Japan farm minister resigns amid questions over political funds

TOKYO (Reuters) - Japan's farm minister resigned on Monday amid questions over his political fundraising, stepping down at a time the government is tackling issues such as agriculture reform and talks on a broad Pacific trade agreement.

In a bid to limit any damage, Prime Minister Shinzo Abe accepted Koya Nishikawa's resignation and quickly picked Yoshimasa Hayashi, Nishikawa's predecessor, to replace him.

"It's totally regrettable," Abe told reporters. "I have responsibility for his appointment so I'd like to apologise to the public."

"Hayashi is well-versed with policy and I believe he is able to grasp the progress the government has made in one night, so there won't be a delay (in policy)."

Nishikawa has been grilled in parliament over political donations from sources including the lumber and sugar refining industries, which get government subsidies and which his ministry oversees. He said he had returned the funds and had not violated any laws.

"Those who don't understand would not understand no matter how much I explain, so I submitted my resignation," Nishikawa told reporters.

The resignation is unlikely to have much impact on policy, experts said, but some said it could be a headache for the premier. Two ministers resigned last year because of funding scandals, shortly after Abe reshuffled his cabinet for the first time.

"Prime Minister Abe has defended him considerably, saying there was no problem at all. In that sense, there is going to be an impact," said Tomoaki Iwai, political science professor at Nihon University, referring to Nishikawa.

Abe's support rate stood at 50 percent in a Nikkei business daily survey published on Monday, relatively high for a leader.

Iwai said the resignation was unlikely to affect agriculture reform or talks on a Trans-Pacific Partnership (TPP) trade deal that would link 12 countries, including the United States, Japan, Australia and Chile, and cover nearly 40 percent of the world economy.

"When it comes to TPP, there won't be fundamental change because the government has all but finished putting agricultural cooperatives under control through the reform of the cooperatives," Iwai said.

TPP negotiators will meet in Hawaii in the second week of March, the U.S. trade office said on Friday.

But no date has been set on a ministerial meeting, which could delay a final agreement.

Agriculture reform is a symbol of "Third Arrow" changes to fuel long-term growth, part of Abe's reflationary policy dubbed"Abenomics".

Japan's politically powerful farming lobby this month accepted plans by Abe's party to reform the agricultural sector.

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