The government will allow large-scale farmers and agricultural groups to take the lead in adjusting rice production from fiscal 2007, according to agricultural ministry officials.
The measure, which is being introduced a year ahead of schedule, will come as the government begins focusing its subsidies on productive farmers, officials said at a meeting of an agricultural reform panel advising the Agriculture, Forestry and Fisheries Ministry.
The move is expected to help farmers increase productivity and become more competitive, they said.
The government has been controlling rice production.
At the panel meeting, representatives of the Tokyo Grain Exchange and Kansai Commodities Exchange explained plans to reintroduce rice futures trading in Japan for the first time in 70 years.
Farmers are afraid futures trading will make their products subject to speculative transactions. But the representatives said futures trading will lead to the establishment of benchmark prices and help prevent price fluctuations.