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May 31, 2008

Japanese 'rice mountain' may ease global food pressure

World leaders looking for ways to ease global food shortages may have found one answer in warehouses dotted around Japan where a rice mountain is standing idle.

The United States is considering relaxing a trade agreement between the world's two largest economies to allow Japan to sell imported US rice on the global market.

Tokyo is already preparing to ship 200,000 tonnes to the Philippines, but that is just a fraction of the 1.5 million tonnes of imported foreign rice that is stored in sacks piled high in air-conditioned government warehouses.

"We have a big stockpile of Japanese rice, so we can export rice for poor people worldwide to save their lives in an emergency," said Nobuhiro Suzuki, an agriculture professor at Tokyo University.

Rice, a staple food for the Japanese, was scarce following the end of World War II but as agricultural advances boosted global harvests, Japan erected barriers to protect its farmers.

Under pressure from heavyweight trading partners, Tokyo agreed in the early 1990s to open the door to a minimum amount of imports, and now accepts 770,000 tonnes of foreign rice every year. To sell these stocks outside its domestic market, Japan is required to obtain approval from the exporting countries.

Vice farm minister Toshirou Shirasu said that the government plans to respond to the Philippine request for rice "as quickly as possible" and would favourably consider other approaches.

Japan also announced that it will send 20,000 tonnes of rice to developing countries in Africa and elsewhere from its stockpiles to help ease food shortages.

Manila said last week prices were softening on expectations that Japan would ship some of its stockpile and amid news of bumper world harvests for 2008.

One of the world's largest rice importers, the Philippines made the request as it scrambles to fill an expected 2008 production shortfall of 2.7 million tonnes amid rocketing grain prices worldwide. But analysts say that unless Japan digs deeper into its rice mountain, it is unlikely to solve Manila's problems.

"If Japan provided only 100,000 or 200,000 tonnes, the impact could be limited," said Yukino Yamada, a commodities analyst at Daiwa Institute of Research.

The Philippines would need 600,000 tonnes from Japan on top of its imports from Pakistan and other countries, he said.

"The situation surrounding the rice industry has worsened since the cyclone hit Myanmar (a major producer)," Yamada added.

Imported rice, unpopular in Japan, often ends up in processed food or is kept until it deteriorates. It is then sold as livestock feed.

"To protect Japanese farmers, the government promised that imported rice will not go into Japanese direct consumption," said Professor Suzuki.

"Foreign rice, including California rice, will be used for secondary purposes like prepared food," he said.

About half of the imported rice stocks are from the United States, with the remainder mainly from Thailand and Vietnam.

Many Japanese view foreign rice as vastly inferior to its own, short-grain variety and there are few complaints about prices in the shops that are several times higher than in many overseas countries.

"I tried Thai rice once, but it's not my taste. I've never tried it since," said Katsue Watabe, a 42-year-old housewife in Kanagawa, southwest of Tokyo.

In addition to the mountain of imported rice, Japan is also boosting its reserve of domestic grain by about a third to one million tonnes as "emergency measures" to prop up domestic prices.

"Rice is the long-time staple of our diet and our stockpile is necessary for the security of people's life in case of famine," said Hirotaka Shoji, agricultural ministry official.

Global food prices have nearly doubled in three years, according to the World Bank, with experts blaming the soaring costs on trade restrictions, poor crop-growing conditions, higher energy and fertiliser tariffs and the rising production of biofuels that rely on staples such as corn.

The food crisis has sparked protests and even riots in some countries and export limits in others, hurting developing countries where food costs consume the lion's share of household income.


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