Photo/Illutration Customers buy newly harvested “Koshihikari” rice at a discount from a produce stand in Isumi, Chiba Prefecture, on Sept. 3. (Shota Tomonaga)

Rice harvested this year is expected to cost more than last year due to rising production costs and demand driven up by supply shortages.

At a produce stand in Isumi, Chiba Prefecture, bags of unpolished, newly harvested rice of the “Koshihikari” variety are on sale.

A sign advertises a price of 12,500 yen ($86) per 30 kilograms offered through Sept. 10, but the regular price of 14,000 yen is about 40 percent higher than a year ago.

“It costs more than last year, but it is less expensive and more delicious than rice in my neighborhood,” said a self-employed man in his 70s from Mobara, also in the prefecture.

An official in charge of the stand said purchase prices of newly harvested rice have risen due to ongoing meager distribution and affected prices at the stand.

But the official said sales have been brisker than last year with some customers coming from outside the prefecture.

Agricultural cooperatives usually pay by rough estimate in advance when they collect rice from farmers and finalize formal purchase prices later.

The amounts of these advance payments, which influence storefront prices, have increased about 20 to 40 percent from last year.

In Akita Prefecture, the nation’s third-largest rice producer, agricultural cooperatives set the advance payment for the “Akitakomachi” variety at 16,800 yen per 60 kg, 38 percent higher than last year.

It was the largest hike over the past 10 years.

In top-ranked Niigata Prefecture, the price for Koshihikari rice increased 22 percent to 17,000 yen. 

The “Nanatsuboshi” variety in Hokkaido, Japan's second-largest producer, rose 32 percent to 16,500 yen.

In western Japan, agricultural cooperatives in Kagawa and Kochi prefectures raised the up-front payments for Koshihkari rice by 42 percent and 43 percent, respectively.

Government and industry officials said increased production costs are a key reason behind higher prices of this year’s harvests.

“Fuel expenses, electricity charges and other prices have surged, pushing up costs for rice production,” said a representative of the Tochigi prefectural headquarters of the National Federation of Agricultural Cooperative Associations.

According to the agriculture ministry, fertilizer prices have risen about 40 percent and utilities and power costs have increased about 30 percent from 2020 due to the impact of Russia’s invasion of Ukraine and the yen’s depreciation.

An imbalance between supply and demand is also believed to be a factor.

The quality of rice harvested last year was poor due to high temperatures and drought caused by the intense summer heat, resulting in a low yield when polished and a decrease in the quantity in distribution.

In addition, consumers hoarding rice following the Nankai Trough megaquake advisory issued in August led to prolonged shortages, which heightened demand for subsequent shipments.

Some experts believe that price increases will shrink if newly harvested rice becomes widely available and shortages because some rice comes to the market through wholesalers, not agricultural cooperatives.

Yasufumi Miwa of the Japan Research Institute, who is familiar with rice policy, said storefront prices of newly harvested rice will eventually be about 10 percent higher than last year.

“While prices of many food items have risen, rice has held its own because it is less susceptible to foreign exchange fluctuations, but we will no longer be in a special situation where only rice remains cheap,” Miwa said.

“Rice prices will continue to rise in line with overall price increases,” he said.

(This article was written by Yosuke Watanabe, Nobufumi Yamada and Eiji Zakoda.)

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