This paper assesses contemporary British LFAs policy through comparison with Japanese Hilly and Mountainous Areas policy. Decoupled income support and environmental schemes promote extensive agriculture and discourage entrepreneur's innovation. Maintenance of the rural population, encouraging added value production and fostering the human resource must be the critical issue. Promoting diversified enterprise of agricultural firms is not readily achievable although it is often considered as an important policy instrument required in connection with decoupled direct subsidy. Accountability and reliability of government finance must be enforced when direct payment is the major instrument to support agriculture and countryside in place of market price support.
