On the surface, Japan’s rice crisis appears pretty alarming. The cost of its cherished main staple—rice—has almost doubled in the last 12 months alone. This worrisome trend is the result of multiple intersecting factors. Surging inflation, poor agricultural harvests, and a robust rebound from the tourism industry are just a few factors. With consumers starting to directly feel the effects in their wallets, the federal government is increasingly under pressure to step up and rein in skyrocketing costs.
Japan’s government has made available data indicating that the price of Japanese-grown rice skyrocketed by 98.4 percent y-o-y in April. This comes on the heels of a previous increase of 92.5 percent in March. This month, the wholesale cost of the most popular Koshihikari rice variety has shot up to 5,000 yen. That’s up to $35 for a 5kg (11-pound) bag! Other rice varieties have seen historic price increases, some going as high as 4,200 yen ($29).
No wonder that Shinjiro Koizumi, Minister of Agriculture, Forestry and Fisheries, is hell bent on lowering them. His objective is to reduce them to about 3000 yen (about $20) for a 5kg bag. He stated, “We first will figure out exactly how much rice there is and where it is.” Making that happen seems very complicated because many things have led to the present crisis.
This summer’s temperature-pounding has only served to exacerbate the problem. The whole picture Japanese farmers are experiencing an unprecedented bad harvest as a direct consequence. The rebound of tourism and the rapidly growing hospitality industry have spiked rice demand inordinately. Tim Harcourt, an economist, highlighted three major contributors to the crisis: “One is panic buying due to rumours of a mega-earthquake. Second is the loss of wheat production because of the Russia-Ukraine war resulting in a substitution effect of wheat for rice. And three, is the resurgence in travel to Japan and a surging hospitality industry driving up demand for rice.
Panic buying has surged after consumers rushed to stockpile rice in fear of sushi restaurants running out and natural disasters occurring. Yet even emergency measures like drawing down national government rice stocks have failed to put an end to the inflationary run on prices. With food prices rocketing up by 7.0 percent just in April alone, this set off panic buttons across the public. This jump is especially welcome as Japanese companies prepare to start their new fiscal year.
Japan’s annual core inflation rate has recently jumped to 3.5 percent in April. It is the fastest yearly pace in more than two years, said the Bank of Japan. The rising costs of essential food items not only burden consumers but threaten the political popularity of Prime Minister Shigeru Ishiba and his ruling Liberal Democratic Party.
