• According to the action plan, the supply and efficient use of inexpensive materials are promoted, so that the production cost can be reduced. More efforts are to be made to enlarge the management scale and introduce new production technology and varieties.

• In order to reduce distribution costs, the wholesale market, where 60-70% of vegetables, fruits and fishery products are handled, should be reformed, and the efficiency of overall commodity distribution should be improved.

• In accordance with the improvement plan, the National Federation of Agricultural Cooperative Association has been promoting the fundamental reform of the economic projects. As a part of the action plan, MAFF continuously monitors the progress of the improvement plan as well as providing advice and instruction.

## Concrete Programs for Cost Reduction

• Increasing Supply of Inexpensive Materials

High-analysis compound fertilizers containing nitrogen (N), phosphate (P) and potash (K) (total content of the three substances is 30% and more) are imported from foreign countries, including Jordan. (The price of imported chemical fertilizer is 25% lower than that of the same domestic fertilizer.)

• Transition of penetration of imported high-analysis compound fertilizers

Year	2000	2004
Amount (tonne)	88,158	103,401
Penetration rate (\%)	23	36

Source: Investigated by National Federation of Agricultural Co-operative Associations

Note: The penetration rate was defined as the proportion of the chemical fertilizers imported from Jordan (fertilizers as raw materials excluded) to all the high-analysis compound fertilizers handled by National Federation of Agricultural Co-operative Associations [limited to the three basic components (N, P, K)].

Purchasing agricultural chemicals in the large packages contributes to a reduction in the costs involved in repackaging into smaller sizes. In this manner, agricultural chemicals are available at lower costs. (The price of the product in large packages is 3-38% lower than that of the standard product.)

Source: Investigated by National Federation of Agricultural Co-operative Associations

## Agricultural chemicals in large packages

• Prices of agricultural chemicals in large packages (examples)

Purposes	Standard agricultural chemicals (A)	Agricultural chemicals in large packages (B)	Price difference (A-B)
Herbicides for paddy field farming	1kg (10 ares)	10kg	$ -5\% $
Pesticides for horticulture	1l (2-10 ares)	5l	$ -10\% $
Foliage applied herbicides	500cc (5-20 ares)	20l	$ -38\% $

## I nexpensive supportive farm machinery

Compared with the price of the conventional machinery, that of special farm machinery with the same basic performance but limited functions is lower by about 10%.

• Comparison between the inexpensive supportive farm machinery and the conventional farm machinery with respect to price and main specifications (example; tractor for paddy field)

Source: Investigated by MAFF

Note: Prices are the manufacturer's

suggested retail prices

(tax included).

• In view of the possibility that the efficiency of distribution of fresh food in the wholesale market may be improved by the introduction of information technology, verification tests have been conducted. The utilization of electronic tags in the process of inspection and classification of packages has contributed to a reduction in work hours of 30%, and the practical application of such new systems is expected in the near future.

Process of verification test

Electronic tag

Change in the Work Hours Involved in the Process of Distribution of Vegetables and Fruits in the Wholesale Market

## Progress of the Improvement Plan Formulated by the National Federation of Agricultural Co-operative Associations (The main programs for cost reduction, as of the end of December 2006)

• Reduction in production material cost of 1.8 billion yen

(since April 2006)

• Fertilizers: 0.51 billion yen (since July 2006)

• Agricultural chemicals: 0.54 billion yen (since December 2006)

• Reduction in rice distribution cost

• The selling charge (600 yen/60 kg) was abolished.

• Efforts are made to reduce the distribution cost from the current level of 3,000 yen/60 kg to the level of 2,000 yen/60 kg, which will be applied to the rice to be harvested in 2008. As a part of this program, 28 prefectural centers set their target figure at a level of below 2,000 yen/60 kg, which was applied to crops harvested in 2006.

Source: Prepared by MAFF according to “Progress of Reform of the National Federation of Agricultural Co-operative Associations,” and “Progress of Reform of the National Federation of Agricultural Co-operative Associations (Point Reached One Year after Formulation of “Improvement Plan” and Future Problems) (Overview Version)” (published by the National Federation of Agricultural Co-operative Associations in January 2007)