Japan Orders Review of Rice Subsidies

Japan’s agriculture minister has ordered a review of the nation’s subsidies to rice farmers while saying Japan needs to maintain its ban on commercial rice imports, the mass-circulation newspaper Yomiuri Shimbun reported Monday.

Under the rice control law, the government purchases almost all domestically produced rice at about eight times more than the international price and sells it to consumers for somewhat lower prices. Tax revenue makes up the price difference.

Japanese consumers pay about twice what their U.S. counterparts pay for rice, and the United States has said the subsidy system keeps out cheaper U.S. rice.

The newspaper quoted Agriculture, Forestry and Fisheries Minister Mutsuki Kato as saying the ban on rice imports should be maintained because Japan needs to maintain a self-sufficiency policy for its principal food.

The Yomiuri said Kato’s plan called for limiting subsidies to farmers who cut their rice production costs by 50% over the next 10 years.

Officials of the ministry and the Food Agency declined immediate comment on the report.

Critics say the current large subsidies encourage farmers to produce more rice than is needed and to hold on to their land, which helps keep real estate among the world’s most expensive.

The U.S. Rice Millers Assn. filed a petition with U.S. Trade Representative Clayton K. Yeutter on Sept. 10, claiming that Japan’s system cost U.S. farmers up to $1.6 billion annually in lost market opportunities.

Yeutter has rejected the association’s appeal to initiate a formal petition against Japan but said Japan has an obligation to place its rice program on the negotiating table.

Although its rice market virtually is closed, Japan buys large amounts of other agricultural products from other countries and is the United States’ best customer for many commodities.