* Abe wants to liberalise sclerotic farm sector

* Abe negotiating trade pact that would cut import tariffs

* Japan Agriculture lobby resisting reforms and trade pact

* Some fear Abe could backtrack to avoid clash before local elections

* Japan farms inefficient and tiny by international standards

By Yuka Obayashi

TOKYO, Feb 1 (Reuters) - After December's landslide re-election, Japanese Prime Minister Shinzo Abe's programme to revive the nation's economy is set to meet perhaps its stiffest challenge, the nation's sclerotic farming industry.

He will soon submit legislation to reform agriculture, a sector where a dwindling band of aging farmers works tiny plots, while conducting gruelling negotiations to sign up for the Trans-Pacific Partnership (TPP), which would cut towering import tariffs that shield domestic farmers.

Standing in his way is Japan Agriculture (JA), a lobby group that controls most aspects of pricing and distribution through its network of about 700 farming cooperatives, and also supplies feed and machinery.

It doesn't like Abe's plans to clip its wings, nor the TPP.

And the JA, which has long had close ties to his Liberal Democratic Party (LDP), has financial clout - its banking business had nearly 91.5 trillion yen ($780 billion) in deposits in March 2014 - and a large membership, which give it influence over lawmakers in rural constituencies.

In January its members campaigned against and helped defeat the LDP's candidate for governor of Saga, a prefecture in farm-heavy southwestern Japan.

Though agriculture is only about 1 percent of Japan's economy, that defeat worries those who fear the government could temper what Koichi Kurose, chief economist at Resona Bank, calls "a symbolic part of Abe's structural reforms" ahead of nationwide local elections in April.

"If they pull back from that to win elections, they can pull back from the whole Abenomics reforms," he said.

"Foreign investors are also watching closely whether or not Abe can carry out agricultural reforms, which will affect their evaluations of Abenomics," said Chizu Hori, senior research officer at Mizuho Research Institute Ltd.

At home, farmers hurt by another plank of Abenomics - loose money and a weaker yen - are also watching closely.

Hiroyasu Sugiura, 67, whose dairy lies in the shadow of Toyota Motor factories in central Japan, says he is desperate.

The tumbling yen helps exporters like Toyota but has led to a sharp rise in feed costs, which now swallow nearly 80 percent of Sugiura's dairy revenue.

"The weaker yen ... may have given Toyota Motor trillions of yen in profit, but we are getting squeezed by the same national policy," said Sugiura, who is also the head of the Aichi Dairy Cooperative. "We want the government to protect us."