Abstract Recently, an international environment revealed the risk of import dependency and required improvement in the domestic production of agricultural products for a stable food supply in Japan. On the other hand, at ordinary times, domestic agricultural products are increasingly exposed to competition in international markets. Since 1993, when the Act on Promotion of Improvement of Agricultural Management Foundation was enforced, fostering efficient and stable agricultural management that can withstand international competition has been a policy objective. The Japanese government has supported certified farmers, acknowledged as leading farmers in the region by municipalities, by various measures. However, why does such policy support for certified farmers contribute to strengthening the competitiveness of agriculture and making it a growth industry? In this paper, we theoretically show that the concentration of resources by policy on certified farmers improves agricultural productivity when certified farmers are regarded as the learning sector and has a productivity-spillover effect in the agricultural industry, and demonstrate the extent of the spillover effect through TFP growth rate decomposition using a cost function analysis. The analysis shows that such spillover effects increased the productivity growth rate of rice farming by about 0.27% on average nationwide.
Yusuke Fushiki (Sun,) studied this question.