The Japanese government on April 9 announced that it would release another 100,000 tons of stockpiled rice onto the market — the third such move to combat the recent surge in prices of the staple. Further releases are planned monthly through July. The sharp rise in prices has dealt a blow to our daily lives, but Satoshi Fukutomi, a Mainichi Shimbun reporter who has been monitoring agricultural policies, points out that the issue isn’t merely about when rice prices will decrease. So what should consumers be focusing on?

An overly optimistic outlook

In the summer of 2024, rice vanished from supermarket shelves. Although the scarcity was later alleviated, prices continued to soar, prompting the government to release stored rice in March this year. The current focus is on supply shortages, but issues relating to a decline in demand such as the abandonment of farmland and surpluses of rice have been pointed out for many years. We can perhaps say the recent commotion surrounding rice has highlighted consumers’ indifference to the production challenges of this food.

In March, I saw a 2-kilogram bag of rice at a supermarket priced at roughly 2,200 yen (about $15). I hesitated to pick it up, but because I couldn’t do without it, I eventually purchased it. Rice balls at the convenience store have also gone up in price, and they’re less of an easy purchase compared to before. According to the Ministry of Agriculture, Forestry and Fisheries, the average price for 5 kilograms of rice at supermarkets across Japan is over 4,000 yen (about $28) — around double the price a year ago. As many experts have pointed out, the current price of rice is too high, and the rapid price increase has had a severe impact on household budgets.

At the same time, Japanese people are eating less rice. According to a survey conducted by the Ministry of Internal Affairs and Communications targeting households with two or more people, the average amount each household spent on rice in 2000 was 40,256 yen (approximately $282), compared to 27,512 yen on bread (about $193). However, by 2011, this trend had reversed and by 2024, annual spending on rice sank to 27,196 yen (about $191), while spending on bread rose to 34,609 yen (around $243).

I find that bread, which can be eaten immediately, is more convenient than rice, which requires cooking. This diversification in eating habits has resulted in a decrease in the amount of rice consumed per capita, which is now less than half of its peak in 1962. Annual demand has also fallen by about 100,000 metric tons every year.

But if demand is falling, why have we recently seen a shortage of rice leading to the release of government stockpiles?

Kunio Nishikawa of Ibaraki University, who specializes in agricultural economics, explains, “Even now, the government controls production volumes indirectly through subsidies, and through the provision of information and instructions to local governments and agricultural cooperatives. It’s a result of such guidance having had an excessive effect.”

The policy of reducing rice acreage to keep prices up, under which production targets were set for prefectures across the country was ostensibly abolished in 2018, but even today, the government effectively adjusts production volumes to maintain higher prices.

At the same time, the government underestimated rice demand. It predicted that demand for the staple would reach about 6.8 million metric tons between July 2023 and June 2024, but the actual figure ended up at around 7 million tons. Furthermore, the amount of rice produced for consumption in 2023 reached only around 6.6 million tons, falling far short. Considering the lack of foresight in the outlook, even if rice production increases this year, it is questionable whether the government will be able to buy back the same amount of surplus rice it has released as it is supposed to do within a year in principle.

With strong demand, one would think the logical move would be to increase production, but this is no simple matter. Due to Japan’s long period of economic stagnation, consumers have a strong preference for low prices, so it has not been possible to raise the price of rice. “Even though productivity was improved, the resulting drop in rice prices wiped out the benefits, leaving producers with little advantage,” Nishikawa pointed out.

Assuming one bowl of rice contains about 65 grams of polished rice, a 5-kilogram bag contains around 77 bowls’ worth. And if 5 kilograms of rice cost 4,000 yen, then each bowl works out at around 52 yen (about 37 cents). We can say that the price of rice in the past has indeed been too cheap.

An urgent task at hand is creating a system for sustainable agriculture. While the pronounced downward trend in domestic demand accompanying the shrinking of Japan’s population is unchanged, one possible measure is expanding exports of rice. The government has set a goal of increasing rice exports, which currently stand at about 46,000 metric tons per year, to 350,000 tons in 2030. From the perspective of maintaining rice paddies and preventing a decline in production capacity, I think this is a meaningful move.

The government plans to create a system to redirect rice originally earmarked for export to domestic use when domestic supply is tight. While I think there are practical challenges to this including the question of whether it is possible to redirect rice under international sales contracts back to the domestic market, it is essential to press ahead with specific system designs to make it easier for producers who want to explore new sales avenues to plan ahead.

The recent supply shortages and price hikes have brought rice production issues to the fore, which has also heightened consumer interest. It is probably necessary to consider a major revision to the government’s current de facto acreage reduction policy to allow producers to make production decisions based on their own management judgments.

Given that the price of rice is an issue closely connected to daily life, it is important that not only the government and producers, but also we as consumers go beyond a temporary interest in the issue. While the price hikes strain household budgets, there is a tendency for us to merely focus on “when prices will drop.” The crucial issue, however, is considering how to maintain an environment where rice can continue to be produced in Japan.

(Japanese original by Satoshi Fukutomi, Tokyo Business News Department)

Published Date: April 21, 2025