Japan faces a rice crisis as emergency supplies are released

Summary

Marketplace Morning Report: Japan Faces a Rice Crisis as Emergency Supplies Are Released

Release Date: June 10, 2025
Host: Liana Byrne
Source: Marketplace, BBC World Service

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1. Japan's Rice Crisis: An Ongoing Emergency

Japan is currently grappling with a significant rice shortage that has sent prices soaring and created widespread concern among consumers and businesses alike.

The Marketplace Morning Report, hosted by Liana Byrne, highlights the severe rice shortage in Japan, attributing the crisis to a combination of factors including adverse weather conditions, a decline in rice farming households, and a surge in demand fueled by increased tourism and dining out activities.

Economic Strain on Consumers:
Hiromichi Akiba, owner of the Akidai supermarket chain in Tokyo, expressed the hardship faced by consumers:
"Honestly speaking, our customers are in trouble. Many other things like food prices had gone up. Then the rice, which had been inexpensive, went up so sharply, I'm looking at."
(01:39)

Shoppers like Momoko Abe are witnessing firsthand the impact of the crisis:
"As you know, like it's a staple in our lives. Sort of a ticket for granted. And it was quite shocking that the price could rise within such a short period of time."
(02:08)

Government Response and Challenges:
In an effort to mitigate the shortage, the Japanese government has begun releasing rice from its emergency natural disaster reserves. However, the distribution has been sluggish, failing to quickly alleviate the consumers' plight. Additionally, the government is contemplating the importation of rice to stabilize the market. Hiromichi Akiba voices concerns over this approach:
"Japan is a nation of rice. We take pride in that. I'm worried that one import of rice would make the rice producer weak here and become a new threat for Japanese farmers."
(02:32)

The root of the crisis lies in Japan's long-standing agricultural policies. For decades, the country has regulated rice production tightly to prevent surplus and control prices. Unfortunately, this strategy has backfired, leading to the current scarcity. The agriculture minister, Shinjiro Koizumi, has pledged to lower prices and overhaul the supply chain, but experts warn that the issues are deeply structural and extend beyond rice alone. The crisis reflects Japan's broader economic struggles, including efforts to revitalize the economy and manage inflation.

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2. Global Economic Updates

Following the deep dive into Japan's rice crisis, the report transitions to other significant global economic developments.

US-China Trade Talks:
Trade negotiations between the United States and China are underway in London, centered around rare earth materials and technology shipments. President Trump has expressed optimism about the progress:
"Things are going well," he stated, while US Commerce officials described the meetings as "fruitful."

Market Highlights:

• TSMC's Sales Surge: Taiwan Semiconductor Manufacturing Company (TSMC), a key supplier for giants like Apple and Nvidia, reported a nearly 40% increase in May sales, reaching $10.7 billion, driven by robust demand in the AI sector.

• Italy's Failed Referendums: Italy witnessed low voter turnout, with only 30% participation, causing referendums on citizenship laws and job protections to fall short of the required votes.

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3. Pharmaceutical Industry Shock: Axelia Pharmaceuticals Closes Danish Factory

One of the standout stories delves into the European pharmaceutical sector's challenges, focusing on Axelia Pharmaceuticals, Europe's last producer of essential antibiotic ingredients. The company announced the closure of its Denmark factory within the next decade, signaling potential shifts in global drug manufacturing.

Interview with Michael Kocher, CEO of Axelia Pharmaceuticals:
Michael Kocher elucidates the reasons behind the closure:
"There are three main reasons. Reason number one, increasing price pressure. Reason number two, rising operational costs. And then we are facing very challenging market dynamics."
(04:41)

He further elaborates on the financial hurdles:
"It's about two kinds of support. We need to invest in new manufacturing equipment and here we would need so called capex support. And on the other side we would need support to cover our operational costs because the operational costs in Europe are by far higher than the costs in low cost manufacturing countries."
(04:57)

Kocher also addresses the strategic risks of Europe's heavy reliance on Asian manufacturers:
"Oh, absolutely. It's a big risk and the trend is kind of intensifying at this point in time. We are spending lots of time discussing reshoring exercises and that concerns me. We should spend our energy at this point in time in keeping the critical infrastructure in Europe."
(06:10)

Highlighting the company's commitment to European supply chains, he states:
"Absolutely. And that's the reason why we are trying to trigger discussions with the EU in order to maintain a footprint in Europe and secure the supply chain in Europe. It would be a nightmare if the society in Europe would entirely depend on supply out of China. And we need to do everything to keep the existing supply chains for critical medicines in Europe."
(06:36)

EU's Response and Future Plans:
Acknowledging the crisis, the European Commission announced the development of a new Critical Medicines Act aimed at enhancing drug manufacturing resilience and attracting further investment. However, Axelia continues to await a response from the Danish government regarding potential support.

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4. Concluding Financial Insights

The episode wraps up with key financial updates:

• TSMC's Impressive Earnings: Benefiting from AI-driven demand, TSMC’s Q2 sales numbers showcase significant growth.

• Italy's Democratic Process: The low turnout in Italy's referendums underscores challenges in engaging voters on critical legislative changes.

• Pharmaceutical Production Shifts: The closure of Axelia's Danish factory raises alarms about Europe's dependency on Asian drug manufacturers, prompting discussions on strengthening local production capabilities.

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This comprehensive overview from Marketplace's Morning Report provides listeners with an in-depth understanding of Japan's immediate rice crisis and its broader implications, alongside critical updates in global trade and pharmaceutical industries. For those keen on staying informed without tuning into the podcast, this summary encapsulates the essential narratives and expert insights presented in the June 10, 2025 episode.

Transcript

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[Liana Byrne]

Rice and it's causing chaos. Hello, this is the Marketplace morning report and we're live from the BBC World Service. I'm Liana Byrne. Thanks for tuning in. So Japan is facing a rice emergency. Prices are soaring, supplies are tight, and it's already cost one government minister his job. So what's going on? Well, a mix of bad weather, fewer rice farming households and booming demand from tourism. And dining out. The BBC's Shaima Khalil has more.

[Reporter]

It's a busy afternoon in Akadai, a small local supermarket chain here in Tokyo. It's been a tough couple of years for Japanese households. They've struggled with inflation, high prices, stagnant wages and a sluggish economy. And yet not many could see the rice crisis coming. Hiromichi Akiba is the owner of the Akidai supermarket chain.

[Hiromichi Akiba]

Honestly speaking, our customers are in trouble. Many other things like food prices had gone up. Then the rice, which had been inexpensive, went up so sharply, I'm looking at.

[Reporter]

The rice shelves close to the till. Unlike other supermarkets, this one still has some bags left. But like all other supermarkets, the prices have doubled since last year. Images of long lines of people queuing up to get their hands on a bag of rice shock the public here. Momoko Abe is here shopping with her four months old baby.

[Momoko Abe]

As you know, like it's a staple in our lives. Sort of a ticket for granted. And it was quite shocking that the price could rise within such a short period of time.

[Reporter]

The government has started releasing rice from its emergency natural disaster reserve. But it's been very slow getting to consumers. They're also considering importing rice, but Mr. Akeba doesn't think this is a good idea.

[Hiromichi Akiba]

Japan is a nation of rice. We take pride in that. I'm worried that one import of rice would make the rice producer weak here and become a new threat for Japanese farmers.

[Reporter]

The current agriculture minister, Shinjiro Koizumi has vowed to bring the prices down and to modify the supply chain. The problem is more structural here. For decades, Japan has tightly regulated rice production to avoid supply overflow and to control prices. But this policy backfired, with one expert describing it as disastrous. The rice crisis is symptomatic of the country's broader struggle to revitalize the economy and contain inflation. Japan imports oil, over half of its food, but the Japanese are very particular about the rice. For many here, this is about much more than putting food on the table.

[Liana Byrne]

That report from Shyla Khalil. Now the US China trade talks resume in London today with hopes high for progress on rare earths and tech shipments. After six hours of talks on Monday, officials are back at Lancaster House near Buckingham Palace. President Trump says things are going well while US Commerce chiefs called the meeting fruitful. And of course markets are watching closely. And with that, let's do the numbers. Chip giant tsmc, which makes chips for Apple and Nvidia, says its May sales jumped nearly 40% thanks to strong AI demand and firms stockpiling revenue hit $10.7 billion. And in Italy, a set of opposition backed referendums on citizenship laws and job protections failed to secure the required voter turnout. Just 30% of of voters took part. Now the Danish drug maker Axelia Pharmaceuticals is Europe's last maker of key antibiotics ingredients. But it's closing its factory in Denmark within the next decade. That could mean more production moves to China. Not good news for the EU which wants to make its drug making to be more independent. Its chief executive Michael Cocker told me it would take about $200 million to build a new factory in Europe and another $28 million a year to keep it running. But but without EU subsidies he says it just doesn't stack up. I asked him why close the Denmark site at all?

[Michael Kocher]

There are three main reasons. Reason number one, increasing price pressure. Reason number two, rising operational costs. And then we are facing very challenging market dynamics.

[Interviewer]

What would it take to keep a facility like yours running In Europe it's.

[Michael Kocher]

About two kinds of support. We need to invest in new manufacturing equipment and here we would need so called capex support. And on the other side we would need support to cover our operational costs because the operational costs in Europe are by far higher than the costs in low cost manufacturing countries.

[Interviewer]

But then at the same time drug prices, they are low, aren't they?

[Michael Kocher]

That's the dilemma we are in. And since a lot of markets in Europe are regulated, there is not the possibility to increase prices.

[Interviewer]

Could things like subsidies and policy support make a difference?

[Michael Kocher]

Oh, it could make a big difference. I would like to highlight two different kinds of support. On the one hand, side, support for new machinery, new equipment, and on the other side, ongoing support to cover the difference in operational costs.

[Interviewer]

Now, roughly 80% of Europe's active drug ingredients already come from China and and India. Do you think that that's a problem? Do you see this heavy dependence on Asia, a strategic risk for critical medicines in Europe overall?

[Michael Kocher]

Oh, absolutely. It's a big risk and the trend is kind of intensifying at this point in time. We are spending lots of time discussing reshoring exercises and that concerns me. We should spend our energy at this point in time in keeping the critical infrastructure in Europe.

[Interviewer]

Do you feel any responsibility towards that then, that you know your company has to leave?

[Michael Kocher]

Absolutely. And that's the reason why we are trying to trigger discussions with the EU in order to maintain a footprint in Europe and secure the supply chain in Europe. It would be a nightmare if the society in Europe would entirely depend on supply out of China. And we need to do everything to keep the existing supply chains for critical medicines in Europe.

[Liana Byrne]

That was Michael Kocher from Axelia Pharmaceuticals. The European Commission told us that supporting competitiveness in the pharma sector is a high priority. It says a new Critical Medicines act is in the works to boost drug making resilience and attract investment. We've also asked the Danish government for comment. Still no reply. I'm Liana Byrne with the Marketplace Morning Report from the BBC World Service.

[Host]

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