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close this bookCERES No. 147 May-June 1994: Cerescop (Food and Agriculture Organization of the United Nations, 1994)
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“I've never tasted foreign rice...”

The irony was not lost on Japanese farmers: in the year of the GATT, while they were mounting their toughest fight ever to keep foreign rice out of their exclusive market, much of Japan's own rice crop failed. The nation was forced to import emergency supplies to meet more than 20 per cent of its needs.

Once predominantly an agricultural society, Japan now needs no introduction as one of the world's industrial powerhouses. Yet it was difficult for Japanese society to accept the decision of the Hosokawa government in late 1993 to accede to the demands of its trading partners and open the door to ongoing imports of foreign rice. Failure to do so, Hosokawa warned, threatened resolution of the Uruguay Round of the General Agreement on Tariffs and Trade (GATT), signed in December.

Public protests to the contrary, many Japanese consumers and rice farmers viewed GATT concessions with a degree of resignation, knowing their national interests lay more with freer trade under a successful GATT than in preservation of the rice status quo. Yet memories of war-time hunger and famine linger in modern Japan, as do indelible cultural and religious links tying the urban population with the country's almost mythical rice paddies. Surprisingly, the high price the Japanese people pay (both as consumers and taxpayers) for homegrown rice hardly seemed to enter the debate.

High-price rice

If there was a prize for uneconomical rice farming, Japan would win. According to a 1991 FAO study comparing the costs of growing rice in different countries:

· in terms of average financial costs of producing rice per hectare between 1987-89, Japan was highest: US$12 934/ha. That's four times the cost in the second most expensive producer in the developed world, Italy, at $3 188/ha. The U.S. cost: $1 223/ha;

· in terms of cost per ton of paddy, Japan leads again: $1 987/ton compared with $543 in Italy and $195 in the U.S.1

But Japan has had a long commitment to assuring rice self-sufficiency, as demanded in the wartime Basic Food Law of 1942, still on the books when the GATT was signed. Consumers and the government pay dearly to keep aging and “weekend” farmers going on tiny, uneconomic plots, most less than one hectare and known colloquially as “cat's foreheads.”

Several times a year, a Tokyo office clerk named Toshiko Wada buys a 14-kilogram bag of rice for 628 yen/kilo (US$5.70/kg) directly from a farmer in Ibaraki Prefecture, just north of Tokyo. She figures she's getting a deal because she's bypassed the Byzantine distribution system which boosts rice prices in the country by another third.

That farm-gate price is not much of a deal compared with rice available outside Japan. As Wada was doing her shopping, on the international market the f.o.b. price for a high quality Thai rice to Japanese customers was just 25 cents a kilo. American Japonicastyle rice, also suitable for the Japanese market, fetches a higher price than the Thai rice-33 cents a kilo.2

Suspicions abound

Even if she were aware of the vast price differences between Japanese and other rices, Wada remains suspicious of foreign imports. “Rice is our main staple food, and I'm worried what's in the foreign rice,” she said, reflecting a widespread concern among Japanese consumers that imported rice may have been treated with dangerous chemicals.

Hiroshi Daimaru, president of a small fishery company, gets Koshihikari rice from a relative in summer and winter, in exchange for salmon and cod roe. “I've never tasted foreign rice, but the gradual liberalization of the rice market cannot be helped in light of this era of internationalization,” he said.

Unusually cool, wet weather and typhoons in the summer of 1993 devastated the Japanese crop. By January of this year the country was committed to importation of two million of the 9.5 million tons it needs for the year. Even with the GATT concessions, those imports will be much lower in future than during this disastrous year. A six-year grace period allows slow integration of imports: starting in 1995, the country will allow non-emergency imports of four per cent of its total needs (roughly 380000 tons).

After six years, total allowable non-emergency imports will be eight per cent of needs (approximately 760 000 tons).

A public opinion poll taken immediately after the GATT was signed revealed that 68.6 per cent thought acceptance of the minimum access formula was “unavoidable” and just 19.4 per cent opposed it.

However, consumers have not completely bought into the concept of open rice markets. When asked about switching from import restrictions to tariffs, a matter to be discussed in the final year of the GATT grace period, 43.3 per cent of respondents in the Yomiurz Shimbun newspaper poll replied it should not be accepted; 34.6 per cent were in favor.

Storage is cheaper

Countries fighting for access to Japan's rice market argued it would be cheaper for the government to buy and store a year or two's worth of rice than to continue protecting its internal market from outside competition. FAO experts estimate it would cost the Japanese US$3 billion to buy and store a year's supply, while the subsidised cost per year is nine or 10 times that amount.

Late last year, indications that the government would agree to open up rice markets led to angry public protests by Japanese farmers. The Socialist Party, with a solid power base in rural areas, threatened darkly to bring down the Hosokawa government. But finally most parties came on side as the opening of rice markets seemed inevitable in Japan. (Meanwhile, in South Korea, violent protests against the opening of that country's rice market continued long after the GATT signing, in hopes of preventing its ratification by the Korean government.)

Mikio Nishide, a rice farmer, said he had long anticipated the opening of the Japanese rice market. He grows mainly Koshihikari, one of the nation's most popular rices, on his 4.8 ha in Ishikawa Prefecture. Last year Nishide, 45, saw his rice production drop by four tons to 15 tons, and sold the bulk of it for about 670 yen/kg (US$5.90/kg)-a price set by the central government to the local agricultural cooperative. By the time it reaches the table in households or sushi restaurants in Tokyo and other Japanese cities, it commands nearly 1 000 yen/kg because of the costly distribution network.

“My main concern is whether the price of our rice remains stable,” said Nishide, a father of three sons. “I don't consider foreign rice a threat. I'm simply trying to grow good and competitive rice.”

Shiro Yoneyama and Kate Dunn

1 C.L. Yap: “A comparison of the cost of producing rice in selected countries,” FAO Economic and Social Development Paper #101, ISBN 92-5-103077-4.

2 Prices extracted from FAO's Export Price Index for Rice (1982-84 = 100), and the document Follow-up to the Guidelines for National and International Action on Rice in 1992,” FAO Committee on Commodity Problems (Intergovernmental Group on Rice) CCP:RI 9315, March 1993.