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Abstract

Following amendments to food supply legislation in 2004, the distribution of rice has become increasingly market driven due to the ability of farmers and agricultural co-operatives to sell their produce directly to the food service industry. This flexibility allows agricultural co-operatives to tailor their production to the needs of rice processors and consumers and thus deliver a better end product. Rice producing districts have embraced the changes and the resulting competition has led to the adoption of new rice varieties, improved management practices and enlarged scale farming. Along with the economic benefits, the eating quality of rice has also improved significantly. However, these changes have not been a panacea for the problems facing rice farmers. Since the 1990s, the unit price of rice has fallen substantially, putting farmers under tremendous financial stress. This has been partly due to a glut in supply driven by farmers choosing not to participate in the Paddy Set-Aside crop rotation program. Subsidies allocated to farmers who take part in the program and rotate rice crops with soybeans, feed crops, wheat and so forth have not sufficiently compensated for the production costs for these crops and thus the number of farmers participating in the program has gradually decreased. The new income compensation policy in 2010 will not fully address these issues.

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