"Prices Plunged by 40%": After Buying from Korea, Japan Faces Crisis Over Surplus Rice

Private Rice Inventories in Japan Reach Record 2.43 Million Tons
Government Pushes to Repurchase Reserve Stock as Only 320,000 Tons Remain
Market Situation Now the Complete Opposite of Two Years Ago When Rice Vanished from Supermarket Shelves

Japan, which last year even purchased Korean rice, now finds itself worrying about a surplus of rice just one year later. This concern arises because as of the end of June, private rice reserves circulating in the market had surged to an all-time high of 2.43 million tons.

Cooked rice. Getty Images

According to the Nihon Keizai Shimbun (Nikkei) on the 25th, Japan’s Ministry of Agriculture, Forestry and Fisheries recently explained the rice supply and demand situation to lawmakers from the ruling Liberal Democratic Party and officially indicated that it would be necessary for the government to repurchase reserve rice. On the 26th, the Ministry began final adjustments regarding the repurchasing policy.

This decision for the government to buy up surplus rice is rooted in a complex set of circumstances. Private inventories of 2.43 million tons exceed what is considered appropriate—between 1.8 million and 2 million tons—by more than 400,000 tons. Projections suggest that this number could rise by up to 16% within a year. On the other hand, while the government aims to maintain reserves of around 1 million tons, the actual remaining quantity is only 320,000 tons. The decision, therefore, is to absorb the excess supply in the market to prevent prices from falling, while also replenishing the government’s reserve stockpile.

This situation results from a delayed release of government reserves and increased production by farmers. Following a supply shortage due to a heatwave two years ago, rice disappeared from supermarket shelves for over six months, yet the government did not open its warehouses. Substantial government distribution of reserves did not start until March of last year. When low-priced reserve rice, sold at around 2,000 yen per 5 kilograms (about 17,000 won), was belatedly released, it eased the burden on consumers. However, more expensive, newly harvested rice from the 2025 crop year remained unsold in storage.

During this process, government warehouses were depleted. Of the 960,000 tons of reserve rice as of the end of March last year, about 60% was depleted during a period of soaring prices. Around half of the remaining 320,000 tons is from the 2020 harvest, and some now argue that the storage period is too long for it to be suitable for consumption.

Experts point out that, given the nature of rice as a crop harvested only once a year, it is difficult to change policy directions rapidly. Nobuhiro Suzuki, a specially appointed professor at the University of Tokyo, commented, "Both consumers and producers have been buffeted by erratic policies."

Image to aid article understanding. Pixabay

Meanwhile, rice prices have already collapsed. In July, early-ripening rice from Kyushu traded at prices 20–40% lower than a year earlier. In the primary rice-producing region of Niigata Prefecture, the cash advances paid by local agricultural cooperatives (JA) to farmers fell by 40% compared to the previous year. In Miyazaki Prefecture, the price for 60 kilograms of brown rice dropped below 20,535 yen (about 178,500 won)—the production cost calculated by government-recognized industry groups. This means farmers are unable to recoup even their production expenses. This is why the National Federation of Agricultural Cooperative Associations (JA Zenchu) is pressing the government to carry out early purchases.

Consumer-level prices are expected to fall further. Major rice wholesalers predict that retail prices for Niigata-grown Koshihikari could drop to just over 3,000 yen per 5 kilograms (about 26,000 won) this year. Compared to last autumn, this is about 2,000 yen (about 17,000 won) cheaper.

The situation a year ago was the exact opposite. According to statistics from the Korea Agro-Fisheries & Food Trade Corporation (aT), the volume of South Korean rice exported to Japan between January and June of last year reached 416 tons, marking a record high since tracking began in 1990. The previous record was just 16 tons in 2012, when Japanese imports were mainly humanitarian supplies following the Great East Japan Earthquake, and there have even been years with no exports at all. Japan imposes an import tariff of 341 yen per kilogram (about 2,960 won) on rice, but as domestic Japanese rice prices soared, conditions allowed Korean rice to be sold at similar prices. The fact that a country that traditionally maintained rice self-sufficiency had to purchase foreign rice was highly symbolic.

However, there are expectations within Japan that this oversupply phase will not last long. The farming population is rapidly declining, and efficiency gains are not enough to make up for this loss. As a result, Japan’s domestic production could fall short of demand in the 2030s. The current food self-sufficiency rate in Japan stands at just 37%. While the nation has historically achieved self-sufficiency in rice, experts warn that if the decline in farming households and rising production costs are neglected, even this foundation could be jeopardized.

This content was produced with the assistance of AI translation services.