THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY
USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENTPOLICY

Voluntary - Public
Date: 7/3/2018
GAIN Report Number: JA8039

Japan
Post: Tokyo

Competitive Changes Expected in Japanese Rice Market
Report Categories:
Agricultural Situation
Grain and Feed
Approved By:
Christopher Riker
Prepared By:
Keiko Fujibayashi
Report Highlights:
Japan’s conclusion of a free trade agreement with the European Union (EU) and efforts to conclude theComprehensive and Progressive Trans-Pacific Partnership (CPTPP) are expected to increase market competition
for U.S. rice exports to Japan. The two agreements are expected to contain tariff concessions for a range of riceproducts. The Japan-EU agreement could enter into force as early as 2019, while CPTPP Member States are
currently undertaking domestic procedures to ratify the agreement. In 2017, Japan imported roughly $552
million in rice and rice products, of which 45.4 percent (approximately $251 million) was from the United States.

General Information:

While Japanese per-capita rice consumption continues to decline, rice remains a staple food for theJapanese diet and the only grain where domestic production levels are sufficient to meet Japanese
consumption needs. As a result, rice production in Japan is considered essential to support Japanesefood security and Japan has established a tariff rate quota (TRQ) and places quantitative restrictions onimports of rice and rice products. Until the Comprehensive and Progressive Trans-Pacific Partnership(CPTPP)1 and Japan’s bilateral Economic Partnership Agreement (EPA) with the European Union (EU),Japan had never provided preferential access to its rice market in a free trade agreement.
On December 9, 2017, Japan and the EU announced the finalization of negotiations on a Japan-EU EPA.
In this agreement, Japan agreed to eliminate or reduce duties for 16 tariff lines covering rice-containing
products of which Japan imports negligible volumes or for which duties were already low.
On March 8, 2018, Japan and 10 other countries signed the CPTPP. In this agreement, Japan establishedan import quota for Australian rice and rice products. Japan also reduced duties for 13 tariff lines
covering rice flour preparations, rice cake and rice crackers (Japan’s leading imported rice products).
Furthermore, Japan agreed to eliminate or reduce duties for products containing rice, similar to theJapan-EU EPA.
In 2017, Japan imported US$358.3 million of rice from the world. The United States and Thailand areJapan’s two major foreign rice suppliers, accounting for 58 percent and 39 percent, respectively,
followed by Australia at 1.9 percent. For the United States, Japan was the third largest export market for
U.S. rice in 2017.
Other than rice, Japan’s major imports of rice products are rice flour preparations, rice crackers andbiefun (rice noodles) which are predominantly supplied by Thailand, China, the United States andVietnam.
I. State Traded Products
Japan has established a 767,000 MT (brown rice basis)2 minimum access World Trade
Organization (WTO) tariff rate quota (TRQ), commonly referred to as Minimum Access (MA)
rice, which covers 17 rice products (see Table 1). Japan’s Ministry of Agriculture, Forestry and
Fisheries (MAFF) administers the TRQ for imports, and collects a markup on imports which iscapped at 292 yen/kg or 321 yen/kg. Within the TRQ, in addition to the markup, ad valorem
1

The CPTPP countries are Australia, Brunei, Canada, Chie, Japan, Malaysia, Mexico, New Zealand, Peru,
Singapore, and Vietnam.
2
The WTO TRQ had increased each year from 426,000 MT in JFY 1995 to 767,000 MT on a brown rice basis inJapanese Fiscal Year (JFY, April - March) 2000. However, because a TRQ was maintained during the WTO
Doha Round negotiations, it has remained at 767,000 MT since JFY 2000.

duties of 25 percent or 19.2 percent are levied on rice products, but the duty for rice itself is zero(see Table 1). Because of this, rice accounts for the majority of the TRQ utilization and importsof rice products are limited. Of the 679,662 MT of TRQ imports in 2017, rice accounted for99.9 percent (679,108 MT, actual tonnage) of the volume. The remainder being 10 MT of rice
flour and 544 MT of pre-cooked or prepared rice from Thailand. These products were imported
subject to a 25 percent duty, but exempted from the markup as they were imported for certified,
specific purposes (rice flour for manufacturing a starch for dyeing textile products and precooked or prepared rice for manufacturing breakfast cereals)3
When importing these 17 state traded products outside of the TRQ, high duties of 341 yen/kg or
375 yen/kg are applied (see Table 2 -- which can equal almost 800 percent when converted to an
ad valorem duty based on the import price and the international price between 1999 and 2001).
Despite high duties, 628 MT of rice and rice products were imported in 2017, of which milled
rice accounted for the majority.
Table 1: State Traded Rice Products covered by Japan’s WTO TRQ
Product

HS

In WTOTRQ duty

CPTPP

Rough rice

1006.10.101

Country Specific Quota forAustralia

Brown rice

1006.20.010

Zero (+
markup)Zero (+
markup)Zero (+
markup)Zero (+
markup)25% (+
markup)25% (+
markup)25% (+
markup)25% (+
markup)25% (+
markup)25% (+
markup)25% (+

Milled rice

1006.30.010

Broken rice

1006.40.010

Rice flour

1102.90.310

Rice groats and meal

1103.19.510

Rice pellets

1103.20.350

Rolled or flaked rice1104.19.250

Other worked rice1104.29.250

Rice mixes and doughs for bakery products

1901.20.122

Rice doughs for rice crackers

1901.20.162

3Year 1: 6,000 MT
2: 6,000 MT
3: 6,000 MT
4: 6,240 MT
5: 6,480 MT
6: 6,720 MT
7: 6,960 MT
8: 7,200 MT
9: 7,440 MT
10: 7,680 MT
11: 7,920 MT
12: 8,160 MT
13: 8,400 MT
The quota volume for Year 14
and onwards remain at 8,400
MT.

Japan does not apply a markup for state traded products when Japan’s Agricultural Minister certifies that theseproducts are used as a raw material: 1) for manufacturing a starch for dyeing textile products, 2) for
manufacturing specific breakfast cereals, and 3) for manufacturing products for export. Imports of rice flour andpre-cooked or prepared rice were exempt from the markup because they were certified to be used for category 1
and category 2, respectively. In addition, some milled rice (HS100630010) was exempt from the markup as it
was certified to be used for category 3. NOTE: Imports of category 1 and category 2 under this system areincluded in the WTO TRQ utilization, but imports under category 3 are not.

markup)Rice preparations containing 85% or more ofgrains by weight, of which rice the heaviest
Mochi (rice cake), dango and other similar
products containing more than 30% by
weight of rice
Food preparations containing 50% or more byweight of swelling and roasting rice
Food preparations containing 50% or more byweight of unroasted swelling rice
Cooked rice (rice-dumpling, pilaf, cookedrice with azuki beans, etc) containing morethan 30% by weight of rice in grain form
Food preparations containing more than 30%
by weight of rice
Source: MAFF, Japan Customs

1901.90.142
1901.90.587

1904.10.211
1904.20.211
1904.90.120

2106.90.517

25% (+
markup)25% (+
markup)

In quota duties are abolished
immediately while the markup
is maintained.

19.2% (+
markup)19.2% (+
markup)25% (+
markup)25% (+
markup)

Table 2: Rice and Rice Products Imported Outside WTO TRQ
Product

HS

Rough rice
Brown rice
Milled rice
Broken rice
Rice flour
Rice groats and meal
Rice pellets
Rolled or flaked rice
Other worked rice
Rice mixes and doughs for bakery products
Rice doughs for rice crackers
Rice preparations containing 85% or more of grains by weight, of which rice
the heaviest
Mochi (rice cake), dango and other similar products containing more than
30% by weight of rice
Food preparations containing 50% or more by weight of swelling and roastingrice
Food preparations containing 50% or more by weight of unroasted swellingrice
Cooked rice (rice-dumpling, pilaf, cooked rice with azuki beans, etc)
containing more than 30% by weight of rice
Food preparations containing more than 30% by weight of rice

1006.10.090
1006.20.090
1006.30.090
1006.40.090
1102.90.390
1103.19.590
1103.20.390
1104.19.290
1104.29.290
1901.20.128
1901.20.168
1901.90.148

WTO MFN
duty
341 yen/kg
341 yen/kg
341 yen/kg
341 yen/kg
375 yen/kg
375 yen/kg
375 yen/kg
341 yen/kg
341 yen/kg
375 yen/kg
375 yen/kg
375 yen/kg

1901.90.588

375 yen/kg

1904.10.212

341 yen/kg

1904.20.212

341 yen/kg

1904.90.130

341 yen/kg

2106.90.518

341 yen/kg

Source: MAFF, Japan Customs

Rice
As mentioned earlier, Japan imports rice to meet its WTO TRQ obligations and MAFF operates
Simultaneous Buy and Sell (SBS) tenders and Ordinary Market Access (OMA) tenders toimport rice within the TRQ. MAFF sets a maximum volume of 100,000 MT (actual tonnage)
for imported rice intended to be sold as table rice in Japan via SBS tenders. Importers andbuyers (wholesalers) jointly bid for SBS tenders by offering: 1) a sales price to MAFF and 2) apurchase price from MAFF of the origin and type of rice of their choice. MAFF then awards
imports to those with the largest markup (i.e., the difference between the two prices) until thetender volume is filled. The remaining quota volumes (767,000 MT (brown rice) minus the SBS
tendered volume) are traded under Ordinary Market Access (OMA) tenders where importers bid
to import the volume, type, and origin of rice MAFF puts on tender. MAFF awards the importer
who offers the lowest price among qualified bidders. MAFF purchases imported rice from theimporter, and eventually sells the imported rice to domestic users who use it for processing riceproducts or feed, but not for table rice.
The SBS quota of 100,000 MT has not always been fully utilized. When the price of rice inJapan is low, the successful bid amount under the SBS tenders may not reach 100,000 MT (seeChart 1). When this happens, any remaining amount is diverted to OMA tenders to ensure Japan
meets its WTO TRQ obligations. The United States and Thailand have been the leading
suppliers of Japan rice imports and accounted, over the last five years, for 48 percent and 44
percent, respectively, of the volume, and 58.6 percent and 31.5 percent, respectively, of thevalue of Japanese rice imports (see Chart 2).
Chart 1. Japanese Rice Tender Results and Domestic Wholesale Rice Prices

Source: MAFF

Chart 2. Japanese Rice Imports

Source: Global Trade Atlas

CPTPP
Under the CPTPP, Japan established a country specific quota (CSQ) for the 17 state traded rice
and rice products from Australia (see Table 1). The CSQ for Australia starts at 6,000 MT andremains at that level for the first three years, gradually increasing to 8,400 MT by Year 13. The
quota volume then remains at that level henceforth. Duties are abolished immediately within the
CSQ while the markup is maintained, and MAFF will administer SBS tenders to import the CSQ
volume.
Australia was the third largest supplier of rice to Japan (8,584 MT, US$69 million), following
the United States and Thailand in 2017. Australian rice accounted for 1.3 percent by volume
and 1.9 percent by value of Japan’s rice imports during that period as the CIF unit price ofAustralian rice was roughly 26 percent higher than for U.S. rice (see Table 3). Japan’s imports

of Australian rice, however, are expected to increase in 2018 as 66,702 MT (30,702 MT of SBS
rice and 36,000 MT of OMA rice) of Australian rice was successfully bid under the JFY2017
MA rice tenders. As the Australian CSQ potentially increases table rice supplies to the Japanesemarket, the GOJ intends to purchase an equivalent amount of domestically produced table ricefor its contingency reserves.4
With the effectuation of CPTPP, 60,000 MT of rice currently imported under the WTO OMA tenders
will be diverted to the SBS tender system, but will be limited to medium grain rice used for processing(ensuring Japanese rice processors have access to a minimum of 60,000 MT of imported rice eachyear)5. Despite this new allocation, Japan’s total MA rice import quantity is expected to remainunchanged. MAFF has noted that it believes moving this volume from the OMA to the SBS system will
facilitate direct trading between importers and users to better reflect demand in Japan.
Table 3. Japan’s Rice Imports in 2017
Value

Share

Volume (MT)CIF Average Unit Price

United States$209,022,097

58.3%

328,614$636.07

Thailand$137,664,879

38.4%

337,443$407.96

Australia$6,910,208

1.9%

8,584

$805.01

Other$4,679,471

1.4%

4,467

Total

$358,276,655

100%

679,108$527.57

Source: Global Trade Atlas
II. Rice Flour Preparations and Rice Crackers
Under the CPTPP, Japan will reduce duties for 13 rice flour preparations, rice cake and rice crackers(see Table 4).6 In 2017, Japan imported nearly 70,000 MT of these products, of which rice flour
preparations accounted for 86 percent (approximately 60,000 MT). Under the CPTPP, the tariff on rice
flour preparations containing added sugar (HS190190251) is gradually reduced from the current 23.8
percent to 17.8 percent in Year 6 (i.e. by 25 percent). The tariff on rice flour preparations not containing
added sugar (HS190190266) is gradually reduced from the current 16 percent to 13.6 percent in Year 4(i.e., by 15 percent). Duties are immediately reduced by five percent for the remaining 11 products.
Japan imported 43,373 MT of rice flour preparations not containing added sugar in 2017, of which
Thailand accounted for 62.5 percent, followed by China with 27.5 percent, and the United States with 10
4

The GOJ holds 910,000 MT of domestically produced rice as a contingency reserve. The GOJ purchases
200,000 MT of rice each year and sells five-year old rice for feed and other purposes.
5This 60,000 MT is not limited to the CPTPP countries but open to all WTO member countries.
6
No duty concessions were made for these 13 products under the Japan-EU EPA.

percent. Imports of rice flour preparations containing added sugar totaled 16,247 MT in 2017, of which
the United States accounted for 66 percent, followed by Thailand with 33 percent.
Rice flour preparations are used to produce rice crackers, rice cakes, breakfast cereals, mirin (sweet sakeseasoning) and other products. Imports of rice flour preparations are affected not only by their price, butalso by the availability of domestic undersized rice grains, domestic production of rice for processing,and OMA rice as a raw material for rice products. Imports of these rice flour preparations decreased
over 30 percent in the last five years despite a decline in prices (see Chart 3). As shown in Chart 4,
domestic production of rice for processing, particularly glutinous rice, increased in the same period
which is believed to have led to the decrease in rice flour preparation imports. Moreover, MA rice
continues to be an essential material for Japanese production of rice products as demonstrated by theestablishment of the 60,000 MT quota for MA rice for processing under the CPTPP.
Japan imported 7,669 MT of rice crackers in 2017, of which China accounted for 71 percent, followedby Thailand with 22 percent, and Taiwan with 6.8 percent. Imports of rice crackers have been
decreasing since 2013 predominantly because of a gradual increase in import prices (see Chart 5). As
Japan’s predominant foreign suppliers of rice flour preparations, rice cake and rice crackers are not
CPTPP Member States, tariff concessions under the CPTPP are not expected to significantly increase
Japanese imports of these goods.
Table 4. Rice Flour Preparations and Rice Products
Product

HS Code

WTO
MFN
duty

CPTPP

1901.20.231

24%

1901.20.234

23.8%

Rice flour preparations in a retail container (500 gram or
smaller of the total weight ) containing not more than 85%
of rice flour by weight and not containing sugar
Rice flour preparations containing not more than 85% ofrice flour by weight and not more than 15 % by weight ofsucroseRice flour preparations containing not more than 85% ofrice flour by weight and more than 15 % by weight ofsucrose (sugar the heaviest)
Rice flour preparations containing not more than 85% byweight of rice flour and containing more than 15% byweight of sucrose

1901.20.242

16%1901.90.241

24%

1901.90.246

28%

1901.90.251

23.8%

Rice flour preparations containing not more than 85% byweight of rice flour and not containing added sugar

1901.90.266

16%

Immediate duty
reduction to
22.8%
Immediate duty
reduction to
22.6%
Immediate duty
reduction to
15.2%
Immediate duty
reduction to
22.8%
Immediate duty
reduction to
26.6%
Year 1↓ gradual
duty
reduction
Year 6: 17.8%
Year 1↓ gradual
duty

Rice Flour Preparations
Mixes and doughs containing not more than 85% byweight of rice flour and not more than 15 % by weight ofsucroseMixes and doughs containing not more than 85% of rice
flour by weight and more than 15 % by weight of sucrosereduction
Year 4: 13.6%
Rice Cake
Mochi (rice cake), dango and other similar products
containing 30% or less by weight of rice, and 15% or lessby weight of sucrose
Mochi (rice cake), dango and other similar products
containing 30% or less by weight of rice, and more than
15% by weight of sucrose
Mochi (rice cake), dango and other similar products
containing 30% or less by weight of rice, and notcontaining sugar
Cooked or Prepared Rice
Cooked grain rice (retort-pouch rice, cooked rice withazuki beans, etc) containing 30% or less by weight of rice

1901.90.583

24%

1901.90.585

25%

1901.90.586

16%1904.90.110

25%Immediate duty
reduction to
23.7%

Rice Crackers
Arare, senbei (rice crackers) containing added sugar

1905.90.311

34%Arare, senbei (rice crackers) not containing added sugar

1905.90.321

29.8%

Immediate duty
reduction to
32.3%
Immediate duty
reduction to
28.3%

Source: MAFF, Japan Customs

Chart 3. Japanese Imports of Rice Flour Preparations

Source: Global Trade Atlas

Chart 4. Japanese Production of Rice for Processing

Immediate duty
reduction to
22.8%
Immediate duty
reduction to
23.7%
Immediate duty
reduction to
15.2%

Source: MAFF

Chart 5. Japan’s Imports of Rice Crackers

Source: Global Trade Atlas

III. Food Preparations Containing Rice and Feed Containing Rice
Under the CPTPP and Japan-EU EPA, Japan eliminates or reduces duties for 16 products containing (orwhich may contain) rice which Japan imports in small volumes or for which duties were already low(see Tables 5 and 6). In 2017, Japanese imports of these products totaled 34,465 MT, of which feedpreparations accounted for 12,373 MT, and biefun (rice noodles) accounted for 7,671 MT. Imports ofbiefun have gradually increased since 2014 due to the increasing popularity of regional (e.g., Thai andVietnamese) foods in Japan (see Chart 6). Thailand and Vietnam dominate the Japanese import market
for biefun, accounting for 70 percent and 25 percent, respectively. Due to its price competitiveness,
Vietnam, a CPTPP member, has gradually increased its exports to Japan, and will benefit from the tariff
concession under the CPTPP (the tariff will be phased out in Year 11). Imports of feed preparations
increased 27 percent in quantity and six percent in value in the five most recent years leading to 2017 –the United States accounted for 63.4 percent (by volume) and 48 percent (by value) of Japan’s importshare, followed by France with 13 percent (by volume) and 14.5 percent (by value) in 2017 (see Chart
7). Tariffs on feed preparations containing rice will be eliminated under the Japan-EU EPA and the
CPTPP, which are expected to benefit France.

Japan imported 8,337 MT of breakfast cereals (HS190410010) in 2017 (some of which may containrice), for which Belgium accounted for 65 percent, followed by Australia with 12 percent. The tariff on
this product will be phased out to zero in Year 8 under both the Japan-EU EPA and the CPTPP.
Table 5. Food Preparations Containing (or may contain) Rice
Product

HSGerm of cereals, whole, rolled, flaked or ground1104.30.000

Food preparations suitable for infants or young
children, put up for retail sale containing added
sugar

Food preparations suitable for infants or young
children, put up for retail sale not containing
added sugar

1901.10.221

1901.10.229

WTO
MFN
duty
17 %

24%

13.6%

Japan-EU
EPA

CPTPP

Year 1:↓
gradualYear 1:↓
gradualreduction
Year 11:
8.5%

reduction
Year 6:0%Year 1:↓
gradualYear 1:↓
gradualreduction
Year 11:
12%

reduction
Year 11:0%Year 1:↓
gradualreduction
Year 11:
6.8%

Food preparations for bakery products put up for
retail sale not containing added sugar

1901.20.241

13.6%

Food preparations for bakery products other thanfor retail sale not containing added sugar

1901.20.249

16%

Food preparations in retail sale containers, notmore than 500g each including container, notcontaining added sugar
Food preparations other than 500g or smaller inretail container, not containing added sugar

1901.90.261

13.6%

1901.90.269

16%

Biefun (rice noodle)

1902.19.010

27.20
yen/kgYear 1:↓
gradualreduction
Year 11:0%Year 1:↓
gradualYear 1:↓
gradualreduction
Year 11:

reduction
Year 11: 0

13.60yen/kgyen/kgYear 1:↓ gradual reduction
Year 8: 0%
Year 1:↓ gradual reduction
Year 11: 0%
Year 1:↓ gradual reduction
Year 8: 0%

Breakfast cereals other than obtained by merely
swelling or roasting of rice, wheat, triticale orbarleyPrepared foods containing less than 50% by
weight of those obtained by merely swelling of
cereals
Breakfast cereals obtained from unroasted cereal
flakes or from mixtures of unroasted cereal
flakes and roasted cereal flakes or swelled
cereals
Prepared foods containing less than 50% by
weight of those obtained by merely swelling of
rice, wheat, triticale or barley

1904.10.010

11.5%

1904.10.300

16.3%

1904.20.100

11.5%

1904.20.300

16.3%Year 1:↓ gradual reduction
Year 11: 0%

Cooked cereals in grain form

1904.90.400

21.3%

N/A

Year 1:↓
gradualreduction
Year 6:
5.3%

Communion wafers, empty cachets of a kindsuitable for pharmaceutical use, sealing wafers,
rice paper and similar products
Source: MAFF, Japan Customs

1905.90.200

6%Year 1:↓ gradual reduction
Year 11: 0%

Table 6. Feed Preparations Containing Rice
Product

HS

WTO
MFN duty

Japan-EU
EPA

Bovine feed containing less than separable 10% ormore by weight of broken rice and flour or meal of
rice
Feed preparations

2309.90.298

12.8%

2309.90.299

36 yen/kg

Year 1:↓ gradual reduction
Year 6: 0%
Immediate reduction to0 yen/kg

Source: MAFF, Japan Customs

Chart 6. Japan’s Imports of Biefun (Rice Noodles)

CPTPP

Source: Global Trade Atlas

Chart 7. Japan’s Imports of Animal Feed containing Rice (quantity and value)

Source: Global Trade Atlas

IV. Japanese Rice Market (on a brown rice basis)
In recent years Japanese table rice consumption has been declining 80,000 MT annually due to both adeclining population and competition with other food. While the GOJ has incentivized a production
shift from table rice to rice for other uses than table rice (see, e.g., Policy Section in JA8018), for feed,
flour and exports, total Japanese rice production continues to decline (Chart 8).

While table rice consumption has been decreasing, production of processed rice products has remained
relatively flat (see Chart 9). Japan’s exports of rice and rice processed products have increased in recent
years (Chart 10). According to MAFF, approximately 960,000 MT of rice and rice flour preparations
are used for producing rice products, of which MA rice and imported rice flour preparations account forroughly 20 percent. Additionally, rice for feed has increased in recent years, and MA rice accounts formore than half the rice used in compound feed production in Japan. As such, MA rice and imported rice
flour preparations are indispensable raw materials for Japanese production of rice processed products
and compound feed.
Chart 8. Japanese Total Rice Production and Table Rice Consumption

Source: MAFF

Chart 9. Japanese Production of Rice Products

Source: MAFF

Chart 10. Japanese Exports of Rice Processed Products

Source: MAFF