Japan to Delay Rice Imports as Prices Soar to Records (Update1)

Japan to Delay Rice Imports as Prices Soar to Records (Update1)

By Aya Takada
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April 24 (Bloomberg) -- Japan, self-sufficient in rice, will delay seeking imports of the grain required under a World Trade Organization agreement until international prices that have soared to a record stabilize.

The country will also hold back on imports because of abundant domestic supply, a senior government official said in an interview in Tokyo. He declined to be identified as a decision is yet to be formalized. Japan imported 630,550 tons of rice in the year ended March 31, as part of a WTO agreement to seek 770,000 tons a year.

Rice prices more than doubled in the past year as countries, including India and Vietnam placed limits on exports to safeguard domestic supplies and cool inflation. The Philippines, the world's biggest rice importer, received offers to supply just two-thirds of the volume the government tried to buy at a tender April 17, stoking concern about a food shortage.

``It is better for Japan not to import rice while a price rally continues, because Japan doesn't need supply from abroad,'' said Nobuyuki Chino, president of Tokyo-based grain trading company Unipac Grain Ltd.

Rice futures in Chicago climbed to a record $25.07 per 100 pounds today and were at $25.055 in after-hours electronic trading at 1:55 p.m. Tokyo time.

Japan agreed to give minimum market access to rice-exporting countries at the Uruguay Round of world trade talks that ended in December 1993 and bought a total of 8.32 million tons of foreign rice from April 1995 to October 2007.

Food Aid

If Japan bought rice in the international market now, that would accelerate price gains and worsen the situation in countries such as the Phillipines, the government official said yesterday. It would be better for Japan to donate money allocated for rice imports this fiscal year for food aid, he said.

Japan last business year held 15 rice import tenders, starting in May. Purchases fell short of the WTO requirement for the first time because of rising prices and decreasing offers. It did not purchase in the last tender seeking 62,502 tons.

Japan allocated 78.6 billion yen ($760 million) for imports of rice for the year ending March 31, up from 73.8 billion yen a year earlier.

Higher food prices have triggered riots and protests in countries including Haiti and Egypt. Food price increases will be on the agenda of the Group of Eight industrialized nations summit to be hosted by Japan in July.

A World Food Program official said April 21 that the surge in prices may put basic foods beyond the reach of the poorest, raising the risk of a ``silent famine'' in Asia.

Japan's wholesale rice price was 257 yen a kilogram as of April 23, according to Komekakaku Center, a wholesale market. Last year, prices in Japan fell to the lowest in at least 17 years because of oversupply.