Can the 'rice man,' Koizumi, save the day?

Could rice prices in Japan drop to less than half their current level?

Many foreign observers of Japan’s foreign and security policies, both within and outside the country, may overlook the significance of what seems like a purely domestic issue. But the ongoing rice crisis — and how the government handles it — could spell serious trouble for political forces that have long relied on and benefited from policies keeping rice prices artificially high without triggering sharp declines.

For them, this is not only a price revolution but rather a political revolution in the making.

Late last week, newly appointed farm minister Shinjiro Koizumi — who took office after his predecessor resigned over a rice-related gaffe — announced that he aimed to bring the rice price range down to around ¥2,000 per 5 kilograms, triggering a major uproar. Just days later, he stirred even more controversy by clarifying that his target was not simply “in the ¥2,000s” but exactly “¥2,000” on the dot. What exactly is this man aiming for?

Nevertheless, the new minister has made a bold decision. Some argue Japan should scrap the rice production reduction policy, boost output and export the surplus — but doing so would require a complete overhaul of the country’s agricultural policy.

If discretionary contracts for rice reserves become widespread, it could create a crack in what I call “iron triangle” of agricultural cooperatives, rice-related lawmakers and the farm ministry.

Reformers argue that changing rice policy could boost Japan’s food security, global competitiveness, farm incomes and consumer benefits while also dismantling entrenched interests. But does the new agriculture minister truly share these goals? If the government seriously targets those entrenched interests, it will likely face strong resistance from the ministry of agriculture, the Japan Agricultural Cooperatives (JA) and pro-rice lawmakers, all of whom want to protect the current system of high rice prices and subsidies created by the production reduction policy.

Whether the “5 kg for ¥2,000” policy is merely a populist measure or the prelude to a fundamental shift in rice policy is something of a mystery. Even as someone without expertise in agriculture, I can see that reforming the rice production reduction policy would not only affect rice-related lawmakers but also the political careers of many Liberal Democratic Party members, potentially challenging not only the “iron triangle” but also the very foundation of postwar conservative politics in Japan.

The reformists argue as follows:

• If the country boosts rice production in peacetime and exports the surplus, the government could redirect that rice for domestic use during a food crisis — effectively building reserves without the fiscal burden. This would also reduce the cost of maintaining current rice stockpiles and enhance the country's food security.
• The rice production reduction policy maintains high rice prices, undermining competitiveness in international markets. Abolishing the policy and enhancing price competitiveness would create opportunities in export markets, thereby contributing to Japan’s improved international competitiveness.
• Rather than suppressing production to maintain high rice prices, producing and exporting large quantities of rice with competitive prices would lead to increased income for farmers as a whole. And for some farmers, direct payments could offset price declines, helping to increase their incomes.
• The rice production reduction policy, which imposes high rice prices on consumers, is detrimental to consumer interests. Abolishing the policy would lead to lower prices, offering significant benefits to consumers and thus aligning with local consumer interests.

Implementing these reforms will likely face strong political opposition, as the ministry of agriculture, JA groups and lawmakers tied to agriculture will join forces to protect the high prices and subsidy system established by the rice production reduction policy.

In particular, JA agricultural cooperatives will strongly oppose the reforms because they control a large share of the rice stocks, collection, sales and their commission income is vital to their operations. If the rice production reduction policy is abolished, rice prices will decline and distribution will diversify, causing a drop in JA’s rice holdings, sales and commission income that could threaten the organization’s very existence. Additionally, many farmers have become dependent on rice production reduction subsidies over the years, fueling significant anxiety and resistance to losing these subsidies.

Lawmakers supported by the rice lobby echo that argument. They maintain their political power with the support of agricultural cooperatives and farmer groups. Especially under the current single-member district system, organized votes in specific regions directly affect election outcomes, making it difficult to ignore the JA group's opinions. Strong resistance also comes from within the ministry of agriculture, which has become accustomed to the long-standing rice production reduction policy system.

The discretionary contracting system for reserved rice, promoted by Koizumi, threatens JA’s control over distribution, as it would allow the government to supply rice directly to distributors, increasing distribution channels that bypass the cooperative.

However, JA's role is not limited to the collection and sale of rice. It encompasses a wide range of activities, including credit services (banking), mutual aid services (insurance), procurement services (material procurement) and agricultural guidance. Therefore, even if rice distribution undergoes some changes, it is unlikely that the JA as a whole will become “obsolete” overnight.

On the other hand, if rice prices fall, farmers' incomes will plummet, making it difficult to sustain their operations, which could pose a significant problem for Japan's food security and the maintenance of local communities. Considering this, the policies being promoted by Koizumi are not merely “populist measures,” but rather contain revolutionary elements aimed at transforming the nature of postwar Japanese conservatism.

Over the past 30 years, rural population decline and urban concentration have progressed, leading to regional, generational and economic disparities among voters who have traditionally supported the nation's conservatives. The 44-year-old Koizumi hails from Yokosuka in the Tokyo metropolitan area, which serves as the headquarters of the U.S. Navy in Japan.

Whether his rice price revolution will prove to be mere populism or a catalyst for transforming the postwar conservative political landscape in Japan will likely depend on the outcomes of the coming few weeks.