Rice Prices Surge Despite Normal Inventory Levels, Ministry Survey Reveals

A recent report by Japan's agriculture ministry revealed that the inventory levels of rice among farmers and distributors were approximately the same as the previous year, despite rising prices. This finding contradicts the ministry's earlier claims which suggested that higher stockpiling was responsible for the significant increase in rice prices.

Agriculture Minister Shinjiro Koizumi ordered the survey in mid-June to explore the reasons behind the soaring rice prices, with the results presented on July 30. The survey showed no substantial evidence of stockpiling occurring within the agricultural sector or among distributors, which casts doubt on the ministry's initial theory regarding the price hikes.

While the government has been releasing emergency rice reserves since March to improve distribution, there is a possibility that no distribution challenges existed, and the rising prices are simply a result of supply not keeping pace with demand. The ministry intends to analyze survey data to better understand the factors creating this price surge and plans to publish its findings in the near future.

To gather comprehensive insights into the distribution of rice, the survey included all registered businesses involved in rice handling. Data from the end of June indicated that inventory levels for farmers, agricultural cooperatives, and distributors were consistent with figures from the previous year. Furthermore, smaller enterprises included in the survey reported similar inventory levels as well.

While wholesalers did report an inventory increase of 100,000 tons, that amount was characterized by the ministry's Crop Production Bureau as not excessive. The ministry had previously conducted a narrower survey with around 1,300 businesses but expanded this latest one to include small-scale operators handling less than 500 tons of rice per year.

The updated survey encompassed approximately 70,000 businesses, with over 4,400 involved in brown rice, such as retailers, restaurants, and farmers. The ministry also held discussions with industry representatives and farmers to gain further insights. Initially, the ministry had speculated that "speculative hoarding" was to blame for the drastic pricing; however, a March survey revealed increases in inventories among consumers and distributors.

In light of this new data, the ministry revised its previous stance, attributing the price spikes to distribution “clogs” while noting that concerns among consumers and distributors led to slight inventory increases across sectors.