Motohiro Yamazaki: How to View the "Rice Shortage"—From a Distribution Perspective

From last summer to last autumn, reports emerged regarding the "Reiwa Rice Riot." It was described in comparison to the "Heisei Rice Riot" that caused a stir in 1993 (Heisei 5). At the beginning of the commotion, the government eventually sold off its stockpiled rice (rice kept to respond to supply shortages during poor harvests), despite having declared it would not release it. As of the end of April 2025, the third bidding for stockpiled rice has taken place, but the average retail price for a 5kg bag of polished rice at mass retailers has been rising for 16 consecutive weeks. There is still no sign of the rice riot subsiding.

What often happens in discussions about rice is that various elements—boasting about gourmet quality, rice as a general food ingredient, rice as a staple food, or its relation to national land conservation (water sources)—are brought into the same arena before anyone realizes it, making it impossible to reach a conclusion. Here, I would like to strive to narrow the focus to the perspectives of general food products and staple food supplies.

Heisei 5 (1993) saw a poor harvest and a major crop failure due to cold weather damage. Nationwide, there were low temperatures and a lack of sunlight, with heavy rain in both Western and Eastern Japan, resulting in a nationwide cool summer not seen since 1954 (Showa 29). No declaration of the end of the rainy season was issued except for the Okinawa and Amami regions. The crop situation index (*1) for that year was 74 nationwide. The region with the best crop situation was Okinawa at 108. Hokkaido was 40, Aomori 28, Iwate 30, Miyagi 38, Akita 83, Niigata 89, Toyama 87... almost all were significantly below the average harvest.

The harvest volume was approximately 7.4 million tons. The demand at the time in Heisei 5 was approximately 10 million tons. Due to the rice supply shortage, rice prices began to rise gradually from early autumn. The Hosokawa Cabinet at the time reversed the previous embargo policy of "not allowing even a single grain of rice to enter" and announced in September that it would conduct emergency imports totaling 2.59 million tons from Thailand, China, the United States, and other countries.

The imported rice consisted mainly of long-grain varieties that do not become "gohan" (Japanese-style cooked rice). Because consumers did not want to buy such imported rice, the government instructed rice distribution businesses to sell it mixed with domestic rice, which increased consumer dissatisfaction. In June of the following year, Heisei 6 (1994), the situation gradually calmed down as the harvest of early-season rice from Okinawa Prefecture began.

That year, Heisei 6, turned out to be a scorching summer, and conversely, reports of a bumper crop nationwide emerged, bringing the rice riot to a complete end. Based on this experience, the government's rice stockpiling system began.

*1 The crop situation index is an index showing the harvest for a given year, with the average harvest per 10 ares of paddy field set at 100. 106 or higher: Good / 102–105: Slightly Good / 99–101: Average / 95–98: Slightly Poor / 94 or lower: Poor.

In the summer of Reiwa 6 (2024), mass retailers lacking rice selections began to be seen here and there. The government's explanation was that things would settle down by the time the new rice hit the market. As the harvest season for new rice arrived, the crop situation index for the Reiwa 6 crop was announced as 101, yet the distribution of new rice progressed slowly, and the procurement prices for rice distribution businesses continued to rise.

Around the end of the year, the government began explaining that while rice existed, rice distribution businesses were hoarding it for speculative purposes. Entering Reiwa 7 (2025), rice prices recorded historical highs. The government's outlook that speculators would start selling for cash proved wrong, and at the end of January, it announced the implementation of bidding for stockpiled rice, which had been stored for food supply crisis situations such as major crop failures. After conducting bidding for 150,000 tons from March 10 to 12, a second round was held from March 26 to 28, and a third round from April 23 to 25. In total, over 300,000 tons were successfully bid for. The government states it will release stockpiled rice until retail prices drop (expected until July), and future bidding will target rice that is two or three years old.

On the other hand, imported rice, mainly from the U.S. and Taiwan, is already appearing on the shelves of mass retailers, not to mention for commercial use in the restaurant and ready-meal industries, and it has received a certain level of positive evaluation from consumers. Unlike the emergency imports of Heisei 5, these are short-grain or medium-grain varieties, and the quality has improved since then. They are being accepted by consumers as "gohan."

The cause of the Heisei Rice Riot was a crop failure in a single year (the previous year was 101 = average, the following year was 109 = bumper crop). While the cause of the Reiwa Rice Riot is unknown, looking at the crop situation index, Reiwa 4 was 100 = average, Reiwa 5 was 101 = average, and Reiwa 6 was 101 = average, so there are no particular problems in terms of the index. Of note is that in August of Reiwa 6, following an earthquake with an epicenter in the Hyuga-nada Sea that measured a lower 6 on the Japanese seismic intensity scale in Miyazaki Prefecture, the Japan Meteorological Agency issued a "Nankai Trough Earthquake Extra Information (Megaquake Advisory)." This information triggered household stockpiling as a disaster preparation. However, rice had already begun disappearing from mass retailer shelves in July.

And as mentioned earlier, the decision to release stockpiled rice was made at the end of the following January. On the other hand, during the Heisei era, it was a cool summer caused by the eruption of Mount Pinatubo in 1991, and the government announced the implementation of emergency imports in September. Heisei was a crop failure; Reiwa was an average harvest. In Heisei, measures were announced during the harvest season, but in Reiwa, measures were only introduced in the following year.

Another difference is the law. Heisei was during the era of the Food Control Act. Reiwa is under the "Act on Stabilization of Supply, Demand and Prices of Staple Food (Food Law)."

New rice, new tea, new buckwheat (soba), or the first bonito of the season. We Japanese appreciate the first products of the season. Among these, rice is perhaps the ultimate example, with people being particular about the harvest year, production area, and variety. As a rule, rice distribution businesses secure their annual sales volume of the current year's rice during the autumn harvest. They enter into purchase contracts with main suppliers and procure any shortages as needed throughout the year through collectors or inter-dealer transactions. During bumper crops, there is a "sentiment that prices will fall in the future," so they tend to limit contracts during the autumn harvest and allow for more flexibility in as-needed procurement. In years when procurement seems likely to become difficult due to factors such as poor harvests, they increase their main contracts in early autumn.

The current rice riot began with the Reiwa 5 crop. Although the crop situation index for the Reiwa 5 crop was 101, there were quality issues, and from the beginning of Reiwa 6, the rice distribution industry was concerned about a rice shortage during the off-season (late summer to early autumn). It became a major topic of conversation around spring, and by June, there was a conviction that rice would be insufficient. Transactions for early-season Reiwa 6 rice took on the appearance of a scramble, and the previous year's crop, which would normally be sold until October, disappeared.

By early autumn, when rice from major production areas hits the market, rice prices had already begun to skyrocket. The government explained to both the rice industry and consumers that businesses were holding onto stock for speculative purposes, but such movements could not be confirmed through the rice distribution industry's information networks. The industry's perception was that "there is no rice" and "the harvest is not as good as the crop index suggests." Many collectors and brokers conduct cash transactions. In a situation where rice prices have more than doubled, from a cash flow perspective, even if the purpose were speculation, it would be time for liquidation to begin, yet rice is not appearing on the market. It seems the harvest volume was indeed insufficient.

By the way, why is it that rice prices are not falling despite the start of the sale of stockpiled rice? This is likely because there is a significant time lag between the theoretical scheme and the movement of goods on the ground. As of the end of April, over 300,000 tons have already been sold. However, less than 10% of the actual goods have reached the end-users. Commercial flows such as name changes and settlements take time, and realities such as cargo handling at warehouses and the decline in logistics functions due to the shortage of truck drivers—the so-called "2024 problem"—are creating a large time lag with the theoretical plans. After this, if another 200,000 tons or so are sold, the total amount will be equivalent to one month of domestic demand, and by the time they are distributed, the new Reiwa 7 crop will also begin to appear.

There is the "Rice Distribution 2040 Vision" published last June by the National Rice Sales Business Mutual Aid Cooperative (Zenmeihan), a rice wholesaler industry group where I currently serve as chairman. This vision was prepared after being inspired by content in materials submitted to the 5th Basic Law Verification Subcommittee of the Council of Food, Agriculture and Rural Area Policies (December 9, 2022), which stated that the demand for staple rice, which was 7.04 million tons in 2020, would shrink to 4.93 million tons by 2040.

A point raised in unison by many think tanks and agricultural researchers, in addition to this vision, is that in the 2030s, domestic production alone will no longer be able to meet domestic demand for rice. This is a situation that the rice distribution industry cannot overlook. Furthermore, just imagining that such a situation could occur more than 10 years ahead of schedule is enough to cause sleep deprivation.

The "Heisei Rice Riot" occurred under the Food Control Act. The "Reiwa Rice Riot" is under the new "Act on Stabilization of Supply, Demand and Prices of Staple Food." Even after the enactment of the new law, substantial acreage reduction policies have continued. The phenomenon the government fears is a rice surplus leading to a drop in rice prices. To avoid this, substantial acreage reduction policies (production adjustment) continue.

If rice farming is based on actual demand (restaurants, ready-meals, mass retailers, rice processing manufacturers, etc.), supply and demand will balance. However, rice farming not linked to actual demand can lead to overproduction, which consequently becomes a factor in falling rice prices. The government does not interfere with rice farming based on actual demand, but producers observing this from the sidelines might turn toward rice farming for which there is no demand. Therefore, the government denies all rice production increases (regardless of demand). The aforementioned 2040 Vision calls for the construction of vertical and horizontal alliances within the rice supply chain, from producers to actual users (upstream to downstream) and among industry peers.

Until now, the rice that actual users sought was rice with a so-called "story," being particular about water quality, soil, climate, variety, and farming methods. It was a story of growing delicious rice. However, about five years ago, changes began to appear in the stories that actual users seek. These include the status of infrastructure such as water management and collection facilities, the status of administrative support, and not only agricultural cooperatives and collectors but also the population trends of the land. In short, it is the evidence that the production area has an environment in place to maintain rice farming 5 or 10 years into the future.

Conversely, even with excellent quality rice, if production is to be discontinued the following year, it becomes necessary to search for a new production area again. To save that effort, sustainable rice farming is beginning to be prioritized above all else. In fact, the number of young-generation farmers practicing farming methods that set them apart from conventional traditional methods is increasing (including a significant number of Keio University alumni).

I feel a strong need to explore new distribution while maintaining conventional traditional distribution. What should lie beyond that is a supply chain with farming methods that maintain stable harvest volumes, profits that allow producers to continue rice farming, and a market that can absorb fluctuations in harvest volumes.

That is the answer to the rice shortage from a distributor.