By IPS Correspondents
TOKYO, Jun 19 2008 (IPS)

In a policy shift, Japan has announced that it will release an emergency food aid package of about 100 million dollars in July to help ease the global food shortage. In the near future it will ship out more than 300 thousand tonnes of imported rice stored by the Japanese government.

The country has a whopping 1.5 million tonnes of imported foreign rice that sits in public air-conditioned warehouses where it spoils or is used for rice flour, animal feed, or – on a small scale – for humanitarian aid. More than half of it is from the U.S.

Japan has woken up to the food shortage problem, according to Japan’s Prime Minister Yasuo Fukuda.

"We are finally hearing the scream of the earth," Fukuda said in Rome earlier this month. "More than 100 million people are at risk of hunger." In Asia and the Pacific about 1.2 billion poor people, who spend about 60 percent of their income on food, are suffering from the rising prices of rice. Asia’s most important food is at its highest price in three decades, according to the Asian Development Bank.

"Japan is the world’s largest net food importer, and will engage in all possible efforts to contribute to stabilisation of demand and supply of food in the world market," Fukuda stressed.

Difficulties obtaining rice in the international market caused the surging prices, according to Fukuda. There are new factors not seen in past food crises, such as rising fuel prices, climate change, and relations between the financial and energy markets.

U.S. Ambassador to Japan Thomas Schieffer commended Japan. "The United States welcomes the news that Japan is considering extraordinary measures to respond to this uniquely critical situation," he said in Tokyo. "All of us at the U.S. Embassy in Tokyo will also continue our efforts to facilitate cooperation on this issue."

Media outlets are questioning whether a deal has to be reached with the U.S. allowing Japan to release its imported rice stockpile. An American official, however, says the media is twisting the truth on this matter.

Schieffer says the U.S. understands the unique conditions in the global rice market this year – the growing humanitarian and political dimensions of recent food price increases and natural disasters in the region – and they warrant extraordinary measures to calm the international market. There was extensive damage to rice fields in Burma by Cyclone Nargis on May 2.

According to Ed Merner, president of Atlantis Investment Research Corporation, the U.S. is not putting pressure on Japan. "Japan has a big inventory," he says. "It’s not like Japan is turning around and making a big profit on imported rice. Besides, this is a great public relations move for Japan, especially coming right before the G8 Summit."

Japan is hosting the G8 Summit in Hokkaido in July. "It makes Japan look caring and is doing its part to help the world."

Japan’s move will push down rice prices, according to Nobuhiro Suzuki, an agricultural professor at the University of Tokyo. "Japan’s move will have a short- and long-term impact to the food shortage," he said. "Japan’s action is important in helping ease the crisis of the world’s rice shortage. If the Japanese keep sending rice to the international market, the supply will cause a decrease in prices. This is important for countries that are restricting their rice exports, including India and Vietnam."

Developing countries who are scared of the decreasing supply and rising rice prices have been hoarding rice to protect their stockpiles, according to Suzuki. The high prices of wheat and corn do not affect Asia, because most people eat rice.

Merner believes people are hoarding rice. They are scared there is not enough, so they buy three bags instead of one bag, he said. Speculators buy it up, waiting for the prices to go even higher. But with new harvest due out soon, we may see boosting supplies and stabilizing prices, he explained.

"Like all bubbles it will burst, the prices will come down… Investors will stop speculating and governments will remove or ease trade barriers. Hoarders would stop stockpiling," he said.

With new supplies governments would be confident that they could meet demand and would remove some trade barriers.

Most Japanese consumers don’t eat imported rice and typically mock it. "I prefer Japanese rice because it’s tastier and has more moisture in it," says Tokyo hair stylist Yuko Okunishi. "It also goes better with our food, which isn’t spicy."

Since the mid-1990s, Japan reluctantly agreed under pressure from its trading partners to import rice. The policy is to keep large stockpiles in case of emergencies such as a typhoon or drought.

Meanwhile, every year 770,000 tonnes of imported rice is unloaded at Tokyo Port, thereafter most of it sits uneaten in warehouses throughout Japan.

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