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Wholesale prices of rice to be harvested this year are likely to fall for the first time in six years, helping consumers while giving farmers a headache.

The drop reflects lower demand for dining out because of the novel coronavirus epidemic, on top of a population decline and a continued shift in consumer preference away from the traditional staple food.

The wholesale prices mean the prices of rice changing hands between shippers, including agricultural cooperatives, and wholesalers.

Rice demand over the year through June stood at 7.13 million tons on a preliminary basis, down 220,000 tons from the preceding year, the agriculture ministry said.

The pace of decline accelerated from some 100,000 tons a year in the past years, prompted by the COVID-19 crisis and consumer frugality following the consumption tax hike in October last year although the tax rate for rice and other food was kept unchanged at 8 percent.

As a result, end-June inventories this year rose 120,000 tons to 2.01 million tons, topping the 2-million-ton line above which rice prices tend to fall.

Inventories may build up further as consumers are still staying away from restaurants.

Japan terminated its traditional gentan rice production adjustment in the 2018 harvest year, allowing farmers to plant rice as much as they like. If they plant rice excessively, however, prices can collapse.

Planted rice acreage in June this year was unchanged from the previous year in 25 of Japan’s 47 prefectures, including production centers in the country’s northeast.

“Farmers think that if they grow rice it will fetch good prices. They are stuck in such a mindset,” a ministry official said.

On Friday, the ministry said that of the 19 prefectures where rice is harvested early, the crop prospects were “slightly good” or “the same as normal years” in Hokkaido and 12 other prefectures as of Aug. 15.

Retail prices for the popular Koshihikari variety grown in Miyazaki Prefecture, put on sale ahead of rice from other prefectures, are slightly lower than last year.

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