Japan Swings From Rice Shortage to Record Surplus in Two Years
Japan has gone from a severe rice shortage in 2024 to a record surplus by 2026, forcing the government to buy back rice to prevent a price collapse. The dramatic swing was driven by extreme weather, a tourism boom, panic buying, and a U.S. trade deal that increased American rice imports.
Japan has completed one of the most dramatic reversals in modern agricultural history, moving from a rice shortage so severe it forced a government minister to resign to a record surplus that now threatens to crush prices. The government has begun buying rice back off the market to prevent a collapse, purchasing 210,000 tons this month to refill reserves it drained only a year earlier.
The shortage took root in 2023, when extreme heat and drought damaged the rice crop during the grain-filling stage, sharply reducing the amount of top-grade, sellable rice. At the same time, a tourism boom and panic buying after an earthquake warning drove demand higher. Private stocks fell from a normal range of about 2 million tons to roughly 1.5 million tons. The price of a five-kilogram bag of rice climbed from about ¥2,000, or $13, in early 2024 to a peak of ¥4,300, or $27, by 2025. In response, the government released its emergency rice reserves for the first time since the system was created in 1995.
What happened next surprised even the experts. Farmers, chasing those higher prices, ramped up production aggressively. Supply overshot demand so completely that private stocks climbed back to 2.43 million tons by mid-2026, and the agriculture ministry now forecasts the surplus will grow even larger heading into 2027. Prices have already fallen back toward ¥3,300, or $21, and could keep sliding toward 2022 and 2023 levels or lower.
«Every expert is actually surprised by this fluctuation,» Ryosuke Inoue, a visiting fellow at the CSIS Japan Chair in Washington, D.C., told Fortune. Inoue, an expert in Japanese agricultural policy, said even he did not see the scale of the swing coming. «The supply-demand gap was there, but it’s not such a huge gap. It could happen, and it could happen also in the United States. But in the U.S., the price fluctuation is not so high.»
Part of the problem, Inoue argued, is that Japan’s rice distribution system is genuinely opaque, even to the people who regulate it. «Many distributors are trying to maximize their profit, and even the government doesn’t know how the rice was distributed from the farmers to the final consumers,» he said. At the moment prices were spiking, regulators did not understand the structure of their own rice market well enough to respond quickly. «People said the government should have released the rice much more quickly,» Inoue said, describing the controversy over the timing of the emergency reserve release.
The shortage also collided with a U.S. trade fight. Japan grows nearly all the rice it eats and exports almost none of it, but it already imported rice from the U.S. under a WTO-mandated duty-free quota of 770,000 tons a year, with roughly half historically sourced from the U.S. In June 2025, in the middle of the worst domestic shortage in decades, President Trump complained that Japan «won’t take our rice, and yet they have a massive rice shortage.» A 2025 U.S.-Japan trade deal that summer pushed Japan to boost its U.S. rice purchases by 75%, and Inoue confirmed that increase is still working its way through the system. «This trend will continue in 2026 and further,» he said.
Longer-term structural challenges loom over the market. Japan’s rice farms are staffed almost entirely by an aging workforce. The average Japanese rice farmer is 67.7 years old, and just 1.2% are under 30. Japan has some 500,000 rice farms spread across 3.4 million acres, while California, one of the largest rice-producing regions in the U.S., has only about 1,100 farms working roughly 512,000 acres. The average Japanese rice farm is a small fraction of the size of its Californian counterpart.
Inoue said the shrinking number of farmers is less of an issue than what happens to the land they leave behind. «The problem is how to take over the land that was cultivated by them,» he said, since much of Japan’s rice farming happens in mountainous terrain that is not attractive to new operators. Once abandoned, that land is extremely difficult to bring back into production. Inoue has proposed a fix modeled on the U.S. Price Loss Coverage program, which would pay farmers only when prices fall below a level covering their production costs.
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