The nationwide rice crop index as of Sept. 15 stood at 101, against 100 for an average year. The situation should be regarded as good, if not for the growing seriousness of excessive supply of rice. The drop in rice prices is becoming so severe that rice growing areas are calling for measures to stabilize prices and supply-demand balance of rice. The government must listen to their voices and take specific actions.
Although the crop index might change in the future due to typhoons, the trend of excessive supply is likely to continue. The Ministry of Agriculture, Forestry and Fisheries estimates the rice yield for 2014 will be 7.9 million tons. Since the production target for 2014 is 7.65 million tons, it would mean 250,000 tons of excessive supply.
Concerns are rising over price trends. Advance payments given to rice farmers who entrust sales of this year’s harvest to agricultural co-operatives are below JPY10,000 per 60 kg for most brands nationwide, except for a few premium brands, marking the largest decline ever. Most farmers settle accounts for production materials by the yearend. When they ship their rice and receive advance payments, they will fully realize the seriousness of the situation. They will be at a turning point of deciding whether to continue rice farming next year.
Farmers in major rice-growing regions are deeply worried over the impact of plummeting rice prices on their business and their willingness to continue rice cultivation.
Akita prefectural government came up with an emergency package of measures to support farmers, including establishing a no-interest loan scheme to provide necessary funds and opening assistance service counters in each region to offer advice on financing and crop changes. Specifically, it will cooperate with JAs and municipalities to encourage rice farmers to apply for a compensation program to mitigate the damage of income losses and shift to different crops such as rice for feed, soybeans, vegetables or flowers.
Yamagata prefectural government, predicting that the trend of excessive supply will continue in the coming year and beyond, plans to take medium- to long-term measures, such as increasing production of rice used as feed or in processed foods, as well as implementing short-term emergency steps to support farmers. JA Iwate group in Iwate Prefecture submitted a petition to the prefectural assembly which opened on Sept. 26 to take measures to stabilize rice prices, and will visit Tokyo next month to make a similar request to Diet members.
The National Federation of Agricultural Co-operative Associations (JA Zen-Noh) plans to encourage farmers to grow more rice for feed by setting a production target of 600,000 tons for 2015. We hope this will lead to an increase in production of rice for feed and tighten supply-demand balance of rice for human consumption.
What should the national government do? Can they leave the situation as it is and just let the prices of rice, the nation’s staple food, go down? The Ministry of Agriculture, Forestry and Fisheries is reluctant to take measures to control supply-demand balance, as it maintains that cultivation of rice for human consumption are conducted based on farmers’ own management judgment on demand forecasting. The ministry says it will implement a preferential measure for this year’s harvest as an exception so that farmers who have not applied for or contributed to the compensation program can receive certain amount of funds if they suffered income losses due to price drops.
Farmers are hit hard, as the current decline in rice prices is so sharp that they cannot cope with the situation. The government and other agencies must take sufficient measures so that their efforts are paid off.
(Sept. 27, 2014)