TOKYO - The so-called 'Reiwa Rice Crisis' that emerged last summer continues to impact Japan. The government initially predicted that rice prices would stabilize once the new harvest entered the market, but as of February 11th, prices remain high. In some supermarkets, the price of a 5kg bag of rice has surged by 700 to 800 yen.
In response, the Ministry of Agriculture, Forestry and Fisheries (MAFF) has announced plans to release a portion of the nation's reserve rice under certain conditions, citing supply bottlenecks as the primary reason for the prolonged price surge. But will this measure actually bring rice prices down? What quantity and harvest years of rice will be released? To explore these questions, we turn to the insights of agricultural economist Shinjo Ogawa, an assistant professor at Utsunomiya University.
Prices Keep Rising Despite New Harvests
Consumers across Japan have been feeling the impact of high rice prices. The issue first gained attention last summer when concerns over rice shortages led to what became known as the 'Reiwa Rice Crisis.' At the time, experts, including Ogawa, expected prices to stabilize once newly harvested rice entered the market in the fall. However, contrary to these expectations, prices have only continued to climb.
MAFF has now shifted its approach, opting to release part of the national rice reserves. But will this actually lead to lower prices? This question is set to be answered later this week when the government officially announces the details of the release.
In the background, concerns are growing over Japan’s broader rice policy, with some arguing that the current system is reaching its limits. The debate over a fundamental review of rice policy has already begun.
Why Are Rice Prices Still Rising?
Despite an increase in domestic rice supply compared to last year, prices remain high. Supermarkets in Osaka report that rice prices have surged since the start of the year, with some brands seeing increases of 700 to 800 yen per 5kg bag.
Consumers are struggling with the rising costs. One shopper expressed frustration, saying, "I feel bad buying rice at these prices. It’s just too expensive." Another noted, "Domestic rice is so costly that imported options are starting to look more attractive."
So why is the price still rising despite sufficient supply? According to MAFF, supply chain disruptions are to blame. The ministry has identified distribution bottlenecks as a major factor and has therefore decided to release rice from government reserves.
Normally, these reserves are intended for use during emergencies, such as poor harvests or natural disasters. However, the government has now approved their release under a new condition—any rice taken from the reserves must be repurchased within a year.
Expert Skepticism Over Government Measures
While the government hopes this measure will ease the market, some agricultural economists are skeptical. Ogawa warns that the move may not have the intended effect. "Releasing reserve rice might not necessarily lower prices," he said. "In fact, in some cases, holding off on releasing rice could have led to price stabilization."
The key issue is balance—releasing too little rice may have no effect, while releasing too much could cause prices to plummet, hurting farmers. Moreover, industry players can monitor government actions and adjust their own rice stocks accordingly, potentially limiting the impact of the policy.
Another major challenge is that a growing number of wholesalers and retailers are holding back their rice supplies, anticipating further price increases. Some industry players believe that demand will rise ahead of major events, such as the Osaka Expo, and are therefore reluctant to release their stocks now.
Why Does Japan’s Rice Policy Need Reform?
Japan’s rice production has long been shaped by government policies designed to stabilize prices and protect farmers. Over the decades, rice consumption has declined by half compared to its peak, leading to reductions in cultivated acreage. In response, the government has been providing subsidies to encourage farmers to grow alternative crops instead of rice.
Currently, Japan spends nearly 300 billion yen annually on these subsidies, but this policy has its critics. Some argue that government intervention is artificially inflating rice prices, forcing consumers to pay more while also increasing the tax burden.
One of the more controversial rules in place is the 'five-year water rule,' which requires farmers growing alternative crops on former rice paddies to flood their fields with water at least once every five years. The rule is intended to prevent subsidy fraud but has been criticized as an unnecessary burden on farmers.
A Turning Point for Rice Policy?
While the planned release of reserve rice has attracted significant media attention, a more fundamental shift may be on the horizon. On January 31st, the government quietly announced its intention to review rice policy from the ground up. Discussions are set to begin in April, with new policies expected to be introduced by 2027.
The goal of these discussions will be to find a better balance between supporting farmers and ensuring affordable rice prices for consumers. With Japan’s agricultural sector facing long-term challenges, these reforms could represent a critical turning point.
The government now faces difficult decisions. If rice prices remain too high, consumers may turn to cheaper imported rice, weakening domestic production. On the other hand, drastic price drops could hurt farmers. As Japan moves forward with its policy review, all eyes will be on how the government navigates these trade-offs.
The coming months will be crucial in determining the future of Japan’s rice industry.
Source: MBS
