The Diet enacted a new food law Friday that officially signals a government retreat from heavy control of rice production and distribution.
The legislation, to go into force next April, will leave the decision of how much rice to produce in Japan primarily in the hands of farmers and transactions to be determined by market forces.
Under the existing system, the government largely controls the price of rice through a purchase program and adjusts the number of active paddies in light of the prevailing rice stock.
The new law gives agricultural cooperatives and other farming groups the power to draw up rice production plans, limiting the role of the government to ratifying the decisions made by farmers.
The law also abolishes the planned distribution system and allows the private sector to set the price of rice based on consumer demand.
The shift away from government control of rice production and distribution is expected to start in fiscal 2008 at the latest.
The government has already signaled its willingness to ease controls on rice production and distribution, unveiling the policy in a rice policy report issued in December.