Does Japan not have enough rice? Why is it dipping into its reserves?

In Japan, no meal is complete without rice. The staple is found in everything from sushi to a McDonald’s burger bun. But now the country, so reliant on rice, is facing a crisis – it appears to be running short of the grain.

The situation is so grave that Japanese supermarkets imposed buying limits and restaurants were forced to increase prices. In a rare move, the Japanese government has turned to its emergency stockpile and started auctioning rice. There have been two auctions so far in March, and the first bags of this reserve rice have hit supermarkets now.

We take a look at Japan’s unprecedented rice crisis.

Why is Japan facing a shortage of rice?

Japan has a complex system of rice distribution, and a slight hiccup in supply chains can have a big impact. To keep prices high and support domestic farmers, Japan limits rice production. The farmers sell to collecting agents who sell to wholesalers. Shops and restaurants purchase from these wholesalers.

Last summer, Japan started facing a decline in rice supplies. Experts say extreme heat in 2023 damaged the harvest. What made matters worse was panic buying over warnings of a devastating earthquake last August.

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The average price of a 60-kilo bag rose to around 23,350 yen ($160 or Rs 13,704) last year, which is a 55 per cent rise from two years ago. In the week ending March 9, a five-kilo bag of rice cost an average of 4,077 yen ($27 or Rs 2,394). That is almost double the price at this time last year.

According to the consumer price index data released by Japan’s internal affairs ministry at the end of January, the price of rice rose by 71 per cent year-on-year in Tokyo’s 23 wards, reports Business Insider.

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Authorities in Japan had warned against panic buying, assuring that the fall harvest would ensure stocks are restored, leading to a reduction in prices. However, while the harvest was good and rice production was higher, distributors did not have enough to sell last year. This did little to ease costs.

There was an increase of 180,000 tonnes of rice harvested last year. However, collection agents have reported a shortfall of 230,000 tonnes of what they were able to buy, reports Bloomberg.

While Japan’s agricultural ministry cannot explain the discrepancy, experts have some answers.

The hoarding of rice continues because people believe the prices will continue to escalate. “Some businesses and individuals have started to deal in rice as a money game,” Masayuki Ogawa, an assistant professor of agricultural economics at Utsunomiya University, was quoted as saying by The New York Times.

According to Shuji Hisano, a professor at Kyoto University, the policy changes have given farmers more ways to sell rice without going through the traditional major distributors, making it more difficult to track distribution.

That’s not all. Like rice, the country is also seeing a shortage of rice growers.

Why Japan is seeing a decline in farmers

Rice growers are on the decline. The average age of a rice farmer is around 71, and the number of farmers has fallen by 25 per cent between 2015 and 2020, according to the Japanese agricultural ministry, reports Bloomberg.

“Rice producers don’t want to pass down an unprofitable business to their children,” Genki Sakurai, owner of a 300-year-old rice farm in Nagaoka, Niigata Prefecture, told the Japan Times. “Rice prices were too low, and farmers operate at a loss. So parents tell their children, ‘You’re better off becoming an office worker.’”

Sakurai says that there were more than a dozen rice farmers in the neighbourhood when he started working 17 years ago. Now that number has reduced to three.

Hitoshi Mizutani, a production manager at a sake brewery, told Bloomberg that farmers face immense pressure. “Agriculture is weakening… Farmers are leaving the industry. There will be long-term disruption in supply. Prices will have to keep rising.”

However, the government has pinned its hope on the rare auction of its rice reserves.

Why Japan’s decision to auction reserves is a big deal

The Japanese government started building its rice reserves in 1955, two years after an unusually cool summer hurt rice production, and it was forced to import grains.

In the past, the country has turned to emergency stockpiles in times of natural disasters or crop failure. It dipped into the reserves after the 2011 earthquake and tsunami, which led to 20,000 people dying or going missing, and after the 2016 Kumamoto earthquake. This is reportedly the first time the stockpile is being used to address rising prices because of issues related to distribution.

The anger over food costs was one of the key issues in last year’s election, during which the ruling Liberal Democratic Party lost seats in Parliament. The government decided to release reserves to collection agents to provide some relief to disgruntled consumers.

How much rise is being auctioned? Will it help?

The government has about one million tonnes of emergency supplies stored in 300 locations. The government announced in February that it would release 231,000 tonnes of rice for auction. This is more than a fifth of what it holds in its reserve.

There have been two auctions in March. “Prices now are exceptionally high,” Agriculture, Forestry and Fisheries Minister Taku Eto said, ahead of the auction. “But I urge everyone not to worry,” he added, saying that prices “eventually come down”

Eto blamed the price hike on a supply chain issue. “We will do our best to resolve the bottleneck in the distribution chain and alleviate the struggles of consumers.” The minister assured that there was sufficient rice in the system.

The government is hoping that this will help curb the price rise and placate consumers. And if needed, it would auction off another 66,000 tonnes.

However, consumers are wary. For a country that hugely depends on rice and is particular about its quality, the shortage is unnerving.

With inputs from agencies