This paper aims to overview Japan’s implementation of the EU’s Less Favoured Areas (LFAs) direct payment support. Furthermore, we discuss the limitations of Japan’s LFA payments to the development of rural policy. Japan’s LFA direct payment policy was formed through adjustments to the small-scale Monsoon Asia terraced paddy field farming which still strongly relies on the community function. It has been effective in preventing further increases in farmland abandonment. However the long-term effectiveness of this policy is questionable due to the likelihood of further depopulation and ageing in Japan’s LFAs. We suggest the need for a conceptual shift from current support that maintains the status quo to one that emphasises investment in rural regeneration.