Productivity Shocks and National Food Security for Japan

Agriculture is the focus of much contention in free trade negotiations. The Japanese government is against liberalizing the rice trade on the grounds that it would threaten “national food security” in the events of such shocks as crop failure, war, and embargo. Trade liberalization is expected to make Japan more dependent upon food imports and to make the Japanese economy more susceptible to these risks. Using a stochastic computable general equilibrium model, we conducted Monte Carlo simulations to quantify impact of rice productivity shocks and export quotas by major rice exporters to Japan and found little chance for trade liberalization for Japan to suffer from such shocks. JEL Code: C68, D24, Q17, Q18