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Japan

Japan looks to foreign markets as domestic demand for rice wanes

  • Exports of Japanese rice products stood at 11,800 tonnes in 2017, far less than the government’s target of 100,000 tonnes per year
PUBLISHED : Monday, 26 November, 2018, 8:00pm
UPDATED : Monday, 26 November, 2018, 9:07pm

Japanese rice farmers are seizing on their chance to boost sales for their high-quality product, amid a fall in domestic demand and expected liberalisation of trade rules.

Kazuya Terasawa, 66, plans to export about 10 per cent of this year’s output from his rice field in the coastal city of Niigata, which sits in one of the nation’s major rice production areas.

“More cheap foreign rice will surely enter into the domestic market, especially for use in restaurants and in meals to go, blending with domestic rice,” Terasawa said.

The forecast is behind his decision to shift towards more exports, which has also been made necessary by the incoming 11-member Pacific trade pact that takes effect in December, as well as upcoming bilateral trade talks with the United States.

Terasawa’s rice is being exported by Niigata Nosho, a group firm under farm equipment maker Kubota Corp. Niigata Nosho shipped 1,896 tonnes of rice in 2017 – mainly to Hong Kong, Singapore and Mongolia – accounting for 16 per cent of Japan’s entire rice export volume.

The firm started exporting rice in 2011 as a way to help farmers who use its equipment. Export volumes quickly expanded from the first year’s 36 tonnes as the reputation of Japanese rice’s quality spread overseas.

“We expect to export some 2,500 tonnes this year,” said Batsukh Oyun, a Niigata Nosho section chief in charge of exports.

According to Oyun, a Mongolian citizen who joined the company in 2013 after studying at Niigata University Graduate School, Niigata Nosho exports unmilled rice to be freshly polished into white rice at its destination. Less fresh rice is often found in rival Chinese exports as they are shipped days or months after being polished in China.

“Japanese rice has become known for being fresh and delicious,” said Oyun, who expects the company to soon begin receiving orders from abroad for an annual total of 5,000 tonnes.

Domestic demand for the traditional staple has declined year after year, down to 7.4 million tonnes in the year from July 2017 through June 2018, from 9.1 million tonnes 20 years earlier, according to government figures.

High-end Japanese rice grown exclusively for premium sake

However, profits on exported rice tend to be lower than when it is sold domestically, so Japanese rice farmers are not always in favour of sending their crop overseas.

Exports of Japanese rice, including Japanese sake and other processed products, stood at some 11,800 tonnes in 2017, far less than the government’s target of 100,000 tonnes per year.

Government data shows that Japanese rice is two or three times higher in price than that grown in China and the United States. Including export costs, Japanese rice increases in price in foreign markets, becoming a luxury commodity for the wealthy.

To boost global consumption of Japanese rice, overseas prices need to be kept in check so that it becomes accessible to middle-class families.

Given the situation, Terasawa grows varieties with high yields and cheaper unit prices for export.

Profits will potentially increase if he cultivates more Koshihikari-type rice, a high-priced, big-name variety from Niigata Prefecture. But, Terasawa continues in his quest to expand his exports, even if the profits do not always reap rewards.

“Japanese rice is expected to have a tough road ahead. I’ll suffer more if I hold back from doing it now,” he said.

Japanese rice policy reached a turning point this year when the government ended its strategy of providing subsidies to farmers who reduce rice production to ensure price stability, despite falling demand.

Rice farmers in the country also face difficult choices with the likely increased international competition that will come with the Trans-Pacific Partnership, as people in Japan will have access to cheaper imported products.

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