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Economy

Japan's China-bound rice exports set to soar

Newly authorized milling plants increase access to world's largest consumer

Japan's rice wholesalers are looking to pitch high-end brands such as Yumepirika to Chinese consumers.

TOKYO -- Japan's rice exports to China are set to soar as an agreement regarding processing facilities begins to take effect.

China gets through about 150 million tons of rice a year, roughly 20 times more than Japan.

Selling the grain in the world's largest market, however, requires the use of milling plants and warehouses that have been authorized by Beijing.

Until recently, Japan's rice wholesalers had to rely on just one plant in Kanagawa Prefecture, south of Tokyo. But the two countries reached a deal in May, paving the way for more plants to be approved.

Two plants have been authorized since then, and several companies have sought to take advantage. Many are looking to pitch high-end brands, such as Koshihikari, to wealthy Chinese customers.

The Japanese government has set a target of exporting 1 trillion yen ($8.83 billion) worth of farm and fisheries produce for 2019. Rice is pivotal to Tokyo's plans, but with only one authorized facility available, the 298 tons of rice Japan sent to China in 2017 made up just 3% of the country's total rice exports.

The first China-bound shipments of Yumepirika brand rice were made earlier this month, with 12 tons leaving from Ishikari Bay New Port on Japan's northernmost main island of Hokkaido.

"Japan's private sector is beginning to benefit from the agreement between the two countries," said Makoto Hirayama, president of rice wholesaler Kitoku Shinryo, which plans to start selling its produce in Shanghai.

The company has also signed a contract with the Hokuren Federation of Agricultural Cooperatives to export 300 more tons of rice harvested in Hokkaido this year.

One of the new plants is operated by Hokuren, and the other is run by rice wholesaler Shinmei in Hyogo Prefecture, in western Japan.

The latter started exporting to China this summer, taking about 17 tons of Koshihikari brand rice from Toyama Prefecture on the Sea of Japan coast in its first shipment.

"We are also in talks with Japanese food makers with plants in China, and plan to increase exports of precooked rice for retail customers," said Shinmei President Mitsuo Fujio. The company aims to ship 2,000 tons of rice to China in 2020 and 10,000 tons in 2025.

Japan's Ministry of Agriculture, Forestry and Fisheries plans to quadruple total exports of rice and processed rice, including sake, to 100,000 tons by 2019.

Kitoku Shinryo and Shinmei will handle 60,000 tons, with the rest to be shipped by the JA group, the country's main agricultural cooperative association, and other companies.

Japan's rice exports, excluding food aid, jumped 13% on the year to 6,318 tons in the first six months of 2018. The figures are now expected to hit record highs on an annual basis.

The Koshihikari brand, which Shinmei sells at retailers in Beijing, is priced at 2,600 yen for 2 kg, nearly twice the price in Japan. In addition to high-grade rice, affordable brands targeted at middle-income earners will be needed to boost exports, said an industry insider.

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