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18 Mar 2011

Agriculture

Rice Exports to Japan, 2011: Competing Head-On with US and China (Business Brief No. 3063)

The latest calamity in Japan has devastated a major rice-producing region that contributes around 20 percent to the nation's rice output. Fortunately, Japan was hit by the disaster post-harvest and they keep a large volume of rice in reserve. Amid falling rice prices globally resulting from the gradual release of supplies from major rice exporters – e.g., Thailand and Vietnam – into the market, importing countries are currently not so concerned about rice shortages. There has been no sign of accelerated imports of rice, as a result. The Japanese government will continue to open bids to import rice as scheduled, including sessions for industrial use (which will begin in May) and for household consumption (which will begin in June.)
In 2011, Thailand is expected to face intense competition within the Japanese rice market due to the resumption of rice exports to Japan by the US and China. The Thai rice shipments to Japan in 2011 are therefore expected to increase only 2.6 percent YoY, to 303,000 tons. However, restoration of quake-ravaged farmland there may take around two or three years, which will likely cause Japan's rice output to fall short of their normal 1.5-1.6 million ton annual output. To fill the gap, Japan may have to increase their imports of grain for domestic consumption.

If Japan decides to do so later this year, shipments of Thai rice to Japan this year may rise over the expected level. Nonetheless, given sufficient rice in their stockpiles at the moment, Japan may defer any such decision until the next harvest. Thus, Thailand's rice exports to the Japanese market could increase next year to meet rising demand for imported rice at that time. However, Thai exporters should be aware of stiff competition in the Japanese market, especially from their US and Chinese counterparts.

Agriculture