Consumers have last word on fate of rice farming

February 22nd, 2011 by Philip Brasor & Masako Tsubuku

Farmers are up in arms about the possibility that the government will participate in the Trans-Pacific Partnership free trade agreement, which would remove import tariffs on products from member countries. In particular, rice farmers say that allowing cheaper foreign rice into Japan would wipe them out, which is probably true for most of them.

The price is rice: 2010 Koshihikari at ¥58 per bowl

Some ambitious high-grade rice producers are determined to meet the challenge not only in Japan, but overseas, as well. The rice collective Beisist Shonan is already selling its expensive brand in Taiwan and Europe. One company in Kobe called Shinmei has a plan to sell 1,200 tons of 2010 rice overseas, which is 870 more tons than they sold of 2009 rice. The company projects that it will export 10,000 tons by 2018. But those companies represent a small portion of rice farmers, the vast majority of whom are part-timers whose methods aren’t very efficient.

At present, the farm sector contributes about ¥10 trillion to Japan’s economy every year, according to the Ministry of Agriculture, Foresty and Fisheries, which estimates that the sector will lose about ¥4.1 trillion if Japan joins TPP. In addition, Japan’s food self-sufficiency rate will drop from 40 percent to 14 percent. About 10 percent of the rice produced in Japan is high-grade (Niigata Koshihikari, organic brands, etc.) and is thus considered invulnerable to foreign imports. Nevertheless, the ministry estimates the price will drop from the current average of ¥280 per kg to ¥177 retail. The remaining 90 percent of Japanese rice, which will compete directly with foreign brands, costs now about ¥247 per kg.

If Japan joins TPP, the foreign rice that will be available will cost about ¥57 per kg, or 77 percent less. In a worst-case scenario, all this domestic rice would be supplanted by foreign rice. Taken together, the decline in production would be about ¥1.97 trillion. Obviously, the damage to farmers is considerable.

But what about the benefit to the general public? Takafumi Okawa, an associate professor of international economics at Shiga University, has pointed out that the lower rice price that will result should Japan join the TPP would free up a substantial portion of household income. The agriculture ministry estimates that the average Japanese person consumes 61 kg of rice a year. Using the ministry’s figures, Okawa calculates that the drop in price of high-grade rice and the replacement of remaining domestic rice with cheaper foreign rice would result in household savings of ¥1.54 trillion a year, money that he believes would be spent on domestic products and services, thus stimulating the economy. This would be a much larger amount of money than the ¥438 billion in lost GDP that the agriculture ministry estimates will result from the liberalization of rice imports.

Okawa admits that his calculations may not be that exact, owing to the fact that the agriculture ministry doesn’t explain how it came up with its numbers. They say the average retail price of a kilogram of high-grade rice is ¥280 per kg, but if you go to a store, Koshihikari usually sells for about ¥400 a kg. (In 2010, farmers received an average ¥210 per kg of rice when they sold to wholesalers, 70 percent less than four years ago.) Also, many retailers post the price of a particular brand of rice “per bowl,” which is as inexact as you can get since a bowl can be anywhere from 60 grams to 150 grams (not including the water used to make it). We’ve seen high-grade rice advertised for as much as ¥64 per bowl, but a few weeks ago a man sent an angry letter to the Asahi Shimbun saying that, for the sake of Japanese rice farmers, consumers should have no problem spending as much as ¥25 per bowl. Where, exactly, does this guy buy his rice?

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One Response

  1. To the people of Japan…my heart goes out to you and you are all in our prayers. Here is hopeing a speedy recovery to the disasters.

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