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Tariff Cap Wipes Off Rice Production from Japan
Introducing of a tariff cap to agricultural products including sensitive products as proposed by the United States and the G20, a group of influential developing countries, constitutes a serious threat to wipe off rice production from Japan, the mainstay of its agriculture, it was revealed. A research team headed by professor Nobuhiro Suzuki of the University of Kyushu Graduate School made an analysis of the impact the U.S. proposed tariff cap at 75%, the most rigorous of all the proposals, could have on rice production in Japan.
According to the finding of the research, on a case of neglecting the quality difference, foreign grown rice will flood into the Japanese market for a price of some \5,000/60 kg(on brown basis) including tariff, and Japanese domestic production will sharply fall to one-third of the present level.
While professor Suzuki says that the estimated figure "should be put in perspective," because results may differ depending on the assumptions about import prices, quality of rice and production trends etc., the U.S. proposal still suggests destruction of paddy culture in Japan.
Import price level (including freight) used for the simulation was \2,938/60 kg, arrived at based on rice grown in China and also reflected rise in the international market prices which will have been brought about by voluminous import into Japan. With the equivalent of 75% tariff of \2,203 added to the original import price, it does not add up even to 10% of the present price of imported rice, and such a tariff does not function as breakwater. Tariff-paid imported rice for \5,100/60 kg flows into the country and prices of domestic rice will fall from the present level of \16,000 sharply down to the import price level. Imported rice will fill 6.21 million tons of the 9.1 million ton domestic demand while domestic rice will only supply 2.89 million tons, bringing the self-sufficiency ratio to just about 32%.
If, in an attempt to prevent destruction of rice production, the government were to pay compensation with \12,000/60 kg as a presumed standard compensation price, the rice self-sufficiency could be maintained at 86%. However, that will require a huge budget spending of \910 billion.
Destruction of paddy culture leads to unfavorable results on environment as well. Reduced area of rice production means less capacity to absorb food crop-related nitrogen (from excreta of livestock etc.) by the paddy fields, and the excess ratio of nitrogen in the soil of agricultural land will rise from the present 87% to 128%. Professor Suzuki emphasizes saying, "Substantial reduction in the levels of tariff brings about a big minus not just on agricultural producers to also to the consuming public. The U.S. proposal is unrealistic, and balanced trading rules should be erected."
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