How to Create a Rice Crisis

While a typical American consumes 27 pounds of rice a year, in Japan, the number is a whopping 110 pounds. One mom said she feeds her kids rice twice a day.

So now, with the price of rice soaring, Japan has a crisis.

Japan’s Rice Shortage Recipe

In Japan, an 11-pound bag of rice costs close to $30–twice as much as last year. At the same time, the price of an average store’s rice balls with pickled plum or salmon filling is up 20%.

Supply

Our story starts with a 2023 heat wave. Shrinking the rice harvest and lowering its quality, Japan’s collecting agents and wholesalers had less to distribute. Making it worse, some might have begun to hoard. Then also, it is possible that the government miscalculated the crop caps that were supposed to guarantee farmers more income. In addition, small family farm numbers had plunged from 4.66 million in 1970 to 700,000 in 2020.

Demand

Meanwhile, the demand side helped to make it worse

After Covid, Japan welcomed an avalanche of “sushi-hungry” tourists that gobbled up more rice. In addition, after a 7.1 earthquake, afraid of a “mega-quake,” people became panic buyers. Others started bulk buying because they expected elevated prices.

As a result, prices rose, supermarkets established purchase limits, restaurants stopped giving rice refills. Businesses even began importing what many believed was less appealing rice and travelers brought rice home from trips abroad; By February, rice imports by private companies had exceeded totals for the 2023 fiscal year. South Korea–whose rice the Japanese reputedly avoided–shipped approximately 24 tons to Japan. Predictably also, looking for a cheaper deal, consumers shifted from pricey small shops to supermarkets.

As economists, we can explain the price hikes. We just need to decrease supply and increase demand:

Our Bottom Line: Supply Stockpiles

Sometimes we find out what countries care about through what they reserve. As a result, China has a pork reserve. But the problem with preserving pork is that it will spoil. Consequently, China has to rotate its supply. Also, we should add that pork is just one of many commodities that China accumulates. As for the U.S., we all know about the Strategic Petroleum Reserve but not perhaps the medicinal items and minerals we stockpile. Last year, we sold our helium reserve.

Japan’s Rice Reserve

Deciding they would tap their rice reserve, Japan scheduled its first auction in March 2025. With 1.1 million tons set aside, they made 165,000 tons of rice (equal to 2 billion bowls) available. Then, adding a second and third auction, they wound up selling 312,296 tons of stockpiled rice. It appears though that the extra supply, so far, has not stopped the price increases.

They still seem to have the recipe for a rice shortage.

My sources and more: Thanks to The Washington Post for alerting me to Japan’s rice crisis. From there The Week, the NY Times, and Nippon.com had more detail.