Global food crisis spurs Japan rice policy rethink

By Miho Yoshikawa - Analysis

TOKYO (Reuters) - This spring, with some nations close to panic over global rice supplies, Japan confronted a different problem -- huge swathes of paddy fields lying fallow due to a 37-year-old price support policy that limits planting.

Now, with the world more anxious about its future food sources than any time since the 1960s, some analysts and politicians say it's time for change.

Banish the curbs on planting and farmers could grow more rice for biofuel and animal feed, or even boost exports to neighboring China.

Or they could just grow other crops, boosting the country's

reliance on domestically-grown foodstuff from the current 40 percent.

"What is important is that we make 100 percent use of the resources we have," said Shinichi Ohsawa, a senior consultant at the Japanese Research Institute Ltd.

The price support policy dates to 1971 and limits rice planting to about 60 percent of Japan's paddy fields.

These produce enough to satisfy Japan's appetite for the grain, now around 61 kg (135 lb) per person each year -- or half the 1962 peak of 118 kg as consumption shrinks in the face of a growing taste for Western foods.

The remaining paddy fields either grow other crops or lie fallow, an expensive anomaly in a nation that is the world's top net importer of farm products.

But politicians reluctant to upset their rural constituencies warn that prices, so isolated that they sat out a recent buffeting in global markets, could collapse if rice production is unleashed.

"If we scrap the rice policy and rice is grown with no restriction at all, about 12 million tons of rice would be produced when only about 8 million tons is consumed," said lawmaker Yoshio Yatsu, of the ruling Liberal Democratic Party.

"Prices would crash."

Japan's large rice crop in 2007 caused wholesale prices to fall 10 percent, and the glut forced the government to buy 340,000 tons of rice to support prices.

Critics to say it is clear Japan's current system cannot support prices because planting controls no longer work.

The premium rice grade now sells for about 300 yen per kg or more, about 4 times the cost of the Thai benchmark grade.