The price of table rice in Japan has skyrocketed. As of June 2025, the average wholesale price had reached 27,102 yen per 60 kilograms. That’s 452 yen per kilogram —or roughly $3.12 at the current exchange rate. In retail, the average price of a 5-kilogram bag had surpassed 4,285 yen ($29.50). Compared to 2021, the price of table rice had more than doubled, causing widespread unease among the Japanese public.
Amid this rice crisis in Japan, former Agriculture Minister Taku Eto from the ruling Liberal Democratic Party said at a lecture in Saga Prefecture that he doesn’t buy rice because he receives so much of it as gifts from supporters. Given that rice is deeply tied to Japan’s culture, traditions, and daily life, a wave of public outrage ultimately forced Eto into resignation.
His successor, Shinjiro Koizumi responded by releasing 300,000 tons of table rice from state reserves in June (on top of the 310,000 tons already approved) at a price of 2,000 yen per 5-kilogram ($13.75). According to the Ministry of Agriculture this measure reduced the national average price of supermarket rice from over 4,000 yen (about $28) to approximately 3,000 yen, providing short-term relief from the rice crisis. Nevertheless, Prime Minister Shigeru Ishiba experienced a painful defeat in the recent Upper House elections, which has been linked to high rice prices and living costs.
Japan’s structural problems in the rice market go back to the 1970s. The Japanese government introduced the Gentan system to reduce the production of table rice, to stabilize its price and thereby to support the income of the politically influential rice farmers. Farmers received subsidies for switching from table rice production to feed rice and other crops such as wheat or soybeans. This lead to a steady decline in table rice production over time. In 2018, former Prime Minister Shinzo Abe drew public attention by claiming the final end of the Gentan system, after it was previously reformed in 2004. However, rice price supports persisted indirectly, as the Japanese government continued subsidies for the production of feed rice and other crops.
Rice imports, which could reduce prices permanently, were only gradually permitted since 1995, but under tight restrictions. Currently, Japan allows approximately 770,000 tons of rice to be imported per year. Only about 100,000 tons of this “Minimum Access (MA)” quota is for the sale as table rice, which corresponds to merely 1.4% of the annual consumption.
The Ministry of Agriculture, Forestry, and Fisheries imposes a significant markup up of 292 yen per kilo on this imported duty-free MA rice when sold to wholesalers. The rice imported beyond the MA quota faces a steep tariff of 341 yen per kilogram ($2.35), which implies a tariff of over 400%. US president Donald Trump has even claimed that the tariff was more than 700%.
Booming tourism and a poor harvest year in 2023 – particularly with respect to quality, and compared to the previous year – have dominated the public debate about the reasons of the steep rice price increase. In the runup to the latest upper house election, the public TV station NHK saw the table rice price and Ishiba’s emergency measures as core topics of the election. A recent opinion poll by Kyodo News showed that the approval rate of Ishiba’s Cabinet has plunged to 22.9%, a sharp drop of 9.6% from the June survey.
The most important issue for voters in the Upper House election was “measures against rising prices” at 32.2%. In June 2025, the consumer price inflation stood at 3.3%, well above the Bank of Japan’s 2% target. Core inflation was recorded at 3.4%. The rising price level has hit households hard, as real wages have been declining steadily since 1998 as the outcome of more than 30 years of economic stagnation. After inflation has surged starting from 2020 it has—in contrast to other industrialized countries—not normalized again.
The latest emergency release of table rice reserves, just ahead of the Upper House elections, was a stopgap at best, but it neither boosted table rice production nor facilitated imports. The primary beneficiaries were large retailers like Don Quijote and Rakuten, as only sellers with an annual rice turnover of over 1,000 tons got access to the released reserves. Small, local vendors were left empty-handed, while general inflationary pressure persisted. Koizumi’s rice price intervention could not address general inflation, as rice only make up less than 1 percent of Japan’s consumer price index.
To contain inflation, the Bank of Japan should have raised interest rates long ago. But long-term interest rates in Japan have already risen significantly, largely due to rate hikes by the US Federal Reserve and the European Central Bank between 2022 and 2024. Additional rate hikes in Japan would not only burden the government with higher debt servicing costs but also amplify financial risks, if the yen appreciates.
Rural populations, of which incomes have been sustained by the government’s rice policies including subsidies from farmland conversion, have deposited their savings inter alia at the Norinchukin Bank (the Bank for Agriculture and Forestry). Nearly half of Norinchukin’s assets — around 47 trillion yen ($324 billion) — have been invested abroad due to the persistent low interest rate policy of the Bank of Japan. If the yen would appreciate against the dollar following interest rate increases of the Bank of Japan, these foreign holdings would lose value in the balance sheets of financial institutions.
Japan’s pension funds face a similar risk. By the end of 2023, Japanese social security and pension funds had accumulated 161 trillion yen ($1.11 trillion) in foreign assets. For example, Japan’s Government Pension Investment Fund (GPIF) has left significant portions of its currency risk on the large-scale foreign assets unhedged, which makes pension funds vulnerable to appreciation.
All in all, Japan’s rice price crisis reveals two dilemmas. First, the Bank of Japan could combat inflation by lifting interest rates. But this threatens sustainability of the government’s budget and the pensions in the overaged Japanese society.
Second, the government could reduce rice prices by ending subsidies for other crops and by allowing for more rice imports. But this would hurt the politically influential famers as well as the periphery regions of Japan, which have suffered more from the never-ending economic crisis since the early 1990s than the economic centers.
After Donald Trump had remarked with surprise in the recent trade conflict that Japan was not willing to take US-American rice despite a massive table rice shortage, Japan’s government only agreed to lift the share of the US within the MA quota, without increasing it. Yet, without comprehensive reforms Japan’s economy will continue to struggle and Japan will face a political polarization as experienced in the US and Europe. The reason is clear: In an economy paralyzed by contradictory government intervention, distribution conflicts cannot be resolved.