Evaluation of the Japanese Rice Policy Reforms under the WTO Agreement on Agriculture

This study aims to quantitatively evaluate the rice policy reforms in Japan since 1995. First, we review the development of the Japanese rice policy reforms since the Uruguay Round Agreement on Agriculture and the transition of the representative indices that measure the level of agricultural protection, such as the producer support estimate (PSE) and the aggregate measure of support (AMS). Next, a quantitative evaluation of the volume of transfers facilitated by the rice policies is carried out by employing the standard framework of welfare analysis. The changes in social welfare are simulated when the ex ante and ex post policies related to rice, namely, direct payment per output, purchase of rice by the government, and acreage control, are abolished and when the import tariff on rice is abolished. In addition, we calculate the average transfer efficiency (ATE) of the rice policies during the analysis period and draw the surplus transformation curve (STC) along with the changes in the acreage control rate. It is concluded that acreage control is the most important policy instrument in the current rice policy mix, but it is highly inefficient and imposes a serious burden on consumers and government expenditure