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USDA Surveys Grain Price Supports in Japan by Scott A. Yates Capital Press, November 26, 2004

SPOKANE -- Eighty-six-dollars-a-bushel wheat may sound farfetched in the United States, but not if you’re a Japanese farmer taking advantage of various government programs.

A study on wheat and barley policies in Japan by the Economic Research Service of the U.S. Department of Agriculture found that farmers there can get paid that much if they divert acreage out of rice and take advantage of other price-support programs. Without the rice diversion, the return is much lower, around $32 per bushel during the 2002 study period.

Considering the average price of wheat in the United State was $3.56 a bushel during the same time frame, the discrepancy is still daunting. Too daunting, said the authors of the report. They contend that without government support provided by the Food Agency of the Ministry of Agriculture, Forestry and Fisheries (MAFF), domestic wheat and barley production in Japan would fall by 70 percent.

Hisao Fukuda, John Dyck and Jim Stout said Japanese taxpayers are spending $800 million to support wheat and barley programs. In the process. farmers are producing about 682,000 acres of inferior quality grain and consumers are paying more for their wheat-based products.

“If Japan gave up its support for wheat and barley farming, foreign suppliers could expect to replace most of the current level of wheat production (up to 850,000 tons) and barley production (up to 200,000 tons,)” the authors wrote.

But Ray Jussaume, a Washington State University professor who has spent years researching Japanese agriculture and buying habits, advised caution in reading the report, suggesting the price discrepancies may not be as great as they are made out to be. Furthermore, he said, Australia, which has very little agricultural support of any kind, likes to trash both Japan and the United States for their subsidy policies.

Even the ERS report indicated the Japanese farmer isn’t getting wealthy from growing the expensive wheat. The authors said most of the high returns simply go to cover costs.

The same scenario is true for barley. The report said planting two-row barley in rice paddy fields results in an equivalent price of $53 to $82 a bushel. A U.S. price for malting barley in 2002 was $2.63 a bushel.

Unlike vegetables and fruits in Japan, where market interaction helps determine price, that is not the case with the small grains. More production of wheat and barley doesn’t lower the revenue farmers receive, the authors wrote, but instead increases the tax-paid subsidy payments, “a cost that the government has so far been willing to shoulder.”