Supermarket Rice Prices Double
5kg of Stockpiled Rice to Be Supplied at 2,000 Yen
Stockpiles at 600,000 Tons... Limitations Pointed Out
Shinjiro Koizumi, Japanese Minister of Agriculture, Forestry and Fisheries, has pledged to allow consumers to purchase government stockpiled rice at half the market price in retail stores in order to curb rice prices, which have doubled in just one year.
According to Kyodo News and other sources, Minister Koizumi pointed out during a lecture held in Sapporo, Hokkaido, on the 24th that current rice prices are excessively high. He announced, "To suppress the soaring rice prices, we will supply stockpiled rice at 2,000 yen (approximately 19,000 won) per 5 kilograms."
Earlier this month, rice sold at Japanese supermarkets averaged 4,268 yen (about 41,000 won) per 5 kilograms. The target retail price for stockpiled rice has thus been set at roughly half the current market price.
He also explained to reporters the previous night, "If we sell 60 kilograms of stockpiled rice for around 10,000 yen (about 96,000 won) through negotiated contracts, the retail price per 5 kilograms can mathematically be 2,000 yen." Until the morning of the previous day, he had stated that consumers would be able to buy 5 kilograms of stockpiled rice at supermarkets for somewhere in the 2,000 yen range, but within less than a day, he lowered the target price further to exactly 2,000 yen.
Minister Koizumi cited a change in the sales method as the key reason such a low retail price for stockpiled rice could be achieved. Until now, stockpiled rice was sold through auctions to the highest bidder, but moving forward, the plan is to sell directly to large retailers and others via negotiated contracts, bypassing the existing complex distribution channels.
Nihon Keizai Shimbun (Nikkei) analyzed that, although the Ministry of Agriculture, Forestry and Fisheries has consistently been slow to respond despite continued rice shortages following the issuance of temporary information related to the Nankai earthquake last summer, Minister Koizumi is now attempting to break the deadlock with consecutive announcements of rice price cuts.
Japanese media outlets have predicted that the low-priced release of stockpiled rice promoted by Minister Koizumi is unlikely to provide a fundamental solution for stabilizing rice prices. While Minister Koizumi has emphasized that he would release stockpiled rice without limit if there is demand, only about 600,000 tons of stockpiled rice currently remain. If 300,000 tons are sold via negotiated contracts, only around 300,000 tons would be left.
Nikkei assessed that Minister Koizumi has drawn a line in the sand for government-led price reductions, noting, "Even if there are short-term effects, pressure to lower prices that ignores market mechanisms could lead to side effects such as severe price fluctuations."
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