The Japanese government may give production incentives to rice farmers to grow rice for animal feed instead of human consumption, informed sources said.
Since plans have been proposed for terminating the state's decades-old rice output control system, the Liberal Democratic Party-led government is reviewing the current subsidies to see if the shift can be encouraged, since rice production for human consumption far outstrips demand, the sources said.
The programme currently pays a fixed subsidy of ¥80,000(€593) for every 1,000 sq. meters of paddies that are newly converted to grow rice for animal feed. But the ruling coalition is considering reducing this amount to ¥60,000(€444) while offering an additional subsidy of up to ¥40,000(€297) in line with crop yields, the sources said.
This would raise the maximum subsidy for crop changes to ¥100,000 (€740), the sources stressed. The LDP and minor coalition partner New Komeito aim to reach a final decision on the programme by the end of the month.
The proposed performance-based subsidy is expected to encourage the production of rice for animal feed. The government hopes to promote the use of varieties that produce heavier yields so that many producers of feed rice will receive higher subsidies than they do now, according to the sources.
The ruling wants to promote rice for animal feed due to concerns that terminating the "gentan" rice reduction system will exacerbate the national glut of the crop, causing prices to slump even more.
Japan imports 10 million tons of corn annually because it's a key ingredient in formula feed. There are concerns, however, that corn prices could soar amid tight global supply, making rice for animal consumption a possible alternative.
The potential demand for animal rice is estimated at 4.53 million tonnes a year, according to government projections. Some 560,000 tonnes were produced in fiscal 2012.
But the LDP and New Komeito have been unable to form a consensus on a planned fiscal 2014 cut in the "gentan" subsidy, which pays farmers ¥15,000(€111) for every 1,000 sq. meters of paddies if they control rice production in line with the government's plans. The two parties canceled a working-level meeting Friday on the proposal.