Japan’s government is releasing strategic rice reserves to combat soaring prices, a move previously reserved for emergencies. Agriculture Minister Taku Eto announced the sale of 210,000 tons, about 3% of annual consumption, due to supply issues stemming from extreme weather and rising demand from tourists. Retail prices have surged 82% year-on-year, straining consumers. Experts suggest that while production may increase, traders might hold stocks, affecting market stability. Increased rice imports are also a consideration as dietary habits shift due to rising costs.
Japan’s Strategic Rice Reserves: A Response to Rising Prices
The Japanese government is set to release its strategic rice reserves, which were designed for emergency situations, to address the ongoing surge in prices of this essential food item in Japan. This marks a significant shift, as previous releases of these reserves—established nearly 30 years ago—were primarily in response to natural disasters and shortages, not price inflation and distribution challenges.
Government Action to Stabilize Rice Prices
On Friday, Agriculture Minister Taku Eto announced that the government will market 210,000 tons of rice, accounting for approximately 3% of the nation’s annual consumption, from its total reserves of about one million tons. The 2023 rice harvest faced challenges due to unprecedented heat, leading to a supply decrease that caused prices to skyrocket in the summer of 2024.
As demand surged and distribution channels faced significant disruptions, prices continued their upward trajectory. According to a government survey, the average retail price of a five-kilogram bag of rice hit 3,688 yen (around 23 euros) at the end of January, a stark increase from 2,023 yen a year prior (approximately 12.6 euros)—an astounding rise of 82%. This price hike adds strain on consumers already grappling with ongoing inflation, which was reported at +3% in December, excluding fresh products.
Eriko Kato, a 41-year-old resident of Tokyo, expressed her frustrations, stating, “I buy rice much less often than before; I sometimes forgo it altogether when I see the price. My parents send me rice to help me manage.” In response to the rising prices, the Ministry of Agriculture has recently adjusted regulations, allowing the sale of portions of national reserves.
Initially, Japan enacted a law in 1995 to build strategic rice stocks following a poor harvest that led to panic buying. Until now, these reserves could only be tapped during severe crop failures or disasters. The new guidelines enable their release during distribution disruptions that affect supply.
Experts attribute the recent price surge to increased demand, particularly with a record influx of foreign tourists seeking sushi, alongside panic buying spurred by warnings of potential “megathrust earthquakes.” Masayuki Ogawa, a professor at Utsunomiya University, noted that the demand for rice has risen as it remained a stable price option amid general inflationary pressures.
While the government anticipated that the autumn 2024 harvest would alleviate supply tensions, the situation remains complex. Although rice production did rise in 2024, major suppliers reported a decrease of 210,000 tons, suggesting producers might be favoring alternative sales channels. Ogawa remarked, “We suspect some traders are holding back their stocks, waiting for prices to climb even higher.” Following the government’s announcement, the market dynamics may shift.
However, Ogawa cautioned that a sudden price drop could jeopardize the long-term stability of rice production. Additionally, there is a possibility that the government may consider increasing rice imports, which have been tightly regulated and fluctuated between 800,000 to one million tons annually over the past 15 years, often hindered by high customs duties. Marcel Thieliant, an analyst at Capital Economics, highlighted that “Thai rice is available at half the price of benchmark Japanese rice.”
Despite the enduring popularity of traditional short-grain Japanese rice, annual per capita consumption plummeted to 50.9 kg in 2022, a stark contrast to figures from 60 years ago. In contrast to rice, prices for corn and wheat have dropped significantly over the past two years, potentially prompting consumers to alter their dietary choices. Nami Tanaka, a 40-year-old Tokyo resident, shared her experience, stating, “I buy less rice now; I sometimes substitute it with cheaper noodles like udon or yakisoba,” even though her teenage son considers these noodles “less nutritious.”