Government to Release Stockpiled Rice Amid Rising Prices and Distribution Challenges

The Japanese government has changed its longstanding policy by deciding to release rice from its stockpiles to address distribution issues, rather than solely in cases of poor harvests. This decision, announced by the farm ministry on January 31, 2024, comes in the backdrop of rising rice prices last summer, which resulted from hoarding caused by concerns over a possible disaster in the Nankai Trough, leading to empty store shelves across the country.

A committee within the ministry's advisory panel approved the proposal, which allows for the release of rice if the market experiences difficulties in distribution. Despite expectations that rice prices would stabilize following the autumn harvest, the anticipated stabilization did not materialize, prompting the ministry to take action. If distribution problems arise, the government will sell rice from its reserves to agricultural cooperatives and other major distributors, but it must purchase back the same amount within a year to mitigate backlash from farmers against potential price drops.

Farmers have traditionally wielded significant influence in the political landscape, especially regarding the ruling Liberal Democratic Party, which has been in power since 1955. While the new policy framework has been established, its implementation requires a further decision. The farm ministry projects that the 2024 rice harvest will exceed 180,000 tons compared to 2023; however, agricultural cooperatives reportedly acquired about 210,000 tons less rice than the previous year. This shortfall is attributed to smaller distributors making purchases at high prices, anticipating that prices will continue to rise, along with some farmers withholding their rice for the same reason.

Recognizing these dynamics, the ministry plans to monitor inventory levels more closely. The intention behind this approach is to motivate farmers to sell their rice rather than hold out for higher prices. Historically, political factors have dictated the ministry's decisions, with farmers’ preferences weighing heavily in considerations for rice release from stockpiles. Should there be an oversupply from government stocks, farmers may demand the government buy the excess to prevent significant price drops.

whether to release rice from emergency reserves, which could incite anger among farmers if prices decline, or refrain from action, potentially allowing prices to remain elevated due to market perceptions of inaction.