Rice farmers respond to challenge of slow consumption, prospect of TPP

Kyodo

Japanese rice farmers have been struggling due to slumping consumption and their business climate is expected to get even harsher with Japan set to start trans-Pacific free trade talks, possibly leading to the removal of the nation’s tariffs on rice imports.

Many farmers believe, however, that there is room for further expansion in the rice industry, with some turning to the rice flour business while others make efforts to create new brands that can become mainstay products.

Rice consumption has slackened in Japan due to changes in dietary habits, especially increased consumer preference for wheat products such as pasta and bread.

Data from the Ministry of Agriculture, Forestry and Fisheries show that Japan’s average per capita rice consumption stood at 58.5 kg in fiscal 2009, less than half the 118.3 kg recorded in fiscal 1962.

The dietary changes have pushed up consumption of wheat and other crops where reliance on imports is high, resulting in a decline in the nation’s overall food self-sufficiency rate.

The rate came to 39 percent on a calorie basis in fiscal 2010, significantly lower than comparable figures for other advanced economies — 80 percent for Germany in fiscal 2007 and 65 percent for Britain in fiscal 2007, for example.

Japan’s self-sufficiency rate for rice is high, however, at 98 percent, as domestic rice is protected against cheaper imports by a tariff of 778 percent.

Japan has the capability to produce even more rice as production has been kept at a certain level under the government’s acreage reduction policy aimed at preventing a fall in prices.

But the climate surrounding the rice market may change significantly following Prime Minister Yoshihiko Noda’s decision in November to participate in negotiations for the U.S.-led Trans-Pacific Partnership free trade agreement. Since the TPP calls for the abolition of tariffs in principle, the outcome of the talks may require Japan to lift its tariff on rice. If that happens, a flood of cheaper imports is likely to flow into the Japanese market.

The government is exploring ways to increase the productivity of rice farming in order to enhance the competitiveness of Japanese rice ahead of such an influx. Specifically, the government has adopted a policy of expanding the average acreage for rice farming more than tenfold, to between 20 and 30 hectares per farmer over the next five years.

The government also introduced a subsidy five years ago to promote the output of food made from rice flour. Under the subsidy program, aimed at raising Japan’s overall food self-sufficiency rate, the agriculture ministry pays farmers ¥80,000 for each 1,000 sq. meters devoted to growing rice that is to be eventually processed into flour. The amount is larger than similar subsidies paid for other crops.

The village of Ogata, Akita Prefecture, is one of the municipalities stepping up the production of rice flour.

Ogata, which built a factory to produce rice flour noodles in 2009, briefly suspended its sales campaign for its nationally known rice brand Akita Komachi to shift its focus to production of rice flour products.

The Ogata Village Akita Komachi Producers’ Association offers a variety of products made from rice flour, including yakisoba, macaroni, Vietnamese pho noodles and Chinese dumpling sheets.

Toru Wakui, 63, who runs the association, believes that hefty demand can be expected if domestically produced rice flour replaces imported wheat, which Japan relies heavily on to make popular noodles like udon and ramen.

“Noodles made from rice flour have the potential to create a new food culture” in Japan, Wakui said.

Wakui is not overly optimistic about the future of rice flour noodles, citing their high prices. In terms of nutritional value, there are no differences between noodles made from expensive rice flour or cheap wheat.

As a means of increasing the appeal of his products, Wakui started making sprouted brown rice noodles, which contain more nutrients than regular wheat noodles. Meanwhile, the lineup of rice flour products offered by the association has expanded, accounting for about 40 percent of items being promoted under the farm ministry’s four-month rice flour campaign that began in October.

Ogata village still has a long way to go before making the rice flour business a stable source of earnings. At least ¥50?million in monthly sales is said to be necessary to make the business profitable — far larger than the ¥25 million to ¥30 million currently earned, which falls short of covering personnel and production costs.

The association is now developing instant noodles as part of its efforts to broaden its product lineup, aiming to generate monthly revenues of ¥100 million by the fall of 2012.

In Motomiya, Fukushima Prefecture, Kiyokazu Suzuki, 53, is another farmer who believes in the potential of the rice business.

It was in the summer of 2003 that he found a rice plant that was growing considerably faster than any other plants in the same rice paddy. After eight years of testing and development based on the plant, Suzuki succeeded through his individual efforts in creating a new brand.

The rice, registered in September 2010 under the brand name Gohyakugawa after a local river, is planted during the Golden Week holiday season in early May and harvested in August before the typhoon season arrives in the region. The harvest is much earlier than the late September through early October period for other rice.

The rice’s quality has been recognized; it won a special award at a tasting contest held by an association of rice experts in Osaka.

Suzuki’s case is considered rare in the rice industry, where new brands are normally developed by laboratories operated by local municipalities.

“People must have thought my individual efforts to create a new brand were an unrealistic attempt,” Suzuki said.

Making the attempt more challenging was his lack of knowledge of legal procedures for registering the brand.

But his efforts have apparently paid off, with Gohyakugawa harvested last autumn selling for ¥14,500 per 60 kg, higher than the traditional Koshihikari brand produced in the same region.

A future for Suzuki as a farmer, however, is not guaranteed.

Casting a shadow over his business are fears of radioactive contamination due to the unfolding nuclear crisis at Tokyo Electric Power Co.’s Fukushima No. 1 power plant crippled by the March 11 earthquake and tsunami. Radioactive cesium exceeding the government’s allowable level has been detected in rice harvested in part of the city of Fukushima, 30 km away from the plant.

“Confusion may spread among local farmers,” said Bunsaku Takamiya, 55, a managing director of the Michinoku Adachi agricultural cooperative in Motomiya.

Even under these circumstances, Suzuki continues to pin high hopes on Gohyakugawa, which he wants to become another mainstay brand in a region that has depended solely on Koshihikari.

“I hope Gohyakugawa will support rice retailers and producers,” Suzuki said.