[New Rice for Under 2,000 Yen Is a Pipe Dream] Prices Don’t Drop Even With a Rice Surplus… Agricultural Cooperatives’ “Reluctance to Sell” and Special Interests That Ignore Consumers

Agricultural Cooperatives’ “Reluctance to Sell” Holds Back Price Declines

The price of 5 kilograms of rice has finally fallen below 3,500 yen.

According to an announcement by the Ministry of Agriculture, Forestry and Fisheries on the 17th, the average price per 5 kg of rice sold at supermarkets nationwide from July 6 to 12 was 3,403 yen. Branded rice, which accounts for nearly 80 percent of sales volume, averaged 3,455 yen. This marks the first time in two years that the average price of branded rice has fallen below 3,500 yen.

According to MAFF estimates, production for the ’25 crop year is projected at 7.47 million metric tons, while demand is forecast to be between 6.91 million and 7.04 million metric tons. In a sharp reversal from the “Reiwa Rice Crisis” of ’24, there is a surplus of ’25 rice.

“If we look solely at the supply-demand balance, rice prices should be falling even further. The fact that they aren’t is likely because some rice collectors are putting the brakes on, ”

said Professor Emeritus Kazunori Oizumi of Miyagi University, who specializes in agricultural management.

According to figures released by the Ministry of Agriculture, Forestry and Fisheries on the 30th of last month, private-sector rice inventories as of the end of May stood at 2.23 million metric tons. Sales of the ’25 crop by collectors—such as agricultural cooperatives—to wholesalers by the end of May reached a record low of 1.32 million metric tons. With sales stagnating, collectors are left holding large amounts of inventory.

What does “the brakes have been applied” mean?

“Last year, under the direction of then-Minister of Agriculture, Forestry and Fisheries Taku Eto, 310,000 metric tons of government-stockpiled rice were released, didn’t they?The sale of this stockpiled rice was conducted through competitive bidding, and JA Zen-Noh (National Federation of Agricultural Cooperatives) won approximately 90 percent of the bids. The bidding for the stockpiled rice was conditional on the government repurchasing the same quality and quantity of rice within one year (later extended to five years). 

This means there is a possibility that the government will purchase the rice currently held in stock by the agricultural cooperatives. If that happens, the cooperatives’ inventory will shrink.  

Agricultural cooperatives across the country are likely to start appealing to the Ministry of Agriculture, Forestry and Fisheries, arguing, ‘We have a surplus of rice, and our stockpiles are piling up. If we sell it at low prices, rice prices will plummet.’”

At the House of Councillors Committee on Agriculture, Forestry and Fisheries meeting on the 7th of this month, perhaps prompted by lobbying from local agricultural cooperatives, lawmakers from both the ruling and opposition parties reportedly pressed Agriculture, Forestry and Fisheries Minister Norikazu Suzuki to expedite the repurchase of government-stockpiled rice.

There is a reason why agricultural cooperatives are urging the government to repurchase its stockpiled rice.

“If agricultural cooperatives try to dispose of their inventory on their own, they have no choice but to cut their losses and sell at low prices. If that happens, the market price of the ’25 crop will fall. The cooperatives want the government to take the rice off their hands so they can clear their inventory without driving down prices.”

Major Losses on “Old Rice” for Dealers Without Government Relief

Agricultural cooperatives, which will have the government purchase their excess inventory, will likely avoid significant losses. However, the problem lies with grain collectors other than the cooperatives who fall outside the government’s safety net.Once the new crop hits the market, the 2025 crop’s inventory will be classified as “old rice.” Before that happens, small and medium-sized wholesalers will have no choice but to offload their inventory, even if it means taking a loss.

“Normally, the rice on supermarket shelves from August through October gradually shifts from old rice to new rice. This year, however, because wholesalers are delaying their purchases of new rice, the transition from old to new rice is expected to be delayed. Even when the new rice season begins, I suspect there will still be a lot of old rice on the market. 

Supermarkets will have to desperately sell the ’25 crop until October. Retail prices will likely continue to drop.”

The price is what’s concerning. Just how low will it go?

“Considering the current financial situation of rice farmers and the supply-demand balance, I think the average price per 5 kilograms will settle around 3,000 yen. It’s not out of the question that it could fall below 3,000 yen as we head into September. We might even see rice priced at 2,980 yen per 5 kilograms on store shelves.”

Prime Minister Sanae Takaichi stated at the House of Councillors Budget Committee meeting on the 17th regarding the timing of the buyback of government rice reserves, “I believe the Ministry of Agriculture, Forestry and Fisheries will make an appropriate decision after assessing future supply and demand conditions.” However, there are also reports that Prime Minister Takaichi is “refusing the buyback,” arguing that it runs counter to measures to combat rising prices.

“If the government does not repurchase its rice reserves, there is a possibility that prices will fall even further.”

The Mechanics of Government Intervention in Manipulating Rice Prices

So, what will happen to the price of the new crop of rice from the ’26 harvest, which will hit the market this fall?While some forecasts suggest “prices will be lower than last year (around 4,000 yen per 5 kg),” it may be premature to expect them to fall to a level that would provide significant relief to household budgets. It appears that the government and agricultural cooperatives have already established a “price-support” network to prevent the price of new rice from falling.

“Minister of Agriculture, Forestry and Fisheries Suzuki says, ‘Prices are determined by the market,’ but in Japan today, there is no truly free rice market.Retail rice prices are determined based on the ‘estimated payment’ that agricultural cooperatives make to farmers as an advance when collecting the crop, and the ‘negotiated price’ at which the cooperatives sell to wholesalers. In effect, it is JA Zen-Noh that controls rice prices. 

To intervene in this system, the government introduced a ‘cost index’ this spring.”

The cost index is calculated by adding up the costs from “production” (such as fertilizer and labor costs) through “collection,” “wholesale,” and “retail,” and does not include profit. The Ministry of Agriculture, Forestry and Fisheries had the Organization for Ensuring a Stable Supply of Rice (Rice Organization) compile it based on the Food System Act.

According to the cost index published by the Organization as of April, the production cost per 60 kilograms of brown rice was 20,535 yen. Adding the respective expenses for collection, wholesale, and retail brings the total cost to 30,412 yen.Furthermore, by setting the yield ratio from brown rice to polished rice at “0.9,” the cost index for 5 kilograms of polished rice was calculated at 2,816 yen.

The government’s aim and reasoning behind introducing this cost index are as follows.

“ The Ministry of Agriculture, Forestry and Fisheries likely reasoned that ‘farmers’ businesses cannot survive without production costs of around 20,535 yen per 60 kilograms.’ Therefore, they created the cost index to encourage wholesalers, retailers, and consumers to accept prices that include these farmer costs as legitimate. The true aim is to protect rice farmers.”

In fact, the cost index employs a contrived calculation method designed to protect specific farmers.

“The cost index is calculated based on the extremely high production costs of small-scale farmers with less than 3 hectares of cultivated land. Rice produced by farmers of this scale accounts for 30 percent of the nation’s total production. 

In other words, the Ministry of Agriculture, Forestry and Fisheries is trying to maintain high prices—ignoring the balance of supply and demand—in order to prop up small-scale farmers with low productivity.”

Government “Pressure” to Stabilize the Floor Price for New Rice

MAFF resumed purchasing rice for government reserves for the first time in two years. Although purchases typically begin in January, the ministry held a bidding auction for the ’26 crop on April 14 and secured the entire planned volume of 207,521 metric tons by June.

Although the purchase price has not been disclosed, it is believed to be around 20,500 yen per 60 kilograms of brown rice. Professor Emeritus Oizumi points out, “MAFF likely used the production cost of 20,535 yen—a cost indicator it set itself—as a benchmark for the purchase price.”

“ The purchase price for government rice reserves has never exceeded 15,000 yen per 60 kilograms. However, this time, it was purchased at 20,500 yen. This is nothing less than a silent message to buyers: ‘Rice circulating in the market should be traded at a higher price than this.’”

The purchase price of reserve rice could serve as a benchmark for the estimated payments that agricultural cooperatives make to farmers.

“As has been the case in the past, I believe the estimated payment will be set roughly 2,000 to 3,000 yen higher than the price of the reserve rice. Since the winning bid this time was 20,500 yen, the estimated payment will be between 23,000 and 24,000 yen.

The Ministry of Agriculture, Forestry and Fisheries likely wanted to maintain this level as the minimum price for new rice.

To achieve this, they established a cost benchmark and set the purchase price for reserve rice at just over 20,000 yen to fix the ‘floor price.’ You could say they intervened through policy to stabilize prices at a high level.”

If the estimated price is between 23,000 and 24,000 yen, how much will the ’26 crop be worth? Will this year’s new rice—especially premium brands—exceed 4,000 yen?

“Anticipating the recent delay in the release of new-crop rice, JA Zen-Noh and agricultural cooperatives across the country have begun stating, ‘We cannot guarantee the <minimum guaranteed price> for the estimated payment.‘We can’t even pay 20,000 yen.’ In response, the Ministry of Agriculture, Forestry and Fisheries, citing its agreement with JA Zen-Noh, is strongly pressing for the payment of estimated payments in line with cost indicators. 

Right now, a tug-of-war is unfolding within the “group” comprising JA Zen-Noh, agricultural cooperatives, and the Ministry of Agriculture, Forestry and Fisheries. Caught between the government’s intervention price and actual supply-and-demand conditions, agricultural cooperatives and JA Zen-Noh are facing a major headache as they try to determine where the provisional payment for the ’26 rice crop will ultimately settle.”  

If the provisional payment is around 24,000 yen, calculations show that the retail price would fall below 3,500 yen per 5 kilograms. However, as long as the purchase price for reserve rice—20,500 yen—serves as the floor, prices are unlikely to drop significantly below that level.  

“Even if some rice does fall below 3,500 yen, it will be limited to certain lower-grade varieties. Whether branded new-crop rice will fall below 4,000 yen will depend on the outcome of this tug-of-war, ”

Self-preservation and vested interests… High prices that ignore consumers

Due to soaring rice prices, the trend of “turning away from rice” has definitely accelerated over the past year.

“If rice prices remain high like this, the trend of people turning away from rice will undoubtedly continue. What should be done? 

The Ministry of Agriculture, Forestry and Fisheries is currently using approximately 300 billion yen in “Direct Payment Grants for Paddy Field Utilization” to run a campaign encouraging farmers to reduce the production of rice for staple food and shift to other crops. They are holding explanatory meetings across the country in collaboration with the JA Group.In response to the public’s shift away from rice, they are pursuing a policy that puts the cart before the horse—aiming to maintain high prices by preventing overproduction.”

These crop conversion incentives, funded by massive amounts of public money, are intended to prevent a drop in rice prices. The intentions of MAFF and the agricultural cooperatives are certainly not to rescue farmers.

“First, the agricultural cooperatives want to keep small-scale farmers—who make up 85 percent of all farmers—under their control by keeping rice prices high. There are two reasons for this. 

Agricultural cooperatives are ‘cooperatives of farmers,’ and it is precisely for this reason that they are granted the privilege of engaging in financial and insurance services in addition to their core agricultural guidance and purchasing operations. However, currently, half of their members are associate members who are not farmers. If the number of farmers decreases any further, the organization will be unable to maintain its structure and could lose these privileges.”  

Another reason is the retention of operating funds. The agricultural cooperatives’ operations are not sustained solely by the sale of agricultural products. They pool the massive deposits and savings entrusted to them by many farmers—including those engaged in other occupations—into “Norinchukin,” Japan’s largest investment bank, and use the enormous dividends generated from those funds to cover their operating expenses.In addition, revenue from JA Kyosai (the National Federation of Agricultural Mutual Aid Associations) is also significant.  

The agricultural cooperatives are determined to retain part-time farmers at all costs. Maintaining rice prices remains an effective means of achieving this goal.  

And politicians and bureaucrats are closely aligned with the agricultural cooperatives’ interests. LDP lawmakers representing farmers, fishermen, and forestry workers want nothing more than the “farmer vote” that the agricultural cooperatives can mobilize for them. That is why they put on a show of protecting farmers by advocating for rice production cuts and high rice prices.As for Ministry of Agriculture, Forestry and Fisheries bureaucrats, they want to secure their own career advancement and post-retirement positions by devising policies and budgets that please politicians.  

In short, what they want to protect is neither Japanese agriculture nor farmers. To ensure the survival of their own organizations and positions, they don’t care what happens to Japanese rice or food security. Their behavior leaves us with no choice but to conclude this.”

“Today’s MAFF bureaucrats lack the ability to make sound judgments on their own,” laments Professor Emeritus Oizumi. He goes on to point out, “Their failure to think for themselves is the result of repeatedly kowtowing to the ruling administration.”

“After the Basic Act on Food, Agriculture, and Rural Areas was enacted in 2000, Japan’s agricultural policy was supposed to have shifted from a ‘protectionist agricultural policy’ reliant on subsidies to a ‘growth-oriented agricultural policy’ that prioritizes efficiency. However, under successive administrations since then, the balance between growth-oriented and protectionist policies has swung back and forth every seven years.Last year, the moment the Ishiba Cabinet was replaced by the Takagi Cabinet, the policy shifted 180 degrees from ‘increased production’ to ‘production based on demand.’ 

Each time this happened, MAFF bureaucrats were left floundering between conflicting rice policies. Under these circumstances, it’s no wonder they’ve lost their ability to think critically as bureaucrats.”

Politicians, MAFF bureaucrats, and agricultural cooperatives—all they ever have in mind are their own interests. They likely have absolutely no regard for the livelihoods of consumers struggling under soaring prices for rice, their staple food.

“The wall of vested interests created by three parties—politicians seeking the farming vote, agricultural cooperatives focused on protecting their organizations, and MAFF bureaucrats pandering to them—is obstructing the price formation that should naturally result from supply and demand. Unless we break through these deep-rooted conflicts of interest, there is no bright future for ‘Japanese rice.’”

▼Kazunuki Oizumi, agricultural economist and professor emeritus at Miyagi University. Born in Miyagi Prefecture in 1949.He completed his master’s degree at the Graduate School of Agricultural Sciences, University of Tokyo. He has served as a professor and vice president at Miyagi University, among other positions. His publications include *The Hidden Strength of Japanese Agriculture* (Yosensha), *A Theory of Hope for Japanese Agriculture* (NHK Publishing), and *How the Food Value Chain Is Transforming Japanese Agriculture* (Nikkei Publishing).