Japan’s Rice Prices Surge Over 20% Despite Harvest as Stockpiles Hit Record Lows

Despite a new rice harvest, Japan’s rice prices surged by 23% last month as depleted stockpiles and rising contract costs drove inflation. With commercial reserves at record lows, consumers are expected to face even higher prices once new supplies hit the market in October.

Despite Harvest Season, Japan’s Rice Prices Continue to Rise as Stockpiles Hit Record Lows and Inflation Persists

Farmers are anticipated to commence the harvest of their new crop, which is expected to result in the return of rice bags to Japan's supermarket shelves. However, the increase in supply is unlikely to mitigate the price increase. In a recent report by The Japan Times, Japan's commercial rice stockpiles, already at their lowest level on record due to the 2023 crop being damaged by hot weather, were further depleted by tourism-related consumption and panic purchasing in response to typhoons and earthquake warnings. This necessitated that certain retailers restrict their sales.

Even though the harvest has increased this month, alleviating supply constraints, consumers will be charged higher contract prices agreed upon by producers and the nation's primary grain distributor. The cost of a 5-kilogram container of rice in central Tokyo, which was ¥2,871 ($20) last month, has increased by 23% from the previous year.

The 300-year-old Isego rice store in Tokyo is owned by Ryuji Imai, who stated, "We have nearly exhausted our stockpiles..." He has encountered this first scarcity since assuming store ownership in 2006. Imai anticipates that prices will increase by up to 50% upon the arrival of new supplies in October.

Japan's rice production has declined since the late 1960s due to government policies encouraging farmers to cultivate other commodities, such as wheat, and an aging farming population. Climate change has also raised concerns about future output and food security.

Even though the international market could provide some respite, Japanese consumers have historically preferred domestic rice, and global prices have remained elevated following India's implementation of export restrictions last year. In August, Japan Agricultural Cooperatives (JA) sold a 60-kilogram sack of unpolished rice to wholesalers at a record price of ¥16,133.

Japan Faces Sharpest Rice Inflation Since 1975 as Stockpiles Dwindle and Prices Surge Amid Supply Woes

In the same month, rice inflation experienced the most significant year-over-year increase since 1975, with a 28.3% increase. Polls indicate that inflation is a substantial concern for electors as the Liberal Democratic Party prepares for its leadership election.

In June, Japan's commercial rice stockpiles plummeted to 1.56 million tons, the lowest level since the Ministry of Agriculture, Forestry, and Fisheries began maintaining data in 1999. Wholesalers and retailers use these figures to evaluate the supply-demand equilibrium for the forthcoming year.

Inventory levels may be even more restrictive in the forthcoming year. The agriculture ministry anticipates a 2024 harvest of 6.69 million tons; however, consumption is expected to reach 6.73 million tons from July 2024 to June 2025.

Last month, the governor of Osaka urged the government to release strategic reserves, citing that 80% of retailers were running out of grain to sell. Nevertheless, the agriculture minister demonstrated a reluctance to utilize these reserves.

"They should have released government stock before the end of June, before the situation worsened,” said Hidekazu Aikawa, managing director of the Japan Rice Merchants Association. "Stable supply should always be protected."

In September, 40% of Japan's rice crop is typically introduced to the market. In July, JA raised the contract prices for producers by 20% to 40% due to inflation, which increased production costs.

Toshiyuki Aizawa, a third-generation rice store owner in northern Tokyo, is experiencing increased customer traffic. "We’re running low on stocks, and it won’t be a smooth transition until October," said Aizawa, noting that most nearby supermarkets have limited sales to one bag per family.