Latest news with #JapanAgriculturalCooperatives
3 days ago
- Business
Japan's High Rice Prices: A Review of the Situation and a Look Ahead
Rising rice prices in Japan have prompted the government to release its emergency stores of the grain to ease the impact on consumer pocketbooks. Prices remain stubbornly high, though, indicating the need to consider the root causes of the rice shortage and reasons that the grain reaching store shelves remains expensive. How Japan Got Here Recent months have seen skyrocketing consumer and media attention on the rising price of rice, Japan's staple grain. The sharp rise in rice prices can be traced back to changes in supply and demand tied to the rice harvested in 2023. Due to the extreme heat that year, the rice was of lower quality than usual, and there was a drastic decline in the output of the grain as a whole. At the same time, demand for rice surged. The lower quality harvest also reduced the white rice yield (produced after milling), raising the amount of brown rice needed to maintain adequate supply. The surge in demand was driven by the fact that the price of rice remained stable even during overall inflation, making rice feel affordable, compounded by the recovery of the food service industry and inbound tourism as the COVID pandemic subsided. The population of foreigners, many from rice-eating cultures, increased by a record 342,000 in 2024, contributing to further demand. In August, before the fall harvest, concerns raised by the Nankai Trough earthquake alert spurred stockpiling, leading to shortages and driving prices upward. Rice is a staple food in Japan and is seen as a necessity, so its demand stays fairly steady even when prices change. For this reason, slight changes in supply and demand can lead to big changes in prices. The optimal range of the private-sector stockpile at the end of June, a key indicator for assessing supply levels, is said to be 1.8 million–2 million tons. As this is a range of 200,000 tons, it can be said that the price of rice will change with a 200,000-ton shift in supply and demand. This amounts to 2.7% of the brown rice produced in 2024. After milling, that's 180,000 tons in white rice, roughly 3.3 kilograms per household, or four grams per citizen per day, close to a single teaspoon. This small amount is all it takes to disrupt distribution and prices. Upheaval on the Wholesale Side The Japan Agricultural Cooperatives (JA) group sets provisional advance payments for farmers when it procures rice, taking into consideration the annual forecast for rice sales. For the 2024 harvest, regional JA cooperatives had raised their provisional payments. However, JA had not fully anticipated how competitive the situation would become. There were more players in the race to procure rice—not only wholesalers offering prices well above JA's provisional rates, but also food service companies and individual consumers purchasing directly from farmers. As a result, JA and other major procurers failed to secure enough rice. As of the end of January 2025, the collected amount had decreased by 230,000 tons, and inventory by 480,000 tons, year on year. Major wholesalers, on the other hand, succeeded at maintaining their usual inventory levels. The risk of purchasing at high prices was offset by passing the costs on to the sales side. Supported by actual demand from consumers and other buyers, major rice wholesalers achieved record profits and saw their stock prices rise. Stockpile Releases Fail to Impact Prices In January 2025, the government made a new rule allowing it to release stockpiled rice when there is a supply chain bottleneck—previously releases were allowed only in times of disaster or when poor harvests threatened the supply. The condition for this release is that the government must repurchase the same amount that it had released, in principle within a year, effectively treating the release as a short-term 'loan' of stockpiled rice. However, since the rule allows stockpiled rice to be distributed for commercial use as well, some may hope that retail prices remain high—a development that would encourage still more stockpile releases. Moreover, the economic impact of stockpiled rice flowing into school lunch programs, hospitals, shops, and restaurants, where rising costs were endured without raising prices, cannot be grasped from retail prices. The government has been releasing grain from its stockpiles onto the market since March this year. Why haven't prices fallen despite this? Besides the time needed for distribution, there are two fundamental problems. First, no changes were made to policy methods (like bidding rules) to match the new goal of price stabilization. Second, stockpiled rice was released without setting metrics to evaluate the policy's effectiveness. Another issue is that the release came after competition to buy rice had already heated up. At this point, most of the rice has already been bought and sold at high prices, and without severe restraint on purchases, the high purchase price will be passed on to the sale price. The government's stockpiled rice being removed from sacks at a rice milling plant in March 2025. (© Jiji) Looking Ahead to the 2025 Harvest In response to this situation, policy changes were made in 2025, allowing farmers to change the sale destination of their rice by August 20 in line with trends in supply and demand. To assess whether there will be enough rice, one important indicator is the total farmland area used for rice cultivation. The figure below shows my estimates based on policies and data as of May 10. Assuming an average harvest, the ideal paddy-field rice cultivation area would be 1.59 million hectares (130,000 hectares more than the previous year). While a table rice shortage could be avoided with 1.38 million hectares, the actual cultivation area is expected to be 1.31 to 1.43 million hectares. Shortages of rice as a whole, including both the standard grain for dining and 'nontable' grain meant for feed and for processed food products, can be addressed by increasing corn imports for feed, arranging emergency imports of rice for processing, and delaying the repurchase of stockpiled rice. However, if the repurchase of stockpiled rice is delayed, the government's reserve of stockpiled rice could remain critically low for some time. Should a poor harvest or major natural disaster occur, emergency imports of 'table rice,' served on its own as a key component of meals in Japan, could become necessary. Sufficient Doesn't Mean Affordable Trends in supply and demand affect price, but having a sufficient supply of rice, on the one hand, and ensuring its affordability on the other don't necessarily happen at the same time. Judging from the recent situation and the fact that there is no established product market for rice in Japan, it is likely that the cost of procurement of rice will be passed on to retail prices. Further, there are no government policies directly aimed at curbing the surge in rice prices. Even the allowing of farmers to change their sale destination was only intended to address shortages. Therefore, starting in April 2025, the government began trying to calm the situation by repurposing the release of stockpiled rice, originally a distribution measure, into a de facto price measure. The current policy framework, shaped over 30 years of reforms since the enactment of the Food Control Act, was designed to reduce government involvement in rice pricing. In contrast, the current price measure only began a month ago. It's unrealistic to expect a quick fix. Given that rice in Japan is basically harvested once a year, the government should aim to stabilize the situation by 2028 and formulate robust policies accordingly. Two Possible Future Scenarios Having lost out in the race to secure a stable stockpile of rice in 2024, JA has been preparing for a comeback in 2025. In addition to increasing price estimates and presenting them earlier, some JA cooperatives are proposing multiyear contracts at stable prices. Depending on whether competition to secure rice intensifies again as it did in 2024—with wholesalers, restaurants, prepared food businesses, and retailers actively seeking to get their hands on supplies—two possible scenarios can be envisioned going forward. On the one hand, if competition does not heat up, prices will not increase. Indeed, if the additional release of stockpiled rice causes a major drop in prices, JA—which is counting on higher rice purchase prices—may see its fortunes decline. On the other hand, though, if competition heats up again, prices may climb even higher. My prediction is that intense competition will persist in 2025. My reasons are fourfold. First, there has been no major slowdown in purchasing, even at the current price level. Second, it's easier for private companies to efficiently collect rice than it is for JA, given its nature as a sprawling cooperative. Third, major wholesalers have increased their buying power due to their profit gains. And fourth, even if the repurchase period for stockpiled rice is extended, JA and other winning bidders must sell the same quantity of rice they won in the bidding back to the government, meaning they will collect extra rice in anticipation, keeping the shortage in place. If rice production does not increase and price measures are pushed back, high prices could persist into 2028. Excluding stockpiled and imported rice, consumer prices for five-kilogram bags would range between ¥4,200 and ¥6,500, with considerable variance in pricing by product (brand). Preventing a Recurrence of This Situation Rice prices are determined by where farmers sell, and at what price. Normally, farmers sell to buyers offering the highest bid. But with consumers moving away from domestic rice due to high prices, farmers might start to think and make choices with a longer-term perspective. If competition intensifies, sales through JA channels will tend to yield less profit. Whether farmers will decide to sell more or less through JA will be important going forward. Selling to non-JA buyers could bring in more money. However, since JA functions as a cooperative, a lower ratio of harvest control here could end up weakening farmers' bargaining powers over the medium to long term. Large-scale farmers, in particular, are often able to negotiate on an equal footing with the companies purchasing their product precisely because of the procurement power that JA wields. From the perspective of these corporate purchasers, any decline in JA influence signals a growing chance that they will be able to procure rice more cheaply in the future. Rice prices may fall to a lower, more stable level, one way or another. But will this because of increased reliance on cooperative-based distribution, or because of the decline of those cooperatives and their replacement by corporations in the grain market? The choices that farmers make in 2025 could become a significant turning point in the history of rice in Japan. What matters now is that rice farmers recognize this reality and carefully consider their decisions on where to sell their rice. (Originally published in Japanese on May 16, 2025. Banner photo: Stockpiled government rice being hauled out from a storage facility on March 18, 2025. © Jiji.)
Kyodo News
26-05-2025
- Business
- Kyodo News
Japan starts revised rice stocks sales to cut prices by early June
KYODO NEWS - 3 hours ago - 22:39 | All, Japan Japan began selling government rice stockpiles through direct contracts on Monday after the newly appointed farm minister pledged to curb soaring prices of the nation's staple by selling the stockpiles at less than half the average price. Targeting a level of around 2,000 yen ($14) per 5 kilograms by early June, rice produced in 2021 and 2022 is slated for release through contracts with major retailers, such as supermarkets. The move comes as the government tries to counter criticism that it has failed to prevent rice prices from soaring amid inflation outpacing wage growth and straining household budgets. The plan to release 300,000 tons of rice bypasses the auction system, under which farming cooperatives purchased most of the previously released stock, limiting the government's ability to influence prices. The rice, harvested a few years ago, will be sold at an average pretax price of 10,700 yen per 60 kilograms, with the government covering transportation costs to regional areas. Online sales are also being considered to widen distribution. "Had we continued as we were, I did not believe we could fulfill people's expectations," farm minister Shinjiro Koizumi told Ministry of Agriculture, Forestry and Fisheries officials in a meeting, which was open to the press. "We will move at speed and with urgency to dispel the people's concerns," he said. On the same day, the agriculture ministry established a special response team of some 500 members nationwide tasked with handling high rice price issues. Koizumi said the group must prevent a situation where the public starts to turn away from rice products. Large retailers handling 10,000 tons or more rice will receive such contracts. The new measures also do not require retailers to comply with previous requirements that suppliers who bought auctioned rice would have to return an equivalent amount to the government. Under the previous system, the government from March began auctioning some 312,000 tons of rice stockpiles in three tranches. They were sold mainly to groups such as the Japan Agricultural Cooperatives. In suspending the approach, Koizumi has said the highest-bidder-wins auction system was pushing up rice costs. The average price of the staple food at supermarkets has risen almost continuously in recent months, hitting a record 4,285 yen per 5 kg in mid-May, roughly double last year's level, due partly to a poor harvest and delays in releasing stockpiled rice. Regarding contracts, Seven & i Holdings Co. said Monday that its Ito-Yokado supermarket chain will enter into a negotiated agreement, while rival Aeon Co. said it is considering joining the deal. Japanese tech giant LY Corp., operator of the Line messaging app, said it is considering selling the rice online, while Rakuten Group Inc. is moving quickly to enter the market in partnership with Japan Post Co. Koizumi assumed his post on Wednesday after his predecessor resigned in an uproar over a gaffe in which he said he had never bought rice due to having a surplus that had been gifted by supporters. The public appears receptive to Koizumi's plans, with a Kyodo News poll released Sunday after he joined Prime Minister Shigeru Ishiba's Cabinet showing 59.8 percent of respondents think he can bring down rice prices. Related coverage: Nearly 60% expect rice prices to fall with new farm minister: poll New farm minister eyes 2,000 yen per 5 kg retail price for gov't rice FOCUS: Free rice gaffe sends Ishiba into pre-election damage control mode
Kyodo News
26-05-2025
- Business
- Kyodo News
Japan starts revised rice stocks sales to cut prices by early June
KYODO NEWS - 3 hours ago - 14:37 | All, Japan Japan began sales of government rice stockpiles via direct contracts on Monday, aiming to slash soaring prices after the newly appointed farm minister pledged to bring them down to about 2,000 yen ($14) per 5 kilograms by early June. The move comes as the government seeks to quell criticism it has been ineffective in preventing rice prices from skyrocketing at a time when inflation is outpacing wage growth and pressuring household budgets. The government plans to release around 300,000 tons of rice via the contracts with major retailers, such as supermarkets, bypassing the auction system under which farming cooperatives bought most of the previously released rice, limiting the government's influence over prices. "Had we continued as we were, I did not believe we could fulfill people's expectations," farm minister Shinjiro Koizumi told Ministry of Agriculture, Forestry and Fisheries officials in a meeting, which was open to the press. "We will move at speed and with urgency to dispel the people's concerns," he said. On the same day, the agriculture ministry established a special response team of some 500 members nationwide tasked with handling high rice price issues. Koizumi said the group must prevent a situation where the public starts to turn away from rice products. The stockpiles of rice produced in 2021 and 2022 are to be sold at 11,556 yen, including tax, per 60 kg and the government will shoulder the cost of transportation to regional areas. Online sales of rice to achieve broader distribution are also under consideration. Large retailers expected to process 10,000 tons or more of the stockpiled rice will receive daily priority in contracts and sales of the products. The new measures also do not require retailers to comply with previous requirements that suppliers who bought auctioned rice would have to return an equivalent amount to the government. Under the previous system, the government from April began auctioning some 312,000 tons of rice stockpiles in three tranches. They were largely sold to groups such as the Japan Agricultural Cooperatives. In suspending the approach, Koizumi has said the highest-bidder-wins auction system was pushing up rice costs. The average price of the nation's staple food in Japanese supermarkets has climbed almost without interruption in recent months, reaching a record 4,268 yen per 5 kg in early May, roughly double last year's level, due in part to a poor harvest. Koizumi assumed his post on Wednesday after his predecessor resigned in an uproar over a gaffe in which he said he had never bought rice due to having a surplus that had been gifted by supporters. The public appears receptive to Koizumi's plans, with a Kyodo News poll released Sunday after he joined Prime Minister Shigeru Ishiba's Cabinet showing 59.8 percent of respondents think he can bring down rice prices. Related coverage: Nearly 60% expect rice prices to fall with new farm minister: poll New farm minister eyes 2,000 yen per 5 kg retail price for gov't rice FOCUS: Free rice gaffe sends Ishiba into pre-election damage control mode
Japan Today
26-05-2025
- Business
- Japan Today
Japan begins selling rice stockpiles via direct contracts
Farm minister Shinjiro Koizumi announces a new system for releasing government rice stockpiles to bring down soaring prices, at the Ministry of Agriculture, Forestry and Fisheries in Tokyo on Monday Japan began sales of government rice stockpiles via direct contracts on Monday, aiming to slash soaring prices after the newly appointed farm minister pledged to bring them down to about 2,000 yen per 5 kilograms by early June. The move comes as the government seeks to quell criticism it has been ineffective in preventing rice prices from skyrocketing at a time when inflation is outpacing wage growth and pressuring household budgets. The government plans to release around 300,000 tons of rice via the contracts with major retailers, such as supermarkets, bypassing the auction system under which farming cooperatives bought most of the previously released rice, limiting the government's influence over prices. "Had we continued as we were, I did not believe we could fulfill people's expectations," farm minister Shinjiro Koizumi told Ministry of Agriculture, Forestry and Fisheries officials in a meeting, which was open to the press. "We will move at speed and with urgency to dispel the people's concerns," he said. On the same day, the agriculture ministry established a special response team of some 500 members nationwide tasked with handling high rice price issues. Koizumi said the group must prevent a situation where the public starts to turn away from rice products. The stockpiles of rice produced in 2021 and 2022 are to be sold at 11,556 yen, including tax, per 60 kg and the government will shoulder the cost of transportation to regional areas. Online sales of rice to achieve broader distribution are also under consideration. Large retailers expected to process 10,000 tons or more of the stockpiled rice will receive daily priority in contracts and sales of the products. The new measures also do not require retailers to comply with previous requirements that suppliers who bought auctioned rice would have to return an equivalent amount to the government. Under the previous system, the government from April began auctioning some 312,000 tons of rice stockpiles in three tranches. They were largely sold to groups such as the Japan Agricultural Cooperatives. In suspending the approach, Koizumi has said the highest-bidder-wins auction system was pushing up rice costs. The average price of the nation's staple food in Japanese supermarkets has climbed almost without interruption in recent months, reaching a record 4,268 yen per 5 kg in early May, roughly double last year's level, due in part to a poor harvest. Koizumi assumed his post on Wednesday after his predecessor resigned in an uproar over a gaffe in which he said he had never bought rice due to having a surplus that had been gifted by supporters. The public appears receptive to Koizumi's plans, with a Kyodo News poll released Sunday after he joined Prime Minister Shigeru Ishiba's Cabinet showing 59.8 percent of respondents think he can bring down rice prices. © KYODO
The Mainichi
26-05-2025
- Business
- The Mainichi
Japan shakes up rice sales system, targets lower prices by early June
TOKYO (Kyodo) -- Japan began sales of government rice stockpiles via direct contracts on Monday, aiming to slash soaring prices after the newly appointed farm minister pledged to bring them down to about 2,000 yen ($14) per 5 kilograms by early June. The move comes as the government seeks to quell criticism it has been ineffective in preventing rice prices from skyrocketing at a time when inflation is outpacing wage growth and pressuring household budgets. The government plans to release around 300,000 tons of rice via the contracts with major retailers, such as supermarkets, bypassing the auction system under which farming cooperatives bought most of the previously released rice, limiting the government's influence over prices. "Had we continued as we were, I did not believe we could fulfill people's expectations," farm minister Shinjiro Koizumi told Ministry of Agriculture, Forestry and Fisheries officials in a meeting, which was open to the press. "We will move at speed and with urgency to dispel the people's concerns," he said. On the same day, the agriculture ministry established a special response team of some 500 members nationwide tasked with handling high rice price issues. Koizumi said the group must prevent a situation where the public starts to turn away from rice products. The stockpiles of rice produced in 2021 and 2022 are to be sold at 11,556 yen, including tax, per 60 kg and the government will shoulder the cost of transportation to regional areas. Online sales of rice to achieve broader distribution are also under consideration. Large retailers expected to process 10,000 tons or more of the stockpiled rice will receive daily priority in contracts and sales of the products. The new measures also do not require retailers to comply with previous requirements that suppliers who bought auctioned rice would have to return an equivalent amount to the government. Under the previous system, the government from April began auctioning some 312,000 tons of rice stockpiles in three tranches. They were largely sold to groups such as the Japan Agricultural Cooperatives. In suspending the approach, Koizumi has said the highest-bidder-wins auction system was pushing up rice costs. The average price of the nation's staple food in Japanese supermarkets has climbed almost without interruption in recent months, reaching a record 4,268 yen per 5 kg in early May, roughly double last year's level, due in part to a poor harvest. Koizumi assumed his post on Wednesday after his predecessor resigned in an uproar over a gaffe in which he said he had never bought rice due to having a surplus that had been gifted by supporters. The public appears receptive to Koizumi's plans, with a Kyodo News poll released Sunday after he joined Prime Minister Shigeru Ishiba's Cabinet showing 59.8 percent of respondents think he can bring down rice prices.
