The Japan grain exchange is listing rice as of August 8 to boost flagging volumes and profits in rice agriculture.
http://www.bloomberg.com/news/2011-08-07/japan-revives-rice-futures-trade-as-radiation-threatens-harvest.html
Rice futures are going to attract speculative money, Bloomberg speculates, after the tsunami hammered Japanese agriculture and radiation threatened the viability of products from the northeast. Stocks will be the lowest they have been for four years in 2012. Production is down after the earthquake.
Fukushima and thirteen other prefecture are testing rice samples before harvest and grain which contain cesium over 500 becquerels a kilogram are going to be banned for export. Bloomberg observes Fukushima, Ibaraki, Miyagi and Iwate prefectures grew 1.56 million metric tons of rice last year, out of the country’s total of 8.5 million tons.
Average prices for rice were 12,707 yen per 60-kilogram bag June 30, compared to 14,470 yen last year in August. Bloomberg notes that Japan has effectively blocked participation in Japan's rice market with a tariff of 341 yen ($4.35) a kilogram on imports.
Not surprisingly, the farmers are suspicious of all this. What we have now is a decoupled income subsidy, and a policy designed to adjust production according to need. How is futures going to fit into the current model? A futures market for rice has the potential to change everything. And farmers suspect that a bulk of the rice profits will end up going to investors, not farmers. This kind of craps-table commodity pricing also has the potential to undermine food security Nokyo points out.
Kato Koichi of the LDP has lead a charge to block futures trading in rice.
The Agriculture and Forestry section in the party along with the committee charged with reinvigorating wet-rice agriculture made a strong statement condemning the move in July.
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