From The Economist, April 10:
A crisis over its staple reveals cracks in the country’s food system
A RECENT farmers’ protest in central Tokyo created an unusual spectacle in a district better known for stylish cafés and luxury boutiques. Dozens of tractors rumbled through the streets, accompanied by thousands of demonstrators. Many of them were rice farmers in jumpsuits and rubber boots, carrying placards declaring “Farmers are a national treasure” or “NO RICE NO LIFE”. A combination of factors, such as ageing and poor incomes, have pushed many out of farming, says Kanno Yoshihide, a farmer who organised the protest (which was dubbed Reiwa no hyakusho ikki—or, a modern-day peasant revolt). “It’s the first time we take to the streets at such scale,” says Mr Kanno.
The protest comes on the back of broader anxieties about Japan’s most sacred staple. Last year shoppers looking to buy rice faced empty shelves. Rice is now available, but prices remain high: in March the cost in Tokyo jumped by nearly 90% from a year earlier, the steepest rise for half a century. The government recently started releasing 210,000 tonnes of its emergency rice reserves in an unprecedented move to lower prices.
With weak opposition parties, the ruling Liberal Democratic Party is unlikely to be unseated—but mounting frustration among both consumers and rural voters could still weigh on the party as elections loom. The episode has revealed cracks in the country’s food system, which has left it vulnerable to climate risks.
The original cause of the shortage was the blistering heat in the summer of 2023, which damaged crops. Because rice is harvested once a year, stored and then distributed gradually, the impact has lingered. Meanwhile demand spiked, explains Ogawa Masayuki, an agricultural economist. Rising prices for imported staples such as wheat—driven in part by the war in Ukraine—made rice a cheaper alternative. Restaurants, buoyed by the return of tourists, stocked up. And some households began hoarding in response to warnings about a possible mega-earthquake last year. “Customers panicked after seeing headlines about shortages,” says Akizawa Marie, who runs a rice shop in Tokyo.
But the continuing crisis has also highlighted deeper structural problems. For decades, Japan has quietly restricted rice production under a policy known as gentan seisaku, which was introduced in the 1970s. As rice consumption began to decline, driven by changing diets, the government moved to prevent oversupply. Farmers were paid to plant less, in order to stabilise prices. Though officially scrapped in 2018, the policy lives on through subsidies steering farmers away from rice towards alternatives such as soyabeans and animal feed. This has created a market with little room for manoeuvre, where small hiccups trigger serious disruption, says Honma Masayoshi of the Asian Growth Research Institute, a think-tank in Japan.
Each rice crisis has brought policy shifts—the previous one in 1993 led to market liberalisation as well as the creation of an emergency stockpile system. More recently, geopolitical tensions have renewed the debate over food security and how to raise Japan’s low food self-sufficiency rate, which stood at just 38% in 2023, far below Germany’s 83%. The country’s rice and agriculture policy “is at a turning-point”, says Mr Ogawa. The government has pledged to increase rice exports seven-fold by 2030 from around 46,000 tonnes in 2024. It is betting that overseas demand can boost production, without oversupplying the domestic market and crashing the price.
But the farmers at the protest still ask: who will be left to farm? Last year, a record number of farmers went bankrupt or shut down, according to Teikoku Data Bank, a research outfit. Among them, more than 60% were in their 70s or older....
....MORE
Related:
September 2024 - "Japan’s largest rice shortage in years is exacerbated by sushi-hungry tourists, weather"
August 2021 - "Japan ends 300 years of trading rice futures" + "The Greatest Hedge Fund Manager of All Time"
First up, from Reuters via Successful Farming, August 6:
Japan’s Osaka Dojima Commodity Exchange will end trading in rice futures, it said on Friday, nearly 300 years after they began trading as the first product on the world’s oldest futures exchange.
The last futures will trade in June 2022 when all outstanding rice contracts will have expired, ending trade that began in 1730, after samurai petitioned the Tokugawa shogunate to authorize trade in rice futures at the Dojima Exchange, as it was called then.
The move came after the agriculture ministry rejected an application to re-license the rice futures because of low volumes, said the head of the exchange, which is generally considered to be the world’s oldest organized futures bourse.
“We haven’t regarded rice futures as a pillar of our revenue. But we believe our rice futures are a useful product for Japanese farmers, so the government’s decision not to approve them is very disappointing,” exchange president Ikko Nakatsuka said, in comments broadcast on national TV....
....MORE
We used to post this piece around Cherry Blossom time (April 1 in Osaka) but are late this year.
Akin to Newton inventing the Calculus so he can get on to bigger and
better questions, Our Hero had to invent something so he could get on to
larger issues.
First posted April 15, 2008:
The Best Hedge Fund Manager of All Time
by John Needham, The Daniel Code Report | January 20, 2008
note: the original link (above) to Financial Sense Online has rotted and a quick search of the site turned up...zip.Samurai Trader!
Homage to HommaMunehisa Homma is an unsung Japanese hero. We know little of Homma’s life. In some reports his name is spelt Honma, and the activities that were to make him a hero are ascribed to any time from 1650 to 1750. This is his story.Homma ran the family rice trading business and rice was the lifeblood of Japan. More than a food, rice was a culture, Rice growing villages lived their whole lives around the rice planting, growing and harvesting cycle. Various parts of this cycle were celebrated with festivals and formal ceremonies. Rice was a precious commodity. Rice was more than a commodity; rice was a culture central to Japanese life. From rice came Sake the famous Japanese rice wine, rice cakes, rice flour, rice vinegar and much more. The rice plant produced not only its precious grains but a large amount of lush green foliage which when dry became straw. Rice straw too was an essential part of Japanese life. From straw, traditional villagers in the north made hats, clothes, utensils and the exquisitely fine rice paper. They made important religious figures, masks, decorations and a hundred other everyday itemsRice was the Japanese economy. Feudal rulers, Daimyos collected grain from the farmers as land tax and sold it from their storehouses. Rice trading was the Japanese way of life for farmers and the merchant class. Soon rice would replace currency as the value of worth in the Feudal land of Japan.Today would be the most important day of Homma’s life, the day he would launch himself on the great adventure that would see him reach dizzying heights of fame and fortune; the day that would eventually see a humble rice trader of the merchant class achieve the greatest honour his country could bestow.This Monday morning Homma sat cross legged on his precious straw mats at his family rice warehouse and forced himself to concentrate on the lists of deliveries and inventory that required his attention every morning. He looked longingly at a pile of large, fine, rice paper parchment beside his small desk. These parchments were unusually large and ordered for Homma by his good friend Nomura San who made the best Tofu in all of Japan and had access to the oversized parchment which was made in Kyoto. Strangely rice paper is usually not made from rice at all. What most people mean by rice paper was more typically made with any of the three traditional materials of kozo (mulberry), gampi or mitsumata. But this was a special paper for a very special purpose.These papers were Homma's most precious possession. More precious than the familys land and warehouses; more precious than the inventory of rice bales stored in the six separate warehouses. It was covered with strange symbols all of them painstakingly drawn by Homma. These symbols ran up and down the sheets in strange whirls and patterns. Numbers ran across the bottom and along the sides of the parchment. Some of the indecipherable symbols were colored in red; others were not. The work to produce these magical symbols had been long and arduous. For 15 years Homma had researched ancient records, thinking about what he saw and what he learned and always striving to perfect his understanding of the strange language contained in the symbols. It was a frustrating task.At times Homma despaired of making the intellectual breakthrough he knew was required. On those days he would retire to his tiny garden where there was a single strategically placed, large, moss covered stone amidst a small stream and two ancient Cherry trees. Homma would gaze at the stone in silent contemplation. Eventually balance or Wa returned to his mind. Something deep inside him forced him to return to his research every day. Instinctively he knew that if he could read just a small part of this mysterious and secret language the rest would unravel, but the search seemed never ending. Homma gave names to each of the symbols and looked for their sequence to repeat. With so many symbols this was indeed an arduous task. As the years passed Homma gradually gained some of the insight he sought. It came not as a bolt from the blue but as a gradual dawning of comprehension. This indeed was insight. This indeed was rare knowledge!At last Homma put aside the workaday chores of his family business and pulled the large rice paper parchments to his side. He gazed with fascination and reverent awe at the sheets, then inking his writing tool made from fine hairs, he consulted his notes and carefully inscribed a small square to precise points, then drew a small line from the top of the square upwards. In due course he drew another line of a different but exact length downwards from the square. With unhurried but long practiced precision he finally inked in the box with red ink and sat back. He repeated this procedure on several more of the fine parchments being careful to place each sheet apart for the ink to dry.Homma called for a pot of Sencha tea and contemplated his drawing for an hour. He had reached the stage where he could read a number of the secret symbols. In time he would master them all. Of those he did understand he noticed they had consequences. One symbol indicated a certain probability; another symbol had a different meaning. From his limited understanding he had isolated a small group of these magical beasts and watched what happened when a specific sequence occurred. He had tested these sequences in his research hundreds of times and he had seen their specificity repeat again and again. His research covered over 1500 years of records. No one had ever observed a reoccurring event over such a long time span. Now at last he was ready.Tomorrow he would rise and leave for the rice market where he would undertake his true calling and unknowingly launch himself into the pages of history. His preparations were made and his mind was serene in the knowledge that he possessed insight unknown to others. At the end of the day Homma took a pot of Gyokuro "the dew of jewels and most precious of Japanese teas to celebrate today's events. Homma was about to take the greatest gamble of his life. It would not be a gamble based on certainties but a gamble based on probabilities. From his endless research Homma could calculate the probabilities better than any man alive.Homma felt blessed to live in Osaka and doubly blessed to know about rice. Homma knew a great deal about rice. This was the first day.On Tuesday, Homma arrived at the rice market, just as a group of growers trundled their carts laden with the new season rice bails into the town square. Here, merchants would inspect and haggle with the growers and their representatives to set today's prices on the bales arriving from local growers and from inland. The growers and their agents were in a gregarious mood. The early harvest was good and the new rice bright and shiny. But business was lethargic. Tea was drunk and pleasantries exchanged. There was no urgency for the merchants to buy.The big rice merchants of Osaka adopted their usual pose of indifference. Just sit quietly and show no interest. This tactic always wore down the growers. The biggest rice buyers operated an informal cartel which controlled local prices. They could afford to wait. Growers had more rice on their farms and the main harvest was still to come from the large rice growing regions to the North and inland. Yes they said to the local growers, it is a very nice rice crop; the gods have smiled and you are indeed fortunate; so sorry, our warehouses are full and nobody is buying rice, we are not really buying new bales today.Quietly Homma went about his business, greeting the growers, enquiring about their health and their families and buying their offerings. As the day wore on, other merchants noticed Homma still quietly greeting the new arrivals at the market and still buying, buying, buying. What was he doing? Why was he buying? Didn't he know that this was just the start of the harvest and prices were sure to fall as more rice came to market? Silly boy; too impatient; what an embarrassment to his family! This was not the way of the Osaka rice merchants. This was the second day.Wednesday saw the process repeated. Homma buying, the others pointedly ignoring the new growers as their carts bought in the new bales. Today there were noticeably fewer bales arriving. The cartel, now openly scornful of Homma watched him again operating in his quiet way and still buying. Homma was not perturbed, he knew things that others didn't know because Homma had that most important of all market jewels.....Homma had an edge! His edge was that he knew things about the market that other traders and merchants did not know. In modern terms he had a huge competitive advantage.At midday an exhausted horse and its disheveled rider clattered into the town square. The rider rushed to the leader of the Osaka merchants, crouched beside him and whispered fervently. The merchants' news service was catching up with reality. The rider from the north was the last leg of a relay to bring the awful news to the cartel of merchants. Late and unseasonal rains in the major growing areas were ruining the annual rice harvest! There would be no abundant crop this year and rice prices were going up and up as the commodity grew scarce...MORE
