from rice production and the share of part-time farmers. In Japanese rural society,
part-time farmers are the majority, while full-time professional farmers are the minority.
Hypothesis 2: Among the factors which are publicly announced to be used in
calculating the allocation, those which reflect potential incentives derived from the
market, such as low cost of production, tend to retain their considerable explanatory
power even after the allocation is revised by incorporating farmers’ grievances through
a political process. Meanwhile, those which are not advocated by political actors other
than bureaucrats and do not reflect potential incentives from the market are relatively
emasculated after such a revision.
Hypothesis 1, especially the last part that the degree of political pressure is
explained by two variables, the level of expected income from rice production and the
share of part-time farmers, is explained in detail as follows:
The cost of rice production varies among regions. The price of rice also varies
among regions, reflecting difference of quality. Reflecting these differences, farmers’
income losses also vary from region to region10. Most Japanese farmers operate as a
family farm. The principle of behaviors is not profit-maximizing but
income-maximizing. Thus, expected income is the most suitable index for representing
damage cause by set-aside programs11. Although subjective utility loss for a farmer
cannot necessarily be equivalent to this objective income loss, it can approximately
represent the relative relationship among regions if we compare them within the same
farmers’ categories, such as the part-time farmer class.
The point here is another variable, that is, the share of part-time farmers. Part-time
farmers feel relatively heavy burden if they convert to new crops from conventional rice
growing because of the increase of labor input and new investments of machines. Even
10 Speaking accurately, income loss of rice production plus other converted crops’
income plus subsidies is net income loss.
11 Correctly speaking, this is only true under the assumption that subsidies and income
from converted crops are the same. This assumption roughly holds on true.
11