Why is the price so high when there is overstock? JA and MAFF’s “Patience Contest” and Experts Explain the “4,000-yen” Period

Why rice is not cheaper even when there is an “overstock”?

When will rice prices fall?

According to the Ministry of Agriculture, Forestry and Fisheries, the average price of 5 kg of rice sold in supermarkets from February 16 to 22 was 4118 yen, and although the price dropped for two consecutive weeks, it has remained in the high 4000 yen range since last September. Conversely, the average price of brand-name rice, which began to drop around mid-January, was 4221 yen, 12 yen higher than the previous week.

The ’25 rice harvest totaled 7,468,000 tons, 676,000 tons more than the previous year. Moreover, the demand forecast for the ’25 rice crop is estimated at 6.97-7.11 million tons, which is 360,000-500,000 tons more than the supply. Why have rice prices not fallen in spite of the oversupply?

Professor Emeritus Michiharu Oizumi of Miyagi University, an expert on the rice situation, believes there are two reasons.

One reason is the high cost of the “estimated payment” made in advance to farmers by JA in each region. In a normal year, the estimated cost is about 12,000 yen for 60 kg. However, for the ’25 rice crop, the estimate was raised from 30,000 yen to 35,000,000 yen. Because of the high purchase price, JA Zen-Noh and other collecting organizations cannot easily lower the “relative transaction price” when selling to wholesalers.

The collectors are the ones with the most rice in stock right now, and JA has plenty of cash to hold on to it. So they are bullish and are not willing to take a loss to wholesale at a lower price just yet.

However, non-JA collectors, who have made the funds to collect rice from farmers at high purchase prices, cannot hold on to their inventories forever. It is time to cut their losses. This is why wholesalers are beginning to purchase from non-JA rice collectors,” said Professor Emeritus Michiharu Oizumi.

The relative price of rice reached a record high of 37,058 yen per 60 kg of brown rice in October of last year, but dropped to 35,465 yen in January of this year.

The fact that the relative price has dropped 1,600 yen from its highest level indicates that downward pressure is certainly at work.

However, if the relative price decline is not large, it will not be reflected in the retail price. In fact, the retail price is only about 100 or 200 yen lower than the 4300 yen per 5 kg price. This is because both collectors and wholesalers are taking a wait-and-see attitude, which is the second reason why rice prices have not fallen very far.

The key to lower prices is “stockpiled rice

Professor Emeritus Oizumi points out that the government’s “purchase of stockpiled rice” for the ’26 rice crop is related to this “wait-and-see” attitude.

The Ministry of Agriculture, Forestry and Fisheries (MAFF) plans to resume purchases of the government’s stockpiled rice from the ’26 crop, which had been suspended due to the rice shortage since two years ago.

Normally, the bidding starts in January and continues until the end of the season. However, this has not yet been done at this point. Apparently, this is due to the fact that it coincided with the House of Representatives election, but when we asked the Ministry of Agriculture, Forestry and Fisheries about the timing of the bidding, they replied, ‘We are still considering it and don’t know.

So now JA and other rice collectors and wholesalers are paying attention to what price MAFF will set for the stockpiled rice bids. Why? Because there is a strong possibility that the estimated bidding price will effectively become the basis for the estimate. The estimated cost would be approximately 2,000 to 3,000 yen higher than the estimated bid price.

For example, if the estimated bid price for stockpiled rice is 20,000 yen, the estimated cost would be 22,000 to 23,000 yen for 60 kg. In that case, the retail price would be about 3,000 to 3,500 yen for 5 kilograms. However, the bidding price for government stockpiled rice has never exceeded 15,000 yen.

Therefore, both collectors and wholesalers have no choice but to wait and see what the planned bidding price for government stockpiled rice will be. MAFF, on the other hand, needs to determine the scheduled bidding price in anticipation of the price of the ’25 rice crop, but they are unable to determine a lower price because the price has remained high. My guess is that both MAFF and JA are now in a situation where they are trying to be patient.”

MAFF has already announced that it will buy back about 590,000 tons of the stockpiled rice it released last year, after determining the future supply and demand situation.

If the government buys back the stockpiled rice, collectors and wholesalers will not have to lower prices. The price will remain high for some time to come. “

Whether the price of rice stays high or goes down depends on the Ministry of Agriculture, Forestry, and Fisheries. Norikazu Suzuki, Minister of Agriculture, Forestry, and Fisheries, has repeatedly asserted, “The price of rice should be determined by the market. I will not commit to it,” he has repeatedly insisted.

Unlike other agricultural products, there is no market for rice. It is JA Zen-Noh and MAFF that decide the price of rice.

If the planned bidding price of 15,000 yen is announced ahead of time, the price of the ’25 rice crop will begin to fall. However, since there is talk among industry insiders of 20,000 or 25,000 yen, I suspect that all the suppliers are willing to wait a little longer.

Will the bids be 15,000 yen or 20,000 yen? What does Professor Emeritus Oizumi predict?

I think that MAFF will probably set the bid at 20,000 yen, ” he said. After April, I think the price will go down toward the 3,500-yen level as far as July.

It appears that the price of the ’25 rice crop will not fall below 3,500 yen even at the end of the season. So what will happen to the price of the ’26 rice crop?

The total production of the ’26 rice crop, as indicated by MAFF, is 7.11 million tons, but the “production guideline” set by 40 prefectures totals 7.25 million as of January 16, 140,000 tons more than the supply-demand forecast. In other words, it can be predicted that there will be an overabundance of rice for the 2014 crop.

The estimated bidding price is around 20,000 yen, and the estimated cost is on average 22,000 or 23,000 yen. I estimate that the estimated cost of Niigata Koshihikari rice will be around 26,000 yen. Then the retail price will be less than 4,000 yen for 5 kilograms. Other brands of rice will be cheaper, so I think it will settle in the low 3,000 yen range.

Imported Rice “95 Times Higher”!　Domestic Rice in Crisis

According to trade statistics released by the Ministry of Finance in January, 96,834 tons of rice was privately imported from overseas in 2013, 95 times the volume in 2012. The reason for the increase in imports is that foreign rice is cheaper than domestic rice, even with a tariff of 341 yen per kilogram.

When the price of domestically produced rice exceeds 3,500 yen, imported rice becomes cheaper. Food service operators, who cannot afford to turn their backs, will choose to rely on foreign rice.

This is suicide for the Japanese rice crop. But how many rice farmers are really concerned about the expansion of imported rice?

The Ministry of Agriculture, Forestry and Fisheries (MAFF) announced last month that the amount of brown rice milled by rice millers nationwide from July 2013 to January 2013 was 1,869,000 tons, 6% less than the same period last year. He further explained, “The volume of milled rice is directly related to the volume of rice sold, indicating that sales in stores are slowing down. It seems certain that consumers are turning away from domestically produced rice.

The previous administration had reversed its policy of increasing rice production, but the Takaichi administration has now reverted to the original policy of ‘production in response to demand. Unless the government decides to increase rice production starting next year and shows a policy of lowering the price of rice, the share of domestically produced rice will continue to decline.

Prime Minister Takaichi has said that he will promote structural transformation of agriculture in order to strengthen food security. If so, the most important thing is rice.

The key to food security is to produce enough rice to export so that the people can eat rice alone in times of emergency. Japan’s security starts with increasing rice production, not with strengthening the defense force.

Will the day come before summer when people can buy rice without worrying about the price? ……

Kazunuki Oizumi, agricultural economist and professor emeritus at Miyagi University, was born in Miyagi Prefecture in 1949. Born in Miyagi Prefecture in 1949, he received a master’s degree from the Graduate School of Agricultural Sciences at the University of Tokyo. He has served as professor and vice president of Miyagi University. His publications include “The Bottom Power of Japanese Agriculture” (Yoizensha Publishing Co., Ltd.), “The Japanese Agriculture Theory of Hope” (NHK Publishing Co., Ltd.), and “Food Value Chain Changes Japanese Agriculture” (Nihon Keizai Shimbun Publishing Co., Ltd.).