Rice is nice when the price is right

October 1st, 2014 by Philip Brasor & Masako Tsubuku

Early birds: Harvesting rice crop in northern Chiba prefecture in September

Early birds: Harvesting rice crop in northern Chiba Prefecture in September

The main rallying cry of those opposed to the Trans-Pacific Partnership negotations, such as JA (National Federation of Agricultural Cooperative Associations), is that Japan can no long feed itself with the food it produces, since its self-sufficiency rate is a meager 39 percent. But as attorney Colin P.A. Jones recently pointed out in his Japan Times “Law of the Land” column, this figure is misleading since it measures food consumed in calories.

In terms of production, Japan’s self-sufficiency rate is 65 percent. Moreover, in terms of total volume of food produced, Japan is fifth in the world. The point is, Japan produces plenty of food for itself, and it also imports lots of food. It is a wealthy country by any measure. However, its agricultural sector is lopsided in that it doesn’t produce food in a way that matches demand.

Rice is the culprit. Even without American threatening their livelihood with shiploads at the ready of cheap short-grained rice, farmers in Japan are already seeing prices drop precipitously. There is just too much rice being produced, despite the fact that the government still pays farmers not to produce so much.

According to Tokyo Shimbun the problem started in 2011 after the Great East Japan Earthquake destroyed much of the crop in the Tohoku region, a major rice-producing region. Consequently, rice stocks became low and the price skyrocketed. This situation lasted through the 2012 harvest. As a result, restaurants and prepared food makers cut back on the amount of rice they used. But by the middle of 2013, stocks of rice had increased to the point of a surplus, and a bumper crop was produced in the fall. But demand didn’t follow suit and the surplus grew considerably. Again, the situation remained unchanged and the price has been dropping steadily since then to the point where it’s lower than it was before the earthquake.

The agriculture ministry says that there was 2.22 million tons of rice held in non-government storehouses as of June this year, and this autumn’s harvest is expected to be huge, even though weather conditions in western Japan were not considered optimal for rice cultivation. After consumers buy all the new rice they want — and it’s new rice that Japanese favor, not last year’s harvest — the surplus will probably be about 30 percent larger than it is now, driving the price down even further. One supermarket manager told the paper that when the new high-value strains of rice go on sale this month they will likely be 10-15 percent cheaper than last year. Already, 2014 rice grown in western Japan, like Miyazaki Koshihikari, is on sale and a 5-kg bag is ¥400 cheaper than it was last year.

A government body that assures stable rice supply says that as of July the average retail price of all strains of rice in Japan was ¥370 per kg. Even with the consumption tax hike factored in, that’s ¥40 cheaper than last year. As one full-time rice farmer from Gifu told the newspaper, if the price goes down any further “we can’t afford to grow rice any more.” Even so-called luxury brands, such a Uonumasan Koshihikari, grown in Niigata Prefecture, is dropping to a level where anyone can afford to eat it every day.

Of course, this is a good thing for consumers as even the head of JA, Akira Banzai, told Tokyo Shimbun, but the general consensus in the media is that it’s a dire development since it could theoretically drive farmers out of business. What they tend to ignore is the fact that rice farmers in particular are a dying breed because they are getting older and no young people are stepping in to take their places. In addition, the government has said that it plans to stop the non-rice growing subsidy by 2018. Whether they will actually carry it out is anyone’s guess, but the time seems ripe for a more or less open domestic market with no price controls and no government handouts.

In that regard, the TPP might actually help more ambitious rice farmers and cooperatives sell their product overseas, especially since the dollar is rising, but the price would have to come down even more. Despite the drop Japanese rice is still too expensive to sell abroad, except to rich Chinese. As it stands, many Japanese farm cooperatives are bypassing JA to sell their rice directly to consumers, and at relatively premium prices. You can even buy it on Amazon.

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