 463 5 298 862 Unshu 361 548 Mandarins FY27 FY28 FY29 FY21 Sources: MAFF, Statistics on Cultivated Area and Planted Area, MAFF surveys Note: The area for switching means the area for plans approved under the orchard management support project. 9

Chapter 2: Securing stable food supply (1) Securing food safety and consumer confidence [Direction of policy measures as indicated by the basic plan] - Promoting policy measures for food safety improvement backed by scientific knowledge and introduction of the Good Agricultural Practice and the Hazard Analysis and Critical Control Point (HACCP) based on the concept that an ounce of prevention is worth a pound of cure, - Promoting traceability efforts, expanding of the origin labeling requirement for materials of processed food products steadily, etc. - Implementing appropriate risk management and control measures to enhance import quarantine, domestic control and epidemic prevention measures It is important for improving food safety to take appropriate measures in each step from primary production to final consumption based on the concept that an ounce of prevention is worth a pound of cure. MAFF makes risk management decisions based on scientific evidence. (Actions for ensuring food safety throughout the food chain) Collection of scientific information and data, including surveillance and monitoring of contamination in food and feed No concern Assessment Confirmation of food safety Actions required Examples of actions for ensuring food safety from the farm to the table Production Processing Distribution Consumption Possibility of Contamination by mycotoxins in fungi-infected cereals Timely control by fungicide application for each type of cereal. Possibility of increasing acrylamide level in heat-processing food Appropriate control of heating time and temperature Growth of microorganisms in animal products and fish products Keeping foods at a suitable temperature during transportation to stores Adherence of foodpoisoning bacteria to hands Washing hands thoroughly with soap before eating and cooking Preparing and disseminating food safety improvement guidelines - Guidelines for reducing cadmium concentration in rice (August 211) - Guidelines for management to prevent fungal contamination of rice (February 212) - Guidelines for vegetable sanitary control from the cultivation to shipment stages (June 211) - Handbooks of good sanitary practices to prevent introduction and transmission of foodborne pathogenic bacteria in beef farms and chicken farms (August 211) - A manual for treating meat for raw consumption (Prepared in July 211, revised in February 212) By FY21, 19% of food manufacturers introduced the HACCP. In the future, efforts are required to promote the HACCP introduction among small and medium-sized companies. (HACCP introduction trends by food sales scale) Planning introduction Introducing Havingintroduced Less than 5 millin yen 5-1 milliion yen 5 6 14 No plan to introduce 14 52 5 Unaware of HACCP concept 28 29 A steady increase has been seen in the number of agricultural production locations that have adopted the GAP, which contribute to food safety improvement. (Trends of GAP introducing agricultural production locations) Locations 2,5 2, 1,5 1,572 1,984 2,194 1-5, million yen 5-1 billion yen More than 1 billion yen All 17 4 24 43 12 66 1 9 14 68 5 16 1 16 3 2 44 17 % 2 4 6 8 1 1, 5 March 29 March 21 March 211 Note: GAP stands for Good Agricultural Practices. GAP are sustainable improvement activities through the accurate implementation, recording, inspection and assessment of each process in agricultural production operations in line with check lists worked out according to relevant laws. 1

t In efforts to promote the traceability of rice and rice products, business entities have been required to prepare and keep transaction records since October 21 and to relay place of origin information of rice ingredients of covered products since July 211. Producer Rice production Rice sale Shipment records Conveying production loca ation (Outline of rice traceability) Rice wholesaler Rice arrival Arrival records Rice shipment Shipment records Conveying production loca ation Processing/ manufacturing Rice arrival Arrival records Process Manufa cture Steamed rice shipment Shipment records Conveying production loca ation Food service enterprise Steamed rice arrival Arrival records Steamed rice provision Conveying production loca ation Consumer Eating Origin labeling for materials of processed food products under the JAS (Japanese Agricultural Standards) Law has increased steadily. In March 211, two food categories were subjected to the origin labeling requirement. At present, the requirement covers 22 processed food categories and four processed food products including farm pickles. (Changes in products subject to origin labeling requirement for materials of processed food products) 8 products 4 products 2 categories + 4 products 2 categories 2 categories + 4 products 2 products 2 categories 22 categories + 4 products 2 categories Continued individual requirement 22 Categories 21 26 29 213 Notified in Notified in Notified in 24 27 211 Source: Prepared by MAFF from Consumers Affairs Agency data Given that a Foot and Mouth disease (FMD) outbreak in Miyazaki Prefecture in 21 and a Highly Pathogenic Avian Influenza epidemic from 211 affected the livestock industry and the economy, the Act on Domestic Animal Infectious Diseases Control was revised in April 211. Over the recent years, FMD outbreaks have continuously occurred in neighboring Asian countries such as China and South Korea. In response to such developments, MAFF has disinfected shoe soles of all visitors from abroad and vehicles and used quarantine detector dogs for enhanced baggage inspection at airports and seaports. (Foot and Mouth Disease outbreaks in the world (as of April 1, 211)) Free countries where FMD vaccination is not practiced (65 countries) Free countries where FMD vaccination is practiced (one country) Non-FMD-free countries (see note) Non-FMD-free countries that have reported FMD outbreaks to the OIE since 28 Note:The above non-fmd-free countries include those that have OIE-identified free regions where FMD vaccination is not practiced and those that have OIE-identified free regions where FMD vaccination is practiced. 11

(2) Food consumption trends and promotion of food education [Direction of policy measures as indicated by the basic plan] - Continuing to promote food education The Engel s coefficient in Japan has leveled off at around 23% since 1995 after declining consistently from the end of the war. The leveling-off has come as food consumption has declined in line with a fall in overall household consumption spending. (Trends of Engel s coefficient) 1, yen/month 35 Household consumption spending 3 25 2 15 1 5 23.7 Engel s coefficient (right scale) Food expense 8 198 199 1995 2 25 211 Source:Ministry of Internal Affairs and Communications, Family Income and Expenditure Survey (two-or-more-member families) Five income groups spending on rice indicates that rice spending has declined for higher-income groups since 1985 and that there was little rice spending gap between the groups in 211. 8 7 6 5 4 3 2 1 (Trends of five income groups rice spending) Unit: 1, yen 1st group 2nd group 3rd group 4th group 5th group 198 199 2 211 Source:Prepared by MAFF based on Family Income and Expenditure Survey by the Ministry of Internal Affairs and Communications Notes: <1> Two-or-more-member families. Agriculture-forestry-fisheries families are excluded for 1999 and earlier years. <2> The five income groups mean that all families are lined up in the order of income from the lowest income families and divided equally into five groups. The government put forward the Second Basic Plan for Promotion of Shokuiku (food education) in March 211. Priority challenges cited in the plan are lifetime Shokuiku, Shokuiku for prevention and improvement of lifestyle diseases, and Shokuiku for children through eating with family. (Shokuiku promotion numerical targets and present levels in the Second Basic Plan for Promotion of Shokuiku (excerpts)) Target item Present level Target for 215 1. Share for people interested in Shokuiku 7.5% 9% or more 2. Reducing share for breakfast-skipping gpeople p (men in their 2 s and 3 s) 28.7% 15% %or more oe 3. Share for local products used in school lunches 26.1% 3% or more 4. Increasing share for people with eating habits giving consideration to nutritional balance 5.2% 6% or more 5. Increasing share for people experiencing agriculture-forestryfisheries operations 27.% 3% or more 6. Increasing share for people with basic knowledge about food safety 37.4% 9% or more Source: Prepared by MAFF based on the Cabinet Office s Second Basic Plan for Promotion of Shokuiku 12 23.6 32 28 24 2 16 12

(3) Actions for developing food industry [Direction of policy measures as indicated by the basic plan] - Given the requirement for environmental considerations, enterprises should promote the reduction of food waste and greenhouse gas emissions to fulfill their social responsibility. - Food manufacturers and distributors should promote production and sales in Asian and other foreign countries to enhance their overseas business bases. - Food Industry Vision of the Future will be established within FY21, in which the proper form and future direction of food industries will be set out. The food industry has stepped up environmental conservation efforts. In FY29, the industry recycled 8% of food waste for such purposes as feed and fertilizer production. (Estimated rate for recycling of recyclable food waste) 1-1 -2-3 -4-5 Food manufacturers Food wholesalers FY28 FY29 1 tons or more Less than 1 tons (Unit: %) FY212 (Target) 93 93 94 4 85 59 58 64 44 7 Food retailers 37 36 38 26 45 Restaurants 13 16 34 9 4 Food industry total 79 81 - - - The number of Japanese food manufactures in Asia has increased year by year in line with the global expansion and diversification of food consumption. Companies 3 25 2 15 1 5 (Changes in number of Japanese food manufacturers in Asian countries) 22 8 26 74 112 235 9 23 73 246 253 259 267 1 12 16 17 21 21 23 21 78 76 71 73 288 17 22 13 137 144 149 156 171 23 24 25 26 27 28 29 78 Others NIEs 3 ASEAN4 China Source: Prepared by MAFF based on the Survey on Overseas Business Activities by the Ministry of Economy, Trade and Industry Notes: 1) NIEs 3 includes 3 countries/regions: Singapore, Taiwan and Korea. 2)ASEAN 4 includes 4 countries: Malaysia, Thailand, Indonesia and Philippines. i The food industry s diffusion index (DI*) in the first half of 211 declined from the year-before level due to the impact of the Great East Japan Earthquake. In the second half, however, the index indicated an improvement. Food Industry Vision of the Future was established in March 212, in which the proper form and future direction of food industries was set out. *The DI is a gap between the percentage shares for enterprises expecting an increase (improvement) and those anticipating a decline (deterioration) 1st half 26 Current profit DI (Changes in Food industry DI) (Food related industries market sizes in 22) 1st half 27 Sales DI 1st half 28 Business condition DI 26.7 35.5 1st half 29 Cash flow DI 27. 43.2 1st half 21 1st half 211 Source:JFC, Food Industry Trend Survey Notes: 1) The business condition DI represents an average of sales, current profit and cash flow DIs. 2) The survey covered food related enterprises (manufacturers, wholesalers, retailers and restaurants) throughout Japan. Unit: 1 trillion yen (118.9) Related investment 12 (17.7) 2.8 Materials supply 2.6 3.2 industry (95.7) 14. Agriculture/fisheries 1 2.3 12.7 2.9-9.8 2.6 25.9-13.8 11.2 Restaurants 8-14.3 23.5 2.9-19.3 6 3.1 Distribution 27.2 industry 24.2 98.9 89.6 4 2 13 34.5 79.5 38.9 42.9 29 215 22 Food manufacturers Source: Prepared by MAFF based on MAFF s Economic Accounts for Agriculture and Food related Industries, etc. Food industry

(4) Establishing comprehensive food security [Direction of policy measures as indicated by the basic plan] - Establishing comprehensive food security - Efforts to realize an emergency rice reserve arrangement for ASEAN+3 (ASEAN, Japan, China and South Korea) International a grain and soybean prices rose again from 21 and on. Grain production o in 211/212 reached a record level exceeding demand. However, the inventory-sales ratio at the end of the season is expected to slip below the year-before level, indicating a tighter supply-demand balance for grains. dollars per bushel 18 16 (Changes in International price of grains and soybeans) 941 16.6 dollars per ton 1, 9 14 12 1 8 6 5.4 29 Soybeans Wheat 7.5 1.9 Rice (right scale) 13.3 574 6.7 6.6 8 7 6 5 4 3 4 2 3.1 2.1 Corn 2 1 25 26 27 28 29 21 211 212 Sources: Prepared by MAFF based on data from the Chicago Board of Trade and the Rice Committee, Board of Trade of Thailand Note: One bushel is equivalent to 27.2155 kg of soybeans and wheat, and 25.412 kg of corn. Given the Great East Japan Earthquake, we will consider various risks regarding stable food supply and revise the food security manual by the summer of 212. In October 211, Japan signed the ASEAN Plus Three Emergency Rice Reserve (APTERR) Agreement. (Overview of APTERR) APTERR reserves Earmark reserves Out of its reserve, each country may release a portion earmarked for an emergency release. Reserve release program Tier 1 Aid using commercial futures trading contracts Tier 2 Earmark reserve aid other than Tier 1 (including grant and long-term loans) Physical reserves (cash reserves) Each country s earmark reserves Japan: 25, tons China: 3, tons South Korea: 15, tons ASEAN countries: 87, tons Physical reserves are made available for the first emergency food aid after a disaster. After reserve periods pass, physical reserves may be used for the Poverty Alleviation and Malnourishment Eradication (PAME) program. Cash reserves may be used for a quicker response. Reserve release program Tier 3 Aid using physical reserves (or cash reserves). (Cash reserves mean that a budget at the APTERR secretariat may be used for quick local rice imports.) Japan s achievements (1) Physical reserves totaling about 1,86 tons Philippines: about 95 tons Cambodia: about 38 tons Indonesia: about 18 tons Laos: about 35 tons (2) Cash reserves covering about 48 tons (Myanmar, Indonesia, etc.) Food aid Country A Occurrence of a major disaster Country B 14

Chapter 3: Sustainable development of agriculture (1) Implementation of Income Support Direct Payment Program for Farmers [Direction of policy measures as indicated by the basic plan] - Agriculture plays key roles for citizens livelihood, including the stable provision of food and the demonstration of multiple functions. Agriculture can play these roles only if it maintains sustainability as an industry. The Income Support Direct Payment Program for Farmers has been introduced to secure sustainability and create an environment where all motivated farmers can continue agriculture and tackle their business development. Based on the implementation of the Pilot Income Support Direct Payment Program in FY21, we formally implemented the Income Support Direct Payment Program for Farmers from FY211. The number of participants under the program in FY211 increased by 55, from the number under the pilot program in the previous year to 1,218,. (Number of participants under the Income Support Direct Payment Program for Farmers by farm category) Number of participants Independent farms Farm category Incorporated farms Community-based farm cooperatives FY211 1,218,237 1,23,367 7,254 7,616 FY21 1,163,9 1,149,55 6,187 7,398 Change vs. previous year (growth rate) 55,147(4.7%) 53,862(4.7%) 1,67(17.2%) 218(2.9%) The planned crop acreage size for income support direct payment participants for rice farming in FY211 increased by 25, hectares from the previous year to 1,152, hectares. The excessive rice planted area compared with the target volume of rice production declined by 19, hectares to 22, hectares. (Planted area for income support direct payment participants for rice farming) Unit: hectares Excessive rice Participants ii Target volume of planted area Staple rice planted planned crop rice production compared with the area (nationwide) acreage size calculated area target volume of rice production FY211 1,151,545 1,526, 1,53,864 22,136 FY21 1,127,4 1,58, 1,538,697 41,33 Change vs. previous year 24,55-54, -34,833-19,167 15

The implementation of the Income Support Direct Payment Program for Farmers has made some contributions to improving farming business performance, promoting the adjustment of rice supply and expanding production of rice for new uses. Revenues cannot cover Production business management cost (yen per or family labor costs 6 kilograms) 24, 22,7 (Rice farmer's business conditions by planted area group) Revenues can cover business management costs while failing to cover family labor costs Revenues can cover both business management and family labor costs 2, Family labor costs 19,3 Yellow: Variable payment 6,8 Green: Fixed payment 16, 5,4 15, 13,1 13,66 4,5 12,2 1,7 12, 11,2 Profit 3,9 3,3 1,7 2,6 1,26 8, 15,9 13,9 FY21 4, Business 1,5 9,2 8,9 selling 8,6 management price costs 2 4 6 8 1 12 14 16 (Unit: 1, ha) Staple rice planted area Less than.5 ha 265, ha (17.4%).5-1. ha 273, ha (17.9%) 1.-2. ha 2.-3. ha 3.-5. ha 282, ha 139, ha 147, ha (18.5%) (18.5%) (9.6%) 5. ha or more 417, ha Note: Business management costs cover material procurement, interest payment, land rent and employment costs for rice production. Area covered by rice mutual relief association 1,526, ha (27.5%) (1%) (Trends of excessive rice planted area compared with ihthe target volume of rice production) 8 Unit: 1, ha 7.1 7-1.7 6 5.4 -.5 4.9 -.8 5 4.1 4-1.9 19 3 2.2 2 1 27 28 29 21 211 6, (Trends of planted area for rice for new uses) 7, ha 64,365 5, 23,86 4, 35,779 WCS (Whole Crop Silage) rice 3, 15,939 16,727 33,955 2, 1,67 Rice for feed 1, 1,23 14,883 9,89 4,957 Flour-use 7,324 rice 28 29 21 211 Source:MAFF 16

(2) Income expansion through sixth industry promotion (collaboration of primary, secondary and tertiary industries), etc. [Direction of policy measures as indicated by the basic plan] - Promoting the expansion of added value through the qualitative improvement, processing and direct sales of agricultural products - Core direct sales stores should expand annual product lineups and enhance management and sales capabilities to promote the local consumption of local produce. - Maintaining and expanding overseas sales channels for high-quality Japanese agriculture-forestry-fisheries and food products to boost annual exports of these products to 1 trillion yen by 22. (Image of sixth industry promotion (collaboration of primary, secondary and tertiary industries) for agriculture and rural areas) Various local resources originating from rural areas Agriculture-forestry-fisheries products Bio mass - Rice straw - Food wastes - Unused thinned wood Experiences/knowledge Natural energy Landscape Traditional culture Industries utilizing rural areas local resources for new businesses Food industry, tourism industry, information technology industry, cosmetic/drug manufacturers, energy industry Etc. Etc. Effective utilization of resources in rural areas Promoting collaboration of primary, secondary and tertiary industries while attempting to expand markets Integrating production, processing and distribution (sales) operationsto to expand added values Agriculture-forestry-fisheries sector s processing and marketing efforts (diversification, integration, etc.), local consumption of local produces, exporting agriculture-forestry-fisheries and food products, etc. Secondary and tertiary industries participation in agriculture, forestry and fisheries Agriculture-forestry-fisheries sector s collaboration and fusion with secondary and tertiary industries to develop local businesses and create new industries Creating new businesses utilizing biomass and other resources in rural areas Promoting agriculture-commerce- industry collaboration Promoting renewable energy uses, etc. Creating new added value Se ecuring employm to revitalize an ment and improvi nd invigorate rura ing income al areas Note: The term sixth industry is derived by multiplying the industrial sectors as follows. First (primary) second (secondary) third (tertiary) to come up with the sixth industry. The sixth industry is expected to synergistically create new added-value through effective use of agricultural, forestry and fishery products, as well as land, water and other resources in farming, mountain and fishing villages, by integrating production, processing and distribution activities Commercial farm households that undertake farm product processing and other related business of agricultural production doubled their share of Japan s total commercial farm households between FY2 and FY21. (Changes in Number of commercial farm households undertaking related business of agricultural production) Number of commercial farm households (1, Households, %) Number of commercial farm households undertaking related business of agricultural production Processing of agricultural products Direct sales to stores and consumers 2 233.7 (1.) 25.3 (1.8) 2. (.9) 8.4 (3.6) 25 196.3 (1.) 34.5 (17.6) 2.2 (1.1) 32.4 (16.5) 21 163.1 (1.) 34.2 (21.) 3.2 (2.) 32.1 (19.7), Census of Agriculture and Forestry 17

Sixth industry promotion efforts (collaboration of primary, secondary and tertiary industries) may take some years to get on a profitable path (surplus). Challenges for such collaboration include the development of product brands and the acquisition of relevant personnel. (Years taken to produce profit (by farming category)) (Key challenges conceived for cooperation of primary, secondary and tertiary industries) (Unit: years) Average number Number of years taken to Differentiation of products and Category of years in produce profit development of product brands 67.3 operation Average Minimum Maximum Acquisition of personnel for specific All categories 13.5 4.1. 25. businesses 55.8 Rice farming 8.4 4.4 1. 15. High quality of raw materials and Vegetable farming 1.8 2.2. 9. products Pig farming 16.2 8.8 2. 25. 54.5 Dairy farming 16.7 1.8. 3. Smooth funds procurement for launching or continuing businesses Orchard farming 18.9 4.5. 15. 52.7 2 4 6 8 % Source: JFC, Survey on Collaboration of Primary, Secondary and Tertiary Industries (released in December 211) Most farmers running tourist farms and farm restaurants undertake direct sales and processing of agricultural products integrally. Farmers running tourist farms and farm restaurants have a stronger sense of income growth than those doing other businesses for collaboration of primary, secondary and tertiary industries. (Changes in farmers income through collaboration with primary, secondary and tertiary industries) 77.% No specific change 1% increase in income 1-3% increase in income 3-5% increase in income 5% or more increase in income Farm restaurants 15.4 7.7 3.8 23.1 23.1 Decreased 65.8% Tourist farms 5.3 1.5 18.4 31.6 23.7 1.5 52.8% No response Direct sales 5.4 17.7 23.4 33.9 12.4 6.5.8 52.7% Processing of agricultural 4.4 22.4 2. 32.7 1.2 9.8.5 products % 2 4 6 8 1, Survey on Consciousness and Intentions about Food, Agriculture and Rural Areas, and Fisheries and Fishery Products (Conducted in January-February 212) Under the sixth industry promotion (collaboration of primary, secondary and tertiary industries) act implemented in March 211, 79 business plans have been approved. The sixth industry s planners have been distributed throughout Japan. (Number of business plans approved under the sixth industry promotion act by region) 16 Cases 14 Forestry products-related plans 12 Agricultural and livestock products-related plans 1 4 3 2 8 6 1 4 82 88 1 2 49 34 Hokkaido Tohoku Kanto Hokuriku 1 61 Tokai 4 3 6 144 Kinki 3 12 4 84 92 Chugoku/ Shikoku Fishery productsrelated plans 8 Kyushu 1 22 Okinawa Agriculture-forestry-fisheries and food products exports in 211 declined substantially from the previous year due mainly to the TEPCO Fukushima Daiichi nuclear plant accident and the yen s appreciation. (Trends of agriculture-forestry-fisheries and food products exports) Unit: 1 million yen 6, Agricultural products Forestry products 5, Fishery products 5,78 4,92 4,49 4,454 4,511 4, 3,69 2,77 2,4 1,724 1,95 1,736 3, 1,482 2 2, 1, 18 2,38 2,359 2,883 2,637 2,865 2,652 24 26 28 29 21 211 Source:Prepared by MAFF, based on Ministry of Finance, Trade Statistics

(3) Promoting motivated, diversified farmers business management [Direction of policy measures as indicated by the basic plan] - Raising and securing motivated, diversified farmers Farms average agricultural income increased from 1.4 million yen in 29 to 1.22 million yen in 21 after continuing a downward trend. Particularly, paddy farms agricultural income in 21 expanded 37% from the previous year affected by subsidies provided under the Pilot Income Support Direct Payment Program for rice farmers, despite rice price drops. Unit: 1, yen 14 12 1 8 6 4 2 (Agricultural income trends) 126.2 123.5 122.8 119.5 18.2 14.2 122.3 24 25 26 27 28 29 21, Statistical Survey on Farm Management Statistics by Farm Category (independent farms) Unit: 1, yen 6 4 2 39.2 (Agricultural income trends (rice farming)) 42.4 38.6 37.2 39.3 37.3% 34.6 47.5 27.3 2.2 24 25 26 27 28 29 21, Statistical Survey on Farm Management Statistics by Farming Category (independent farms) Pilot program subsidies for rice farmers Agricultural income (excluding pilot program subsidies for rice farmers) Unit: 1, yen 7 (Agricultural income trends by farming region) 6 585.8 62.6 5 4 3 29 21 2 1 122.3 14.2 11. 9 15.8 116.5 9. 98.9 78. 12.1 61.2 54.7 71.4 82. 78.4 82.7 89.5 153.1 118.4 Japan Hokkaido Tohoku Hokuriku Kanto/Tosan Tokai Kinki Chugoku Shikoku Kyushu, Statistical Survey on Farm Management Statistics by Farm Category (independent farms) (Rice farmers agricultural income (by planted area group)) Unit: 1, yen 1,4 Agricultural income in 29 Unit: 1, yen 6 47.5 1,2 1, Pilot program subsidies for rice farmers 4 34.6 27.3 8 6 Agricultural income in 21 (including pilot program subsidies) 2 4 2 21 22 Average (29) (21) -2 1 2 3 4 Less than 5 6.5-1. 7 8 9 1 11 12 13 14 15 16 17 18 19 2 21 22 23 24 25 26 27 28 29 3 1.-2. 2.-3. 3.-5. 5.-7. 7.-1. 1.-15. 15.-2. More than.5 ha 2. ha, Statistical Survey on Farm Management Statistics by Farming Category (independent farms) 19

The number of community-based farm cooperatives has increased year by year, standing at 15, as of February 212. (Changes in community-based farm cooperatives by farming region) Farms 16, 14, 12, 1, 8, 6, 4, 2, 1,63 13,62 14,736 25 28 212 Hokkaido Tohoku Hokuriku Kanto/Tosan Tokai Kinki Chugoku Shikoku Kyushu Okinawa, Survey on Community-Based Farm Cooperatives The number of agriculture production legal persons has also increased year by year, standing at 12, in 211. Legal persons 14, 12, 1, 8, 6, 4, 2, (Changes in agriculture production legal persons by farming category) 3,816 5,889 11,829 12,52 2,249 2,68 2,423 915 4,397 199 2 21 211 Others Vegetable farming Dairy farming Orchard farming Rice/wheat farming It is important to raise and secure new farmers. Challenges include how to secure income and improve skills. The farming grant system for young farmers started in FY212. (Business management problems for new entrants into agriculture in first or second year (biggest problem) Income is low 3.8 Insufficient skill Equipment tinvestment tfund shortage Operating fund shortage Failure to collect farmlands 7.9 7.5 13.3 2.1 Sales are unexpectedly slack 4. Labor shortage Cultivation plans or schedules fail to be implemented 3.1 3.8 Others 9.4 5 1 15 2 25 3 35 Source: National Chamber of Agriculture, Fact-finding Survey on New Entrants into Agriculture (Changes in new farmers) (Persons) 26 27 28 29 21 New self-employed farmers 72,35 64,42 49,64 57,4 44,8 39-year-old or younger persons 1,31 9,64 8,32 9,31 7,66 New employed farmers 6,51 7,29 8,4 7,57 8,4 39-year-old or younger persons 3,73 4,14 5,53 5,1 4,85 New participants in farming 2,18 1,75 1,96 1,85 (1,68) 1,73 39-year-old or younger persons 7 56 58 62 (58) 64 Total new farmers 81,3 73,46 6, 66,82 54,57 39-year-old or younger persons 14,74 14,34 14,43 15,3 13,15, Survey on Newcomers in agriculture 2

(4) Active use of rural women s capabilities [Direction of policy measures as indicated by the basic plan] - Promoting rural women s participation in farming management and women s income-generating activities for processing and marketing of agricultural products - Promoting working styles giving consideration to the rural work-life balance through the conclusion of family management agreements to secure women s further participation i i in local l society. Rural women s income-generating activities have increased steadily. While group-managed businesses account for a majority of new businesses launched by rural women, independently managed businesses have increased year by year. Many businesses are for food processing and sales in the farm stand. In 211, for the first time all agricultural committees in Tochigi and Yamaguchi Prefectures included women members through elections. The number of agricultural committees with women members increased from the previous elections in 33 prefectures. In 211, all agricultural cooperatives in Aichi, Shimane and Okayama Prefectures had female executives for the first time, joining Nara, Tottori, Kagawa, Kumamoto and Okinawa Prefectures that already had female executives at all such cooperatives. The number of family management agreements to promote women s participation in farm management has increased year by year, standing at 49, in 211. Opportunities for rural women to actively participate have increased, including the establishment of nationwide networks and attendance to international conferences. (Changes in the number of income-generating activities by rural women and type of activities) (Trends of the number of income-generating activities by rural women) (Type of activities (multiple answers)) Cases 9,533 9,757 1, 9,5 8 8, 6824 6,824 6, 4, 5,141 5,745 5,589 5,284 Group management Food processing Distribution/sales (including sales through farm stands and Internet) Exchanges with urban regions (through agricultural production and product processing activities, farm restaurants, etc.) 2.5 59.7 75.2 2, 3,944 4,473 335 3,35 1,683 2 25 27 21 Individual management Agricultural production 2.4 Non-food processing 3.3 % 2 4 6 8 (Changes in family management agreements) 5, Households 48,62 4, 3, 2, 1, 5,335 12,3 21,575 32,12 4,663 1996 1999 22 25 28 211 21

(5) Securing fine farmland and promoting its effective use [Direction of policy measures as indicated by the basic plan] - Securing fine farmland and promoting its effective use steadily to improve Japan s food self-sufficiency ratio - Raising the utilization rate of cultivated land to 18% in 22 - Supporting efforts to utilize abandoned farmland and promoting efforts to eliminate idle farmlands under the revised Agricultural Land Act - Promoting farmland concentration for motivated, diversified farmers The utilization rate of cultivated land in 21 rose slightly for the first time in eight years due to an increase in the planted area size for rice paddies as a decline in the total cultivated area size. (Aggregate planted area size, cultivated area size and utilization rate of cultivated land trends) 28 29 21 Aggregate planted area ( ) (1, ha) 426.5 424.4 423.3 Rate of change (%) (-.95) (-.49) (-.26) Cultivated area ( ) (1, ha) 462.8 46.9 459.3 Rate of change (%) (-.47) (-.41) (-.35) Utilization rate of cultivated land ( / ) (%) 92.2 92.1 92.2, Statistics on Cultivated Area and Planted Area The increase in abandoned cultivated land has slowed down over recent years. (Changes in area of abandoned cultivated land) Unit: 1, ha 1985 199 1995 2 25 21 Total 13.5 21.7 24.4 34.3 38.6 39.6 Commercial farm households 7.3 11.3 12. 15.5 14.4 12.4 Non-commercial farm households 1.9 3.8 4.1 5.6 7.9 9. Non-farm households possessing cultivated land 4.2 6.6 8.3 13.3 16.2 18.2, Census of Agriculture and Forestry Cultivated land under management per commercial farm household continued increasing in 211. (Changes in cultivated land under management per commercial farm household and per business farm household) ha 3 Hokkaido (business farm households) 27.7 27.64 23.58 24.98 25 2.52 2 17.46 18.68 2.1 21.48 22.1 15 15.98 1 13.95 Hokkaido (commercial farm households) 11.88 1.11 5 6.76 3.54 4.9 6 5 4 3 2 1 ha.88.91.97.77.79.8 Entire Japan (commercial farm households) 3.23 1.98 3.91 2.26 1.33 1.41 1.5 1.6 4.36 2.48 1.76 Entire Japan (business farm households) 4.85 4.88 5.5 Japan excluding Hokkaido (business farm households) 278 2.78 272 2.72 286 2.86 1.87 1.96 2.2 1.5 1.1 1.15 1.21 1.3 1.38 1.42 1.46 Japan excluding Hokkaido (commercial farm households) 196 1965 1975 1985 199 1995 2 25 28 21 211 Sources: MAFF, Census of Agriculture and Forestry and Survey on Agriculture Structure Dynamism 22

Farms cultivating 2 hectares or more in 21 accounted for 32% of cultivated land area being utilized for land-extensive crops including rice and wheat. (Percentage share of land area cultivated for land-extensive crops by farms having 2 hectares or more in farmland) Unit: 1, ha 4 35 372.8 367.5 3 25 2 15 276.4 248.7 (73%) (68%) Area cultivated by farms having 2 hectares or more in farmland 1 5 118.8 96.4 (27%) (32%) 25 21 Area cultivated by farms having less than 2 hectares in farmland Sources: Estimated based on MAFF s Census of Agriculture and Forestry and Statistics on Cultivated Area and Planted Area (6)M Maintaining, i i managing and ddeveloping agricultural l production infrastructure t [Direction of policy measures as indicated by the basic plan] - A drastic reform of improvement measures for the agricultural production infrastructure base to strengthen agricultural productivity, including enhancing infrastructure maintenance through strategic preservation and management of major irrigation facilities, and building a better agricultural production base regarding the improvement of the food self-sufficiency ratio. Rice paddy fields expanded through readjustment to 3 ares or more totaled 1.55 million hectares in FY21, accounting for about 6% of total rice paddy fields in Japan. The functional diagnosis of the facility is conducted to extend in-service lives of major irrigation facilities including irrigation channels, drainage canals and pump stations. Given the Great East Japan Earthquake, the Cabinet decided on a new Long-Term Plan of Land Improvement in March 212 to enhance Japan s agriculture and promote recovery from the disaster. 7 6 5 4 3 2 1 (Trends of the rice paddy field readjustment share and rice-farming hours) Percentage share for rice paddy fields expanded through readjustment to 3 ares or more rice-farming hours (right scale) 26.4 1963 1969 1975 1981 1987 1993 1999 25 Sources: MAFF, Basic Survey on Agricultural Infrastructure Development, Rice and Wheat Production Costs hr/1a 62.1 16 12 8 4 (Implementation status of the functional diagnosis of the facility (major irrigation facilities)) 23 About 17.9 trillion yen Not yet to be conducted About 1.9 trillion yen (6.8%) Completed About 7. trillion yen (39.2%) Notes: 1) An accumulated total through FY21 2) Assessment on a reconstruction cost basis for irrigation facilities

(7) Sustainable agricultural production [Direction of policy measures as indicated by the basic plan] - Promoting agriculture and food industries introduction of energy-saving facilities and machinery, the optimization of fertilization and other measures to address global warming, and networks of farmers who tackle farming operations contributing to conservation of the environment. - Promoting the expansion of production and distribution of organic agricultural products Energy-saving farm machinery and facilities have increased steadily. In FY21, greenhouse gases emission cuts for facility horticulture and farm machinery totaled 319, tons-co2. (Greenhouse gases emission cuts for facility horticulture and farm machinery) 35 1,t-CO 3 25 2 15 1 5 4.1 8.7 18.9 27.1 31.9 26 28 21 2,5 2, 1,5 The number of eco-farmers certified as promoting sustainable agriculture giving consideration to the environment increased to 212, at the end of March 211 against the backdrop of growth in consumer needs. Unit: 1 cases 1, 5.1 (Trends of certified eco-farmers (by region)) 262 989 1,863 1,964 2,116 2 23 26 29 21 211 Hokkaido Tohoku Kanto Hokuriku Tokai Kinki Chugoku/ Shikoku Kyushu Okinawa Note: Numbers given for the end of March in each year Agricultural products rated as organic under the organic JAS system in FY21 totaled 56, tons including vegetables. Direct payment for environmentally friendly agriculture started in FY211 to support farmers activities which address global warming and enhance biodiversity. (Trends of agricultural products rated as organic under the organic JAS system) (Unit: ton) Total Vegetables Rice Fruits Others FY21 33,734 19,675 7,777777 1,391 4891 4,891 FY22 43,759 24,545 12,338 1,939 4,937 FY23 46,192 28,444 1,433 2,163 5,152 FY24 47,428 29,674 1,4 2,29 5,325 FY25 48,172 29,17 11,369 2,222 5,474 FY26 48,596 29,949 1,811 1,766 6,7 FY27 53,446 32,78 1,828 2,199 7639 7,639 FY28 56,164 36,164 11,278 2,5 6,672 FY29 57,342 37,644 11,565 2,436 5,697 FY21 56,415 36,854 1,976 2,56 6,79 24

Chapter 4: Promoting and revitalization of rural areas (1) Creating new industries in rural areas through renewable energy promotion and other efforts [Direction of policy measures as indicated by the basic plan] - Expanding renewable energy production, promoting regional renewable energy utilization, developing new profit-making systems in rural areas - A strategy for Revolution in Environmental Technology Preserving Water and Greenery will be worked out to implement measures for creating new industries. Renewable energy accounts for some 1% of Japan s total electricity generation (in FY21). The vast majority of this renewable energy is large-scale hydroelectric power generation. Other renewable energy sources including solar energy, wind power and biomass energy account for only about 1% of the total. (Breakdown of Japan s electricity generation) Electric source Share (%) New energy sources 1.2 Pumped-up water.9 Ordinary hydro energy 7.8 Crude oil 8.3 Coal 23.8 LNG 27.2 Nuclear energy 3.8 Source: Ministry of Economy, Trade and Industry, FY21 Annual Report on Energy Note: New energy sources include solar energy, wind power, geothermal energy and biomass energy. Demonstration tests for cutting costs for small hydroelectric power generation, installation of solar panels on agricultural facilities and efforts to convert biomass energy into electricity will be promoted at various points in Japan to utilize renewable energy. (Efforts to utilize renewable energy) A methane fermentation facility A compost facility Demonstration tests of a small hydroelectric power generator (Takeda City, Oita Prefecture) Solar panels installed on a compost facility (Sanmu City, Chiba Prefecture) Tokuai Wind Power Station (Itoigawa City, Niigata Prefecture) Biomass conversion facilities (Yamaga City, Kumamoto Prefecture) Technology verification and other studies are conducted at various points in Japan to build independent distributed energy systems including Smart Village systems to integrally control renewable energy on a regional basis. Various measures to create new industries in rural areas are promoted under the Comprehensive Strategy for Revolution in Environmental Technology Preserving Water and Greenery, adopted in February 211. An upland community using renewable energy, storage batteries, HEMS (Home Energy Management System) cogeneration systems, etc. Solar power generation Agricultural facilities heat and electricity supply to greenhouses Small hydroelectric power generation (Smart Village image) An energy management system to adjust the supply-demand balance in response to renewable energy fluctuations Thinned wood Electricity supply Heat supply Transport Livestock waste, etc. A saw mill Heat and electricity supply to the lumber A biomass power Wooden biomass industry plant (supplying heat A large plywood and electricity) factory Seafood processing and distribution facilities (cooling) Wind power generation 25