Commodities: Japan goes against the grain

IT SMACKS of bringing coals to Newcastle. Japan, one of the world's largest rice- producing and consuming countries, must import at least 1 million tonnes of rice this year because bad weather has caused the worst crop since 1945.

Japan's need to import its staple food is ironic, not just because rice is a national symbol, but because the Japanese government has stubbornly refused to open its market to foreign rice imports for years.

Its unwillingness to let down the trade barrier has created a stumbling block in Gatt multilateral trade talks. The US, the UK and the 14- member Cairns group of exporting nations have pressured Tokyo to remove it.

The Japanese authorities are in a ticklish spot over the issue. Announcing the import plans on Thursday, Morihiro Hosokawa, the prime minister, insisted that it was a one- off response to an emergency.

Yet earlier this month he hinted to his British counterpart John Major that Tokyo might be persuaded to let rice in permanently.

The main reason for the restriction is political. Japan's powerful farm sector, which holds disproportionate voting power compared with the cities, traditionally supported the Liberal Democratic Party and was crucial to keeping it in office.

The government's version is that rice self-sufficiency is crucial because Japan has the lowest food self-sufficiency in the industrial world.

Each year, the authorities decide how much land will be devoted to rice production, and guarantee to buy rice from any farmer who does not sell it through other channels. The government has tried to tailor production to demand, so that it is not buying up rice it does not need.

But such hand-to-mouth production leads to shortages when the weather is poor. This year, typhoons and an unusually cold summer have reduced the crop to an estimated 8.5 million tonnes, compared with the usual 10.5 million.

Japanese rice production, seventh largest in the world, is highly inefficient because many individual growers farm small paddies.

The cost of production works out to an astronomical dollars 2,577 per tonne - more than 10 times the world market price of dollars 223. The government support price is around dollars 2,500 per tonne, making Japanese rice one of the most heavily subsidised crops ever.

Domestic pressure to give up the ban is mounting. Japanese consumers are fed up with paying sky-high prices for a basic foodstuff. Rice in Japan costs at least nine times more than anywhere else.

The newspaper Asahi predicts the government will have to import rice next year too. It said recently: 'That means the effective collapse of the government's policy of self-sufficiency. The cool summer will force this illogical system, in which the government forces consumers to buy rice at a high price while placing production restrictions on farmers, to self-destruct.'

The Gatt talks aim for a deal on lifting trade barriers this year. Mike Espy, US agriculture secretary, visits Japan next week to press the issue. Now may be the best opportunity for Gatt negotiators to do some arm-twisting - if they can find a way for Japan to save face while backing down.