The Rice Problem Deepens — Experts Warn ¥4,000 per 5kg May Last Through Next September

“Because the Ministry of Agriculture, Forestry and Fisheries kept telling various lies, the situation became tangled.”

Newly harvested rice from the 2025 crop has begun appearing in stores across the country. Shockingly, some branded varieties are being sold at the steep price of 7,800 yen for 5 kilograms.

The sales price of branded rice from the 2024 crop has remained flat, staying in the 4,000-yen range for 5 kilograms.

“Even with the new crop entering circulation, the price of branded rice won’t change. Rice prices will remain high,” asserts Professor Emeritus Ikkan Oizumi of Miyagi University, a specialist in agricultural management.

Since March of this year, the average sales price of rice had exceeded 4,000 yen per 5 kilograms, but after the release of stockpiled rice, it fell to around 3,500 yen. On the 5th of this month, Prime Minister Shigeru Ishiba stated, “We sincerely acknowledge the shortage in rice production,” while also announcing his policy to shift toward increased production.

Among consumers, there is a faint sense that the rice problem may have been settled… but the reality is different.

“There is nothing that can truly be called a solution.

At first, the Ministry of Agriculture explained the surge in rice prices by saying, ‘Production has increased by 180,000 tons compared to the previous year, so there is no shortage. The problem is just a bottleneck in distribution.’ However, even after conducting two separate investigations, no such bottleneck was found. I believe that when Minister (Shinjiro) Koizumi declared he would ‘flood the rice market’ and released stockpiled rice, the ministry already knew that there was a shortage.

In the end, it was only at the end of July that they finally admitted the price surge was caused by a shortage of rice. The whole rice issue became tangled because the Ministry of Agriculture kept telling lies. So talk of a solution doesn’t go beyond that.” (Professor Emeritus Oizumi continues:)

On the 30th of last month, the Ministry of Agriculture announced an estimate that the demand for staple rice from the 2024 crop was 7.11 million tons. But with production at 6.79 million tons, that meant a shortfall of 320,000 tons compared to demand.

“In fact, the 2023 crop was also short by 440,000 tons, and the year before that by 210,000 tons. So even before this year’s shortage, more than 600,000 tons were already lacking.

The released stockpiled rice, combining the bidding portion under former Minister Taku Eto and the discretionary contracts under Minister Koizumi, amounts to about 620,000 tons. That just about covers the shortages from the 2022 and 2023 crops. But now it turns out the 2024 crop was short another 320,000 tons.

Rice prices are determined by supply and demand. While there wasn’t enough branded rice, in the meantime, consumers shifted to blended rice—made of branded rice mixed with stockpiled rice from auctions—so fewer people were buying the expensive branded varieties. That’s why, even at around 4,200 yen per 5 kilograms, the supply-demand balance for branded rice somehow held up. And that’s why prices didn’t fall.”

What about low-priced rice to replace stockpiled rice?

Minister of Agriculture Koizumi has already announced the outlook that production of staple rice from the 2025 crop will reach 7.35 million tons—an increase of 560,000 tons compared to the previous year.

“Normally, increased production would be a factor that lowers prices. However, rice prices are influenced by what’s called the relative price, which is the price at which agricultural cooperatives (JA) sell to wholesalers.

Currently, there are two types of prices determined by JA. One is the gaisankin (advance payment) made to farmers when JA collects rice. The other is the relative price, which is essentially the gaisankin plus about 3,000 yen per 60 kilograms.

Under usual circumstances, rice prices would drop as new harvests hit the market in August and September. But this year, branded rice has remained flat at around 4,200 yen per 5 kilograms even now. This suggests that the same price level could be maintained beyond September.”

On top of that, JA’s gaisankin is set at levels that support these high prices.

“For the 2025 crop, the gaisankin is currently set at 26,000 to 30,000 yen per 60 kilograms (about 2,170 to 2,500 yen per 5 kilograms). For higher-priced branded rice, it exceeds 30,000 yen. This means the relative price comes out to around 29,000 to 33,000 yen. Adding on wholesalers’ fees and other costs, the retail price becomes about 4,300 to 5,000 yen per 5 kilograms. For premium rice, the price could exceed 5,000 yen.

So even if production increases for the 2025 crop, it’s reasonable to assume this won’t serve as a factor to lower prices. In other words, the high prices will remain in place until next September.”

Currently, JA (agricultural cooperatives) handles about 30% of rice distribution volume. Even so, does it really have that much influence over rice prices?

“In Japan, there is no public rice market. When wholesalers buy rice directly from farmers, they use JA’s relative price as the benchmark—deciding whether to buy higher or lower than that.

The gaisankin (advance payment) that JA pays farmers is originally set lower than the relative price. So for farmers, it’s more profitable to sell to wholesalers who pay above JA’s price. In fact, last year JA Zen-Noh (National Federation of Agricultural Cooperatives) collected 1.79 million tons, while farmers sold directly to wholesalers, supermarkets, and other retailers about 2.3 million tons.”

Until around June last year, the average rice price hovered at about 2,000 to 2,200 yen per 5 kilograms. But the chances of branded rice prices dropping back to the 2,000-yen range are now almost nonexistent. Blended rice, which mixes auctioned stockpiled rice with branded rice, is also beginning to disappear from store shelves.

As for stockpiled rice sold by discretionary contracts, the Ministry of Agriculture has recently approved an extension of the sales deadline, originally set for the end of August. However, once retailers sell out their stock, sales will end.

So will cheaper rice options vanish from stores?

“As a substitute for blended or stockpiled rice in the lower price range, imported rice will likely appear on shelves. Separate from the ‘minimum access’ quota rice, private companies have already imported 40,000 tons this year by paying a tariff of 341 yen per kilogram. If the 2025 domestic crop isn’t sold at low prices, we may have to rely on imported rice.

For example, if foreign rice is brought in at about 150 yen per kilogram, the 341-yen tariff raises it to around 500 yen per kilogram. That makes about 2,500 yen for 5 kilograms, and adding margins, around 3,000 yen retail. If domestic rice is priced in the 3,000-yen range, consumers won’t buy imported rice at the same price, so companies wouldn’t import it either. But with domestic branded rice currently around 4,200 yen, imported rice will almost certainly come in.”

“No one in the current agricultural bureaucracy is capable of promoting a review of rice paddy policy.”

So how does Professor Emeritus Kazunuki Oizumi view the government’s recent policy shift in agriculture, which emphasizes shifting toward increased production and putting full effort into a fundamental expansion of exports?

“Ending production adjustment—which was essentially a form of gentan (acreage reduction)—producing more to bring rice prices down, and exporting the surplus. I believe this is the right course of action.”

Still, there are concerns about expanding exports: Japan’s farmland area is small compared to overseas, and production costs are high. Even with high quality, rice won’t sell if the price is too steep.

“For rice export expansion, reducing production costs is essential. That’s why large-scale farms that can produce at lower costs and lower prices need to be actively supported. For example, expanding income compensation systems such as crop income insurance will be necessary.

Prime Minister Ishiba has said he aims to review paddy field policy starting in FY2027. If the four measures—abolishing production adjustment, increasing production, expanding exports, promoting large-scale farm management, and supporting large-scale farmers—are realized together, then rice prices could potentially fall starting with the 2027 crop.”

But how likely is it that all four of these measures will actually be realized together?

“Can they really carry this out? That’s what concerns me.

When Prime Minister Ishiba was Minister of Agriculture back in 2009, he attempted to review production adjustment. But he had to abandon it due to opposition from LDP agricultural-affiliated lawmakers who feared falling rice prices.

This time, whether it’s an abolition or relaxation of production adjustment is unclear, but increased production will likely happen. However, it will take time for the reviewed paddy field policy to take root in practice. And it also depends on how long the Ishiba administration lasts.

If Prime Minister Ishiba and Minister of Agriculture Koizumi, who are both eager to push forward agricultural reform, step down, then who will carry on with reviewing paddy field policy? Among the current bureaucrats at the Ministry of Agriculture, there’s no one who can do it. That’s what greatly worries me.”

Kazunuki Oizumi – Agricultural economist, Professor Emeritus at Miyagi University. Born in Miyagi Prefecture in 1949. Completed the master’s program at the University of Tokyo Graduate School of Agricultural Sciences. Served as professor and vice president at Miyagi University. Author of The Hidden Strength of Japanese Agriculture (Yosensha), The Hopeful Future of Japanese Agriculture (NHK Publishing), How Food Value Chains Will Change Japanese Agriculture (Nikkei Publishing), among others.