The government's plan to sell its 50-per-cent stake in Japan Tobacco (JT) was offset by the opposition party's support for Japan's tobacco farmers.

By tapping long-standing support from Japan's biggest opposition party, the Liberal Democratic Party, tobacco farmers have put up resistance stiff enough to oblige the government, at least for now, to hang on to one-third of JT reports the Wall Street Journal. The farmers fear that removing the state's shield and JT's obligation by law to buy leaf from farmers would spell the end to tobacco farming in Japan.

Full privatization of JT was one element of a package to raise JPY 12 trillion (EUR 116 billion) to finance rebuilding efforts after the March 11 earthquake and tsunami. As part of that package, the LDP, which along with other opposition parties has a majority in the upper house of Japan's parliament, agreed to back the first stage of the government's plan which will cut its stake to 33 per cent, but withdraws support for the sale of any further shares.

Meanwhile, JT believes it needs to transform itself into a fully privatized entity to compete with its much bigger global rivals. "Our management freedom won't be secured without full privatization," said JT senior vice president Yasuyuki Tanaka in a recent interview

Compared with a decade ago, the number of tobacco farmers in Japan almost has been halved, to 10,801 for this fiscal year. The number is expected to fall to about 6,000 next year. (pi)