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Yomiuri Shimbun
6 days ago
- Business
- Yomiuri Shimbun
Increased Imports of U.S. Rice Likely to Have Limited Impact in Japan; Aircraft Agreement, LNG Project May Cause Issues
The outline of the Japan-U.S. trade and investment agreement announced Wednesday by the administration of U.S. President Donald Trump included key U.S. demands such as increased imports of U.S. rice and other agricultural products and the purchase of about 100 commercial aircraft. Questions have been raised about the feasibility of some elements of the deal, such as a proposed joint project on Alaskan liquefied natural gas. Imports of U.S. rice were a major focus during the bilateral negotiations. Japan annually imports 770,000 tons of rice tariff-free under a 'minimum access' framework. Tokyo and Washington have agreed the proportion of these imports allocated to U.S. rice will be expanded by 75%. 'The total rice import quota won't increase,' Agriculture, Forestry and Fisheries Minister Shinjiro Koizumi told reporters Thursday. 'During the negotiations, we achieved our goal of keeping the quota at its current level.' Koizumi insisted the impact of the deal on domestic rice farmers would be imported 346,000 tons of U.S.-grown rice under the minimum access framework in fiscal 2024, accounting for 45% of the quota. Boosting the U.S. share by 75% would lift the volume of tariff-free U.S. rice imports to about 600,000 tons, or almost 80% of the total. If realized, imports of rice from Thailand, Australia, China and other nations would be reduced and the framework would be heavily tilted in favor of the United States. As things stand, 670,000 tons of the rice imported under the framework is used as animal feed or for processing. If the proportion of rice set aside for these two uses stays unchanged even after imports of U.S. tariff-free rice are increased, the impact on consumers is likely to be small. Japan will also purchase $8 billion (about ¥1.2 trillion) in U.S. agricultural products including corn, soybeans and fertilizer. Japan's imports from the United States in 2024 included about ¥459.3 billion worth of corn and about ¥187.6 billion worth of soybeans. It may be challenging to increase the imports from the current level. The imported corn is expected to be used for feed as well as fuels such as bioethanol, and some in the government view achieving the increase as not difficult. 'Increasing these imports won't present any problem,' a senior Agriculture, Forestry and Fisheries Ministry official told The Yomiuri Shimbun. 100 aircraft The Trump administration also leaned on the Japanese government to purchase about 100 commercial aircraft manufactured by Boeing Co. Major Japanese airlines will be paying close attention. Airline companies have been increasing orders for aircraft as they boost international and domestic routes due to the growth in inbound tourism and other factors. In the past two years or so, three of Japan's major airlines have announced plans to purchase a total of about 100 aircraft. A large aircraft has a price tag of tens of billions of yen. Airlines must carefully consider aircraft purchases while taking into account the fact that some have a service life of about 20 years. If airlines are forced to order more aircraft than they need in the years ahead to uphold the Japan-U.S. agreement, there are concerns that profits could deteriorate. In some cases, an aircraft accident or fault can result in an airline grounding and being unable to use any of that model of aircraft while they are inspected. To mitigate this risk, airlines also possess planes made by Europe's Airbus SE and other manufacturers. However, this balance could be upset if orders become heavily skewed toward Boeing. Some observers have also pointed out that Boeing's production capacity might not be able to keep up with a surge in orders arising from the agreement. Alaska LNG project The Alaska LNG project will involve building a massive new pipeline stretching about 1,300 kilometers from the state's north down to its Pacific coast in the south. Once completed, this pipeline project is forecast to export 20 million tons of LNG per year, equivalent to 30% of Japan's annual demand. If the pipeline becomes a reality, LNG could be shipped from Alaska to Japan in about eight days, about half the time it takes LNG from the Middle East to reach Japan. This project also offers the advantage of diversifying Japan's LNG suppliers. 'The route doesn't pass through any areas with geopolitical risks,' said Yukio Kani, chair of JERA Co., Japan's largest power generation company. 'It's a fantastic concept.' The biggest challenge facing this project is the cost. The pipeline will need to navigate three mountain ranges and 800 rivers and streams, and development is projected to cost about $44 billion (about ¥6.4 trillion). One official at a major power generation company was apprehensive about the pipeline project. 'The project will need to gain the understanding of locals concerned about its impact on the environment. The risks are too high,' the official said.
Yomiuri Shimbun
10-06-2025
- Business
- Yomiuri Shimbun
Rice Policy: Identify The Causes of Price Increases
As rice prices have continued to soar, there are growing public calls for a shift in established agricultural policies. The causes and issues behind the increases in rice prices, which have doubled from the previous year, must be identified, and reforms aimed at ensuring a stable supply should be implemented. A council of relevant Cabinet ministers established by the government intends to consider the future rice policy, but it is first necessary to analyze the causes of the price increases and assess whether the Agriculture, Forestry and Fisheries Ministry's measures to date have been appropriate. The council is said to be aiming to reach a conclusion within about a year. As part of mid-term reforms, it would be desirable to reconsider the production adjustment policy that effectively amounts to the reduction of rice paddy acreage. It is also necessary to explore measures for income compensation for farmers who face financial difficulties when rice prices decline as a result of increased production. It is clear that the ministry misjudged the outlook for rice prices. Price increases began last summer. The ministry had indicated that prices would stabilize once rice harvested in 2024 became available, but prices did not decline and concerns about shortages persisted. As a result, frustration spread that wholesalers and other businesses involved in the distribution process were hoarding rice due to expectations of continued high prices. It has also been argued that the entry of speculative traders has helped fuel the price surge. Criticism continues over such matters as delays in releasing stockpiled rice. But where exactly did bottlenecks in the distribution process occur, and why? The ministry's failure to grasp the reality of how complexly the distribution system operates is a significant problem. Under the nation's rice policy after World War II, the government in principle purchased and controlled all the rice produced. Producers became able to sell directly to consumers after the Food Control Law was abolished in 1995, but the government continued to maintain prices through production adjustments led by the state through its policy of reducing rice paddy acreage. The government abolished the acreage reduction policy in 2018, but to stabilize farmers' livelihoods, it has provided incentives to encourage farmers to shift to other crops, effectively maintaining the policy. This may have led to a lack of consideration for the consumers' perspective and delayed responses. The current rice policy has been in place for about 30 years, and it is obvious that it is unable to respond to unforeseen circumstances such as the current situation. The importance of food security has increased dramatically due to climate change, the intensification of disasters and the instability of the international situation. It can be said that the time has come to undertake comprehensive reforms. The number of people whose primary occupation is in the agriculture industry has halved over the past 25 years, dropping to about 1.1 million. With an average age of about 69, the farming population is growing progressively gray. The number is projected to plummet to 300,000 in 20 years, making the shortage of successors a serious issue. It is necessary to establish new agricultural policies that include strengthened exports, to stabilize supply by enhancing productivity so that producers can engage in rice cultivation without worries, as an appealing profession. (From The Yomiuri Shimbun, June 10, 2025)
Yomiuri Shimbun
27-05-2025
- Business
- Yomiuri Shimbun
19 Firms Apply to Buy 90,000 Tons of Japan Government Rice; Could Appear on Store Shelves by First Week of June
The Yomiuri Shimbun Agriculture, Forestry and Fisheries Minister Shinjiro Koizumi speaks at the House of Councillors Agriculture, Forestry and Fisheries Committee on Tuesday. The Agriculture, Forestry and Fisheries Ministry had received applications from 19 companies to buy state-held reserves of rice through 'discretionary contracts' as of 9 a.m. Tuesday, agriculture minister Shinjiro Koizumi told reporters Tuesday after a Cabinet meeting. The total amount applied for was 90,824 tons, part of the 300,000 tons to be released through the contracts in which the government will set the price of the grain. Once the deals are closed, the rice is expected to be delivered to the companies on Thursday at the earliest. If all goes well, it could appear on store shelves by the first week of June. The applicants include Pan Pacific International Holdings Corp. — a leading retailer that operates Don Quijote discount stores — Sundrug Co., Rakuten Group, Inc. and OK Corp, the ministry said. Major retailers handling at least 10,000 tons of rice annually are currently eligible for the contracts. Koizumi has considered expanding the scope of applicants to small and medium-sized supermarkets and local rice shops, saying, 'The next step is to determine how to deliver the rice to these places satisfactorily.' The ministry will consider revising the details of the contracts in the future, Koizumi said. By shifting from public bidding to discretionary contracts, the ministry aims to deliver the rice directly to retailers that are close to consumers and have it available at supermarkets and other stores for around ¥2,000 per 5 kilograms (excluding tax) by early June. 'We will do our utmost to alleviate the public's concerns and prevent further decline in rice consumption.' Koizumi said Tuesday during a policy speech at the House of Councillors Agriculture, Forestry and Fisheries Committee.
Yomiuri Shimbun
27-05-2025
- Business
- Yomiuri Shimbun
Discretionary Contracts for Stockpiled Rice: Will They Be A Catalyst for Calming Prices?
The government has taken the unusual step of releasing stockpiled rice under 'discretionary contracts.' It is hoped that this will have the effect of turning the tide on soaring rice prices. Under the conventional practice of general competitive bidding, eligible participants were limited to major distributors, such as the National Federation of Agricultural Cooperative Associations (Zen-Noh). In contrast, the discretionary contracts will allow around 50 major retailers that can handle 10,000 tons or more of rice to participate. According to an announcement by the Agriculture, Forestry and Fisheries Ministry, it will release a total of 300,000 tons of stockpiled rice — 200,000 tons produced in 2022 and 100,000 tons produced in 2021. The sales price at stores, including general expenses and profit margins, is envisioned to be around ¥2,000 per 5 kilograms. The rice is expected to be on store shelves in early June. Rice has been stockpiled with the use of national funds, and the ideal approach is to sell the rice at the highest possible price when it is released. Under general competitive bidding, the operator who offers the highest price wins the bid. For this reason, over-the-counter prices for 5 kilograms of rice have remained high at more than ¥4,000, double the level last year, even though 310,000 tons of stockpiled rice have been released so far. The release of stockpiled rice under discretionary contracts is reportedly meant to be a catalyst to change the uneasy sentiment in the market. However, the government's attempt to tie down over-the-counter selling prices poses a challenge in terms of the antitrust law. Retailers are urged to exercise restraint and avoid adding excessive profit margins to their selling prices. Prime Minister Shigeru Ishiba said at the Diet that prices 'must be in the ¥3,000 range.' In addition to stockpiled rice, the prices of brand-name rice will also be a focus. The ministry has noted that stagnation at the distribution stage is the reason for the high prices. If stockpiled rice that is priced cheaply due to the discretionary contracts is placed on store shelves, wholesalers and other businesses — who are said to be hoarding their inventory in anticipation of continued tight supply and demand — may increase their sales, and the effect of lower prices may spread to brand-name rice as well. Even if stockpiled rice is used for the time being as a step to calm prices, it will be necessary to change the nation's rice agricultural policy from the consumers' perspective as a step in the medium to long term. This is because the current policy of effectively reducing rice paddy acreage has highlighted an inability to provide a stable supply of rice under unforeseen circumstances. It is obvious that current rice prices are at a level that is difficult for consumers to accept, but producers are also faced with rising prices of fertilizers and production materials. The number of rice farmers has halved over the past 15 years. There are concerns that if prices become too low, farmers will leave the business at an accelerated pace. It is hoped that a system will be established that allows farmers to increase rice production with peace of mind, including strengthening the production base by reviewing the policy of reducing rice paddy acreage, and transferring surpluses to exports. It is important to promote measures to stabilize prices that will be acceptable to both consumers and producers. (From The Yomiuri Shimbun, May 27, 2025)
Yomiuri Shimbun
22-05-2025
- Business
- Yomiuri Shimbun
Koizumi, Japan's New Agriculture Minister, Faces Soaring Rice Prices and Possible Surge in Imports from U.S.
The Yomiuri Shimbun Agriculture minister Shinjiro Koizumi arrives at the Prime Minister's Office in Tokyo on Wednesday. Newly appointed agriculture minister Shinjiro Koizumi faces critical challenges, including addressing the rising price of rice and a possible increase in agricultural imports from the United States. How he manages these issues could ultimately determine the fate of Prime Minister Shigeru Ishiba's administration. During his inaugural press conference at the Agriculture, Forestry and Fisheries Ministry on Wednesday, Koizumi said: 'What we need to focus on right now, above all, is rice. It's all about tice. I want to take the first step toward lowering rice prices.' Ishiba said Wednesday he had instructed Koizumi to change how the government sells stockpiled rice reserved for emergency use, shifting from competitive bidding to discretionary contracts in order to reduce prices. Although currently only rice distributors can bid on contracts, Koizumi stressed that he was committed to moving quickly to flesh out plans such as for expanding discretionary contracts to include retailers and restaurant operators. The National Federation of Agricultural Cooperative Associations (JA Zen-Noh) placed successful bids on more than 90% of the 210,000 tons of stockpiled rice released by the ministry in March. Yet, as of April 27, only about 10% of that rice had reached retailers and the food service sector. The average price of a five-kilogram bag of rice sold at supermarkets nationwide has increased for 17 weeks running, and now exceeds ¥4,000 — double last year's price. Koizumi will have to act swiftly to ensure that reserve rice reaches consumers and retail prices come down. He will also be tested during the Japan-U.S. negotiations over President Donald Trump's tariff measures. Proposals for increased imports of corn and soybeans, both of which Japan relies on imports for, are being considered as bargaining chips with the United States. Plans to boost rice imports are also being floated, though they are certain to face fierce resistance from Japan's farmers. 'Based on a policy of not sacrificing agriculture, I want to cooperate with relevant ministries and agencies to secure national interests,' Koizumi said. One senior official inside the ministry expressed optimism, saying, 'We expect he will make reforms.' However, another senior official raised concerns, arguing that 'if policies are decided top-down, it will cause confusion on the ground.' A Diet member with close ties to the agricultural lobby said that Koizumi 'knows how to grab attention, but his leadership abilities are still untested.'
