Japan’s Mixing of Rice Supplies Fuels Backlash : Imports: Emergency purchases have led to an artificial shortage as consumers strip store shelves.

Japan’s first, limited experience with importing rice is nearing disaster because of the government’s insistence on mixing foreign rice with domestic varieties, which are held almost sacred by consumers here.

Japanese families began hoarding domestic varieties of rice last week, when the government began widespread sales of a mixture of domestic and foreign varieties of the grain. The situation turned into full-scale panic Monday, when consumers learned they may have little choice but to swallow some foreign rice with every bite.

The government announced that scarce supplies of domestic rice could be sold only if it was mixed with imported rice or sold in double packs containing bags of domestic and imported rice.

Store shelves were quickly emptied of what was left of the pure domestic rice, and some consumers turned to a thriving black market in search of their beloved home-grown staple.

Although Prime Minister Morihiro Hosokawa pleaded Tuesday for consumer patience with government policy, the nation was in an uproar. At least one tabloid newspaper called the Agriculture Ministry a “war criminal which should be hanged five times over.”

Hosokawa, under sharp questioning in Parliament on Tuesday, replied with a plea for public “understanding that until the new crop is in, it is necessary to consume a balance of imported rice together with the limited amount of domestic rice.”

The controversy underscored a major criticism of Japan heard from many of its trading partners, including the United States: that even when Japan decides to open a closed market to foreign competition, it does so in a manner that is designed primarily to protect its domestic industry.

Behind the government’s decisions are attempts to preserve an irrational distribution system--controlled by the Ministry of Agriculture’s Food Agency--that keeps rice prices at eight to 10 times world market prices in order to support Japanese farmers.

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But the government’s latest action is threatening to increase the power of the black market in rice and undermine the government-controlled system.

When the government decided last fall that it had to allow foreign rice into Japan--under an emergency exception only--to make up for last year’s poor harvest, it also decided to take windfall profits on its monopoly imports by setting prices close to the level of domestic varieties, which sell for up to $3 a pound.

Allowing imports to be freely priced would destroy the existing system.

With most of the price incentive to buy foreign rice eliminated, the government and officially licensed retail outlets now have little choice but to search for ways to force consumers to buy it.

Hence the new rules for rice distribution.

But these rules apply only to the 70,000 licensed retailers who sell most of Japan’s rice. Estimates are that this year, up to a third of the country’s rice supply will be distributed through another 200,000 technically illegal outlets, ranging from gas stations to convenience stores. The government’s edicts are fostering growth of this out-of-control black market.

All varieties of rice, from the most popular domestic varieties to the long-grained Thai variety--which has been the focus of most of the Japanese consumer’s distaste for foreign rice--are sold at unlicensed shops that are technically illegal but operate openly.

The Japanese are less critical of California rice, a short-grained variety that suits their tastes.

Black market prices for domestic varieties and California rice are running at 40% or more above the official price at approved shops; Thai rice has been selling at about half the government price.

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If the black market in rice--which participants often refer to as a “free market”--gets even bigger, that may do more than just undermine the Food Agency’s control of rice distribution. A freer sales system could boost pressure to offer imported rice to Japanese consumers at prices much closer to world levels. It is no longer clear that the government would have the strength or determination to stop such a trend.

Since the government has pledged to open the rice market gradually to comply with the General Agreement on Tariffs and Trade, in the long run, this could bode well for imports.