Photo/Illutration Rice in the government’s emergency stockpile (Provided by agriculture ministry)

Reversing its longstanding policy, the government plans to release stockpiled rice for emergency use if distribution problems occur, not just when there is a bad harvest.

The Jan. 31 decision by the farm ministry reflects surging rice prices last summer due to hoarding over fears of a possible disastrous earthquake occurring in the Nankai Trough off the nation’s Pacific coast.

Store shelves were stripped bare of the staple.

A subcommittee of a ministry advisory panel on Jan. 31 approved the proposal to allow the release of rice from government stockpiles if problems develop in the smooth market distribution of rice.

Ministry officials gave assurances that rice prices would stabilize after rice from last autumn’s harvest hit the market, but that did not happen.

In future, rice from government stockpiles will be sold to agricultural cooperatives and other major distributors if distribution difficulties arise.

But the same volume of rice sold would have to be purchased by the government within a year to avoid a backlash from farmers if rice prices then dropped precipitously as a result.

Farmers traditionally have been a key voting bloc for the Liberal Democratic Party, which in one form or other has mostly held power since 1955.

The proposal only establishes the new system. A separate decision is needed to implement the policy change.

The ministry estimates that the 2024 rice harvest will be about 180,000 tons larger than in 2023.

But the rice acquired by agricultural cooperatives and other major distributors as of the end of 2024 was about 210,000 tons less than in 2023.

Ministry officials believe the reasons for the shortage lie with  smaller distributors buying grain at high prices with the expectation that prices will rise even further. Some rice farmers are also believed to be holding back on selling their rice for the same reason.

These factors were outside the range of ministry studies into the rice inventory, but that will now change. The move is designed to encourage farmers to sell off their rice rather than wait for higher prices.

Rice farmers have long held greater political power than consumers, and farm ministry officials have had to take that into consideration when making decisions about the release of rice from the government stockpile.

But in the event of a glut due to the release from the official stockpile, farmers, in the opinion of a high-ranking ministry official, would scream for the government to buy up the surplus, forcing it to do so.

A key factor behind the latest proposal is the failure of rice prices to stabilize as ministry officials had said would happen after the rice was harvested.

As a result, the increase in rice prices over a four-year period exceeded that of the price of fuel and feed for livestock over the same time frame.

The decisive factor may have been the Bank of Japan’s Outlook for Economic Activity and Prices released on Jan. 24 after it decided to raise a key interest rate. The report pointed to the rise in rice prices as a key factor behind the increase in the consumer price index.

The next difficult decision for the ministry will be in deciding whether to go ahead and release rice from the emergency stockpile. If doing so leads to a drop in rice prices, rice farmers will get really angry.

But if the ministry does nothing, rice prices could remain high due to a perception it was not serious about releasing any rice.

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