Farmers mutual aid associations and their umbrella organizations across the country have accumulated about 160 billion yen in surplus funds earmarked for agricultural insurance schemes, which includes premiums paid by government subsidies, The Yomiuri Shimbun has learned.
The Board of Audit plans to urge the Agriculture, Forestry and Fisheries Ministry to downsize the funds on the grounds that such an amount does not tally with the current size of the domestic agricultural industry, and more than half the funds are believed to have emanated from the government.
The Board of Audit inspected the finances of 207 farmers mutual aid associations; the 76 municipal governments that operate the insurance schemes; and 43 prefectural organizations under whose umbrella the mutual aid associations function. The insurance schemes are financed by premiums, with farmers and the central government each contributing half. The money is used to cover losses suffered by farmers when agricultural products are damaged by natural disasters.
Operators of the insurance schemes are required to accumulate a certain amount of surplus funds to ensure stable management.
According to the current standard, an appropriate size for the surplus fund should be about 40 billion yen.
However, the Board of Audit discovered the 326 bodies that were inspected had accumulated about 160 billion yen--about four times more than the suggested amount.
According to the ministry, the largest insurance payout so far occurred when cold weather hit the country in the summer of 1993, but the sum covered by farmers mutual aid associations and others only totaled 110 billion yen.
It is thought that such large-scale damage will only occur rarely.
In the scheme with the largest number of subscribers, insurance money paid out to cover damage to rice, wheat and barley in the past five years totaled between about 1.44 billion yen and 22.8 billion yen each year.
In addition, there is an established ceiling for insurance payments from the agricultural schemes. Damages that exceed this ceiling are met by the central government.
Under the current insurance schemes, if no damage occurs to agricultural products for three years, up to half the premiums paid during the period is returned to subscribing farmers.
However, the portion of premiums met by the central government is not returned to the government. As a result, this money has been accumulating for the past several years.
The funds are used to finance measures and research projects that aim to prevent agricultural damage from natural disasters. However, a large portion of the cash is either deposited in bank accounts or invested in government bonds and other types of financial products.
The Okitama farmers mutual aid association in Yonezawa, Yamagata Prefecture, headed by former Agriculture, Forestry and Fisheries Minister Takehiko Endo, was discovered to have illegally received government subsidies as premiums for its insurance program by padding the number of its members. The Board of Audit has twice instructed the association to rectify the problem, but the association has failed to follow the instructions.
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