Rice Sector Policies in Japan

Japan's rice sector is supported by high prices paid by consumers that allow many farm households to maintain small rice farms. Japan's government controls trade within a tariff-rate quota and imposes a prohibitively high tariff on imports outside the quota. Within Japan, diversion programs pay farmers to substitute other crops for rice since, without government-mandated diversion, supply would exceed demand at the price levels in Japan's market. Farmers are compensated for market price declines below a moving average of past prices. Government subsidies are used to restructure farming into larger operations, enabling lower production costs. Japan freed its wholesale and retail rice markets from government control in the late 1990s, and market prices have been gradually falling. Nevertheless, producer prices are 10 or more times higher than prices in other japonica rice-growing countries, and consumer prices are 2-3 times higher.