How Japan went from a rice shortage to a rice surplus in two years, as climate change, tourism, and a U.S. trade fight collided
In 2023, extreme heat and drought damaged Japan’s rice crop, and a year later, that damage turned into a national shortage so severe, it forced a government minister to resign. By 2026, Japan had swung so far in the opposite direction that it was sitting on a record surplus, forcing the government to buy rice back off the market to keep prices from collapsing further. It’s still a wonder to the people who study it: how on earth did Japan go from shortage to surplus in two years?
“Every expert is actually surprised by this fluctuation,” Ryosuke Inoue, a visiting fellow at the CSIS Japan Chair in Washington, D.C., told Fortune. Inoue, an expert in Japanese agricultural policy, said even he didn’t see the scale of the swing coming. “The supply-demand gap was there, but it’s not such a huge gap. It could happen, and it could happen also in the United States. But in the U.S., the price fluctuation is not so high.”
Let’s start with the shortage, which seems pretty easy to understand. (The answer is going to be climate change, which, after all, was also partially the answer for the incoming Parmigiano and Moroccan sardine shortage we’re inevitably going to experience.) Heat and drought in 2023 damaged rice during the grain-filling stage, cutting the amount that was deemed as sellable, top-grade rice. Simultaneously, a tourism boom and some panic buying after an earthquake warning led to increased demand.
As a result, private rice stocks fell from the normal range of about 2 million tons down to roughly 1.5 million tons, and the resulting shortage sent a five-kilogram bag of rice from about ¥2,000 ($13) in early 2024 to a peak of ¥4,300 ($27) by 2025, read Inoue’s data. That year, the government released its emergency rice reserves for the first time since the reserve system was created in 1995, something that was normally kept for natural disasters.
“There was a controversy,” Inoue said, over how long the government waited. “People said the government should have released the rice much more quickly.”
What happened next is the part that actually surprised the experts. Farmers, chasing the higher prices, ramped up production hard. Supply overshot demand so completely that private stocks climbed from that 2024 low back up to 2.43 million tons by mid-2026, and the agriculture ministry is now forecasting the surplus will grow even larger heading into 2027. Prices have already fallen back toward ¥3,300 ($21) and, by Inoue’s estimate, could keep sliding toward 2022 and 2023 levels or lower. This month, the government moved to buy back 210,000 tons of rice just to refill the reserves it had drained the year before.
Supply stock shock
“Your instinct is correct,” Inoue said when asked if Japan’s rice stock lacked a buffer. Part of the reason, he argued, isn’t only the weather, but that Japan’s rice distribution system is genuinely opaque, even to the people who regulate it.
“Many distributors are trying to maximize their profit, and even the government doesn’t know how the rice was distributed from the farmers to the final consumers,” Inoue said. At the moment prices were spiking, he said, regulators didn’t actually understand the structure of their own rice market well enough to respond quickly.
Japan grows nearly all the rice it eats and exports almost none of it. In June 2025, in the middle of the worst domestic shortage in decades, President Trump complained that Japan “won’t take our rice, and yet they have a massive rice shortage.” Japan already imported rice from the U.S. under a WTO-mandated duty-free quota of 770,000 tons a year, and roughly half of it was historically sourced from the U.S. However, the shortage happened to arrive right as rice became a genuine flashpoint in trade talks between the two countries.
A 2025 U.S.-Japan trade deal that summer pushed Japan to boost its U.S. rice purchases by 75%, and Inoue confirmed that increase is still working its way through the system. “This trend will continue in 2026 and further,” he said. A country whose entire domestic rice-price debate is about protecting its own farmers ended up leaning harder on American imports exactly when its own shortage made that leverage point politically unavoidable.
But wait, there’s more. Japan’s rice farms are staffed almost entirely by an aging workforce. The average Japanese rice farmer is 67.7 years old, and just 1.2% are under 30. Compare Japan to California, for example, which is one of the largest rice-producing regions in the U.S. The state has only about 1,100 rice farms working with roughly 512,000 acres, while Japan has some 500,000 rice farms spread across 3.4 million acres, meaning the average Japanese rice farm is a small fraction of the size of its Californian counterpart.
Inoue said the shrinking number of farmers isn’t an issue as much as what happens to the land they leave behind. “The problem is how to take over the land that was cultivated by them,” he said, since much of Japan’s rice farming happens in mountainous terrain that isn’t attractive to new operators. Once abandoned, he said, that land is extremely difficult to bring back into production.
Inoue has proposed a fix modeled on the U.S. Price Loss Coverage program, which would pay farmers only when prices fall below a level covering their production costs, which he pegs at around ¥2,800 ($18) per five kilograms. Japan tried a similar policy once before, in 2011, but abandoned it under a change in government before prices ever moved enough to trigger it. “I think now is the time,” Inoue said. He argued letting the market operate freely with a safety net instead of production caps would serve farmers and consumers better than the current system’s boom-and-bust cycle.
Climate change means the shocks testing that system aren’t going away. This year’s drought across western Japan, with some meteorologists comparing it to the country’s worst drought in more than 30 years, is already being tied to yield declines in official data.
Inoue said Japan’s summer temperatures have climbed well above their long-term trend line in 2023 through 2025, pushing farmers toward heat-tolerant rice varieties whose adoption rate has been steadily climbing, though it remains under 20% of total plantings.
This story was originally featured on Fortune.com