Rice consumption in Japan has been falling for decades. Lately, however, the Japanese have been racing to the store to buy as much rice as they can. Not because their preference for rice has suddenly changed, but because they are worried there won’t be anything left when they get there. Despite higher-than-usual rice production, a combination of factors has led to Japan’s rice inventory in summer of 2024 to fall to its lowest levels in 20 years. First, while rice production is up, bad weather has had a severe negative impact on Japan’s wheat harvest. Next, Japanese households began stockpiling rice in preparation for typhoon season. Finally, rice consumption by tourists nearly doubled. As a result, rice prices have increased and store shelves are nearly empty, with some stores limiting the amount each household can purchase.
This shortage could be remedied by importing rice from other countries. But Japan has severe restrictions on rice imports. Japan imports 682,000 tons of rice per year to comply with a World Trade Organization agreement. However, that rice is low-grade rice used in processed foods and animal feed. Any rice imports above that are subject to a 778% tariff designed to protect their rice farmers. Such a high tariff restricts rice imports to less than one-half of one percent of Japan’s annual rice consumption. Not nearly enough to make up for the shortfall.
Discussion Questions:
- Use a supply and demand graph to show how and increase in production and an increase in consumption lead to higher rice prices in Japan. Is it possible that a combination of these same factors could also lead to decreased prices? Explain.
- Who benefits and who loses from tariffs?
Sources| CNBC: https://www.cnbc.com/2024/09/25/japans-largest-rice-shortage-in-years-exacerbated-by-sushi-hungry-tourists-.html; The Guardian: https://www.theguardian.com/world/2023/jul/09/bread-easier-japan-rice-staple-food; Unsplash: Photo by Eduardo Prim on Unsplash