Japanese farmers hit by higher grain and fertilizer prices

Japanese farmers are being hit by higher prices of grain, fertilizers and other supplies necessary for agriculture and livestock farming as Russia’s aggression against Ukraine continues.

In particular, grain prices are soaring due to a decline in exports from both Russia and Ukraine, boosting the prices of compound feed.

But many producers are finding it difficult to pass on the higher costs to buyers.

“Despite the soaring prices (of supplies), we can’t reflect them in our prices,” said Toru Nakaya, head of the Central Union of Agricultural Cooperatives, or JA Zenchu.

Sales prices of fresh food items, such as vegetables, are usually determined by the balance of supply and demand because it is difficult to adjust the production amount quickly.

Higher prices of supplies needed for production therefore directly lead to a decrease in farmers’ net income, Nakaya stressed.

Grain prices had risen due to poor harvests caused by drought. The situation worsened further, as Russia’s invasion of Ukraine sparked supply concerns, leading wheat futures on the Chicago Mercantile Exchange to rewrite their record highs for the first time in 14 years. Compound feed prices also rose sharply.

The government has increased the size of its price stabilization fund. But there are concerns that the fund “may run out,” according to a lawmaker from the ruling Liberal Democratic Party.

Fertilizers have been affected by soaring prices of raw materials, including phosphorus and potassium.

Japan procures about 90% of its phosphorus from China. The prices of the substance have jumped since Beijing restricted the country’s exports of the material.

Meanwhile, Russia and Belarus together account for 25% of the potassium procured by Japan. The country consequently needs to find other suppliers.

The National Federation of Agricultural Cooperative Associations, or Zen-Noh, has started to procure phosphorous from Morocco.

Zen-Noh expects to revise up the prices of fertilizers for use from autumn, as the global price of fertilizer materials is expected to remain high.

Higher prices of crude oil, used to make fuels and covering materials for horticultural facilities, and soaring import prices stemming from the yen’s weakening have also been a blow to farmers. “We’re suffering from a triple burden,” one of them said.

The government plans to include assistance to ensure a stable food supply in a comprehensive package of emergency measures to fight rising prices that it plans to draw up this month.

But another LDP lawmaker doubts whether the government will be able to give enough support, saying that the government lacks financial resources while it is uncertain when the Ukraine crisis will end.