A Japanese agricultural economist warns that Japan's recent auction of 150,000 tons of reserve rice might offer only temporary relief from soaring prices, and regional disparities could persist.
Japan's Ministry of Agriculture, Forestry and Fisheries (MAFF) auctioned off the first batch of 150,000 tons of government-reserved rice on Monday in an effort to increase market supply and curb soaring rice prices, with the bidding results announced on Friday.
The rice will gradually be released to the market, but experts say that while the release of reserve rice can alleviate market pressure to a certain extent, it is still uncertain whether it can completely solve the problem of rising rice prices.
The bidding results showed that the average winning bid for the 150,000 tons of rice was approximately 21,000 yen (about 140 in U.S. dollars) per 60 kilograms.
According to the latest data released by MAFF on March 3, the price of rice in Japanese supermarkets is about 47,000 yen per 60 kilograms, a year-on-year increase of 94.7 percent. Masayuki Ogawa, an assistant professor of agricultural economics at Utsunomiya University, believes the impact of releasing the reserve rice may be limited.
"We expect to see rice with a lower price and better quality, but there is also the possibility of failure. For example, if all of the rice flows into supermarkets and is sold at a discount as a way to attract customers, and if it's all sold out within one or two weeks, it will ultimately just be a short-term promotion of cheap rice. In that case, the effect of the policy will be limited," said Ogawa.
Ogawa said that, as planned, the first batch of Japan's reserve rice will be available in supermarkets and other retail stores as early as the end of this month, but rice prices may vary in different regions.
"The release of this reserve rice is biased towards eastern and northern Japan, and its Hokuriku region. For suppliers in western Japan, the cost of transporting rice will increase, and ultimately these costs will affect the price of rice in supermarkets. So I think the price of rice in western Japan may be slightly higher than in eastern Japan. There may be differences in price," he said.
Ogawa believes that although the implementation of the policy of releasing reserve rice is a positive starting point, a more systematic and long-term policy support is still needed to completely solve the supply and demand contradiction in the rice market.
"Simply put, the previous basic policy was that the Japanese government would not intervene in the distribution of rice, and it was mainly led by the market. But this policy may greatly change this situation. The Japanese government may start to actively intervene in the price of rice. There is still debate about whether it is better for the Japanese government to directly intervene to stabilize prices, or whether it is better to leave it entirely to the market. It is expected that after further observing the effect of the release of reserve rice, the discussion on how to formulate rice policy in the future will deepen," said Ogawa.
Reserve rice release may only temporarily solve price crisis: Japanese expert
