MercoPress. South Atlantic News Agency

Japan rice stockpiles to reach the highest in eight years in 2011

Government protects Japanese rice farmers with a 778% tariff on imports

Japan’s food rice stockpiles may reach the highest level in eight years at the end of June 2011, leading to a price drop and planting curbs by growers next year. Private and government inventories are forecast to climb 2.5% to 3.24 million metric tons from 3.16 million tons a year earlier, the Ministry of Agriculture, Forestry and Fisheries said in a report Wednesday.

It will be the largest volume since 2003 as consumption is expected to drop by 51,000 tons to 8.05 million tons in the year to June 30.

Increasing supply may pressure Japanese rice prices, which declined 6.4% on average in the past year. It may also force local growers to cut production further next year, after reducing output by 4%t to a six-year low in 2009.

“The current level of private stockpiles is already very excessive,” said Shigeo Fuji, senior executive director at Central Union of Agricultural Cooperatives, Japan’s biggest farmers’ organization. Out of 3.16 million tons in the June 30 stockpiles, 980,000 tons were held by the government and the rest was kept by farmers and distributors.

“Rice growers may have to cut production by 600,000 to 700,000 tons next year,” Fuji said at the ministry’s advisory panel meeting, which approved the forecast today. Japan’s food rice production is planned at 8.13 million tons this year, compared with last year’s 8.15 million.

The Japanese government increased subsidies to reduce food rice sowing to balance supply with declining consumption. Demand is expected to keep shrinking as the nation’s population ages and declines, Masachika Murai, director at the ministry’s rice policy planning division, said at the meeting in Tokyo.

Wholesale prices of Japanese rice harvested last year averaged 235 yen per kilogram in June, declining from 251 yen a year earlier, according to the ministry.

The government started subsidy payments this fiscal year to support incomes of local rice growers. It also increased payments to farmers who switch rice paddy production to crops for alternative uses, such as animal feed.

Japan, the world’s largest corn importer, is self- sufficient in rice as the government protects growers from foreign competition with a 778% tariff on imports. The country agreed to give minimum market access to rice- exporting countries at the Uruguay Round of world trade talks in 1993, buying 770,000 tons a year.

Japan imported a total of 10.12 million tons of rice from April 1995 to March 2010. Of this, 3.52 million tons was sold to domestic food processors, 2.53 million tons was used as aid to foreign countries, 1.8 million tons was sold to Japanese feed makers and 1.08 million tons was used as table rice, the ministry’s report showed today.

Stockpiles of foreign rice stood at 970,000 tons as of March 31, compared with 1.11 million tons a year earlier, according to the report.