Japan takes action to lower soaring rice prices with stockpile release

Faced with long lines of consumers seeking affordable grain, Japan's farm minister announced Tuesday the government is prepared to release additional stockpiled rice, following retailers' emergency distribution of the grain over the weekend.

In a sudden policy shift, the government initiated direct sales of its rice reserves to retailers last week. 

This move intends to provide consumers with 5 kg bags at approximately 2,000 yen ($14), which is significantly below the prevailing average market prices, according to media reports.

Measures to stabilise prices

In response to rising rice prices impacting consumers, the Japanese government has initiated the release of its rice reserves through direct agreements.

Agriculture Minister Koizumi Shinjiro stated on Sunday that he believes releasing stored rice reserves could potentially contribute to a general decrease in rice prices.

A total of 80,000 tons harvested in 2021 are up for sale through no-bid contracts, according to media company NHK World Japan.

The ministry reports receiving approximately 1,300 applications.

Due to the volume of applications, which may exhaust the available rice allocation, the ministry had temporarily halted accepting applications from rice retailers from Monday.

Skyrocketing rice prices, having doubled since last year and exacerbated by extreme heat affecting harvests, are generating significant worry among both voters and government officials in Japan. 

This issue takes on heightened importance as Japan prepares for the Tokyo metropolitan assembly election on June 22 and the upper house parliamentary election in July.

Consumer concerns and market response

"I never thought the price of stockpiled rice would fall this low," 75-year-old Kazumi Uchida told Reuters in a report as she waited in line at an Ito-Yokado store in Tokyo on a rainy Saturday. 

During the week ending May 25, the average price of rice in supermarkets experienced a slight decrease of 25 yen, settling at 4,260 yen per 5 kg. 

This marked the first price drop in three weeks. However, the limited impact of releasing stockpiled rice through the former multi-tiered wholesale auction system was evident in this modest price change.

After assuming his post on May 21, Farm Minister Shinjiro Koizumi, eliminated the auction system. 

He mentioned the government might consider purchasing rice back from wholesalers who participated in the auctions since March. This potential buyback could increase rice availability in the market and lower prices.

If required, the government is prepared to release its entire stockpile, he reiterated.

The impact of artificially low-priced stockpiled rice on the market for premium, single-origin "brand" rice and related products is yet to be determined. Projections indicate an increase in rice production for the 2025 harvest season.

Impact of imports and outlook

Due to escalating domestic rice prices, a significant increase in the demand for more affordable imported rice has occurred. 

This surge persists despite Japan's substantial tariffs, which are designed to safeguard local rice farmers and are applied beyond the designated duty-free "minimum access" allowance.

Private rice imports experienced a fourfold increase, reaching nearly 1,500 metric tons in the first 11 months of fiscal year 2024. This figure, although still minimal, shows a significant jump. Note that Japan's fiscal year spans from April to March.

Though complete official statistics for recent months are pending, Japan Agricultural News indicates a sharp increase in private imports, with April alone exceeding 6,800 tons.