Only Extraordinary Measures for Rice Can Bring Prices Down

Japan Forward

5 days ago

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Rice prices have soared to twice the level of a year ago. That has created a serious situation that continues across the nation. Given the need to respond to the crisis facing consumers, it is appropriate for the government to take extraordinary measures.
Agriculture, Forestry and Fisheries Minister Shinjiro Koizumi has announced a new bidding method that will be used for the release of government stockpiled rice into the market. MAFF has bypassed traditional competitive bidding in this case. Instead, it is selling directly to major supermarkets and other retailers through discretionary contracts.
The aim is to have stockpiled rice on store shelves selling for about ¥2,000 JPY ($13.80 USD) per five-kilogram bag by early June. This marks a departure from the policy of Taku Eto, Koizumi's predecessor as agriculture minister. Eto rejected involvement in setting prices based on the principle of government non-intervention in the market. Stockpiled rice arrives at Iris Ohyama's rice milling plant on May 29. Deliveries to major retailers have begun and will be made available in stores from June 2nd (Watari Town, Miyagi Prefecture).
Koizumi's recognition that soaring prices "might accelerate the shift away from domestically produced rice" is certainly valid. Although the impact on farmers struggling with rising production costs must be considered, restoring prices to an affordable level makes sense.
Under the previous approach using preestablished contracts, the price could not be lowered even by releasing stockpiled rice. Next, the question is whether the government can deeply reflect on this point and implement a new system that resolves the problem without confusion.
Dealing with the rice issue is the core of the measures the Ishiba administration must take to combat rising consumer prices. It should not be overlooked that Prime Minister Shigeru Ishiba and Minister Koizumi will bear a large share of the responsibility for its success or failure.
Under the previous competitive bidding system, stockpiled rice was sold to the highest bidder. That made it difficult for retail prices to fall. Under the no-bid arrangement, the government can determine the price and other terms and then choose willing contract partners at its discretion. That should improve the prospects for easing prices.
In addition to the introduction of discretionary contracts, under the new arrangement, buyers will also change from collection agents, such as the National Federation of Agricultural Cooperative Associations, JA ZEN-NOH, to large retailers closer to the level of actual consumers. We would like to see the government select suitable vendors to ensure that stockpiled rice is distributed nationwide. Stickers are also affixed to stockpiled rice for clear identification at Iris Ohyama's rice milling plant. It will be available in stores from June 2. (May 29, Watari Town, Miyagi Prefecture)
In order to quickly get the stockpiled rice to consumers, distribution, milling, and other necessary operations must also proceed smoothly. The government should provide detailed support to retailers, not limited to the costs of shipping goods to rural areas.
The key will be whether or not the retail price of all rice, not just stockpiled rice, can be controlled. That would include brand-name rice. Prime Minister Ishiba intends to lower the average price for a five-kilogram bag, which is currently over ¥4,200 ($29), to the ¥3,000 ($20.50) range. However, wholesalers and other parties have stock that they acquired at high prices.
Will their prices fall enough to reach Ishiba's target level? Consumers will not accept a two-tier structure with sharply different prices for stockpiled rice versus other products.
Author: Editorial Board, The Sankei Shimbun
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