Photo/Illutration Farm minister Shinjiro Koizumi responds to reporters in Tokyo’s Chiyoda Ward on May 26. (Hisashi Naito)

Moving to cut soaring rice prices nationwide, the government started the process of selling rice from its emergency reserves directly to retailers on May 26, accepting applications for contracts.

The government had previously been auctioning off its rice reserves to the highest-bidding wholesalers. However, since this did not have the expected effect of lowering rice prices, the government changed its policy to proactively intervene in the rice market.

Farm minister Shinjiro Koizumi is aiming for 5-kilogram bags of the government rice to be sold in stores for around 2,000 yen ($14), excluding tax.

The government plans to sell 60 kg of brown rice (unpolished rice) to vendors for 10,700 yen on average, excluding tax—892 yen for 5 kilograms. This is about half the price of government stockpiled rice sold at previous auctions.

The government will sell its rice stockpiles to retailers, including online retailers, that handle 10,000 or more tons of rice annually.

Government officials said that their suggested price should lead to 5 kg bags of rice being sold in supermarkets for around 2,000 yen, after retailers add their profit margins.

However, the farm ministry doesn’t have the right to set retail prices, so it’s uncertain what the final prices will be at stores.

According to a farm ministry survey, rice retail prices at about 1,000 supermarkets nationwide between May 12 and 18 for 5-kilogram bags were 4,285 yen on average, including tax, which is 17 yen higher than the average price of the previous week.

Average prices continue to be more than twice as high as in the same season last year.

The ministry hopes that putting the government’s stockpiled rice on the market at half the current cost will drive rice prices down across the board.

The ministry intends to initially release 200,000 tons of rice from the 2022 crop and 100,000 tons from the 2021 harvest. This rice is expected to be sold by August, before rice from the new harvest will be available for retailers.

The ministry will not repurchase the rice for its stockpile after it sells the total 300,000 tons.

The ministry explained that it is selling its stockpiled rice only to large retailers to ensure that it reaches stores as quickly as possible.

Ministry officials expect that the rice reserves will be on supermarket shelves by early June.

The ministry will also cover the costs of transporting the rice from the government warehouses to designated vendor sites.

The ministry expects that it will make contracts with about 50 retailers.

About 320 companies attended the ministry’s briefing session for retailers on May 26. Koizumi said that day that seven of these companies applied for contracts.

By 9 a.m. the next day, 19 companies had applied for contracts, the ministry announced. These 19 companies requested 90,824 tons of rice between them—about 30 percent of the 300,000 tons that will be released.

Companies that have applied include Pan Pacific International Holdings Corp., which operates the major discount store chain Don Quijote’s; OK, a discount supermarket chain; Sundrug Co.; Iris Agri Innovation Inc.; Rakuten Group Inc. and other retailers.

The government has taken a bold countermeasure this time.

“We don’t get involved in deciding retail prices,” said farm minister Taku Eto, before he resigned from the post on May 21 after generating public outrage with his joke about the rice shortage.    

However, Koizumi, who took office as a farm minister that day, claimed that the ministry should take unconventional measures considering the “emergency state” of current rice prices.

Prime Minister Shigeru Ishiba’s administration has started coordinating a meeting of related ministers soon to discuss future farming policies, government sources said.

The ministers are expected to discuss increasing rice production, which Ishiba is willing to consider, and income compensation measures for farmers when rice prices fall.

(This article was written by Hisashi Naito, Sho Ito and Taro Kotegawa.)

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