Rice moves through a multi-layered supply chain in Japan before reaching consumers, a structure that drives up costs and complicates market adjustments of the staple food, with retail prices currently standing at around twice the level seen a year earlier.
Farmers typically sell their harvest to collection agents, notably the Japan Agricultural Cooperatives, a powerful nationwide organization. The agents pass the rice to wholesalers, who then sell it to retailers such as supermarkets or specialty rice shops.
Each step in the chain adds transportation fees and profit margins that accumulate and are eventually passed on to households. Ultimately, rice prices at retail stores can be much higher than what farmers initially receive for their harvest.
One distinct feature of Japan's system is that the JA, as the organization is known, offers advance payments to farmers. The provisional payouts help farmers cover living and operational costs before their rice is sold, but they also influence how prices are set throughout the supply chain.
Critics say the framework makes it difficult for rice prices to reflect market trends. Unlike in freer markets, where prices adjust based on supply and demand, Japan's rice distribution is viewed as rigid, preventing flexible responses to sudden changes in demand.
Earlier this year, the government of Prime Minister Shigeru Ishiba began to release emergency rice stockpiles to address soaring prices. The reserves are generally saved for disasters or crop failures but are now being used as a temporary price control measure.
When the Ministry of Agriculture, Forestry and Fisheries was led by then minister Taku Eto, who has strong links to the farm industry, the stockpiled rice was released through auctions, allowing most of it to be purchased by the JA at high prices.
The total amount of reserve rice won by the JA at auction since March was about 296,000 tons, accounting for around 95 percent of the 312,000 tons released by the government, according to official data.
In May, however, Eto resigned over a gaffe involving rice gifts from supporters. His successor, reform-minded minister Shinjiro Koizumi, has shifted strategy by supplying the stockpiles through direct contracts with retailers including supermarkets.
By selling affordable reserve rice, Koizumi has pledged to push down prices across the board in Japan -- an approach some analysts see as market intervention -- so that consumers can obtain the staple food more quickly and at lower cost.
But skepticism is growing that the initiative will have a major effect, given that the volume of the stockpiles is small relative to total domestic demand and that only a limited number of retailers are handling the released rice.
The government essentially stores 1 million tons of rice by buying 200,000 tons annually from farmers over five years. Japan's annual domestic rice demand, meanwhile, totals about 6.7 million tons, the ministry said.
On Thursday, Ishiba chaired the first ministerial meeting to discuss ways to ensure a stable rice supply.
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