From 'No Rice to Sell' to a Turnaround: Rice Dealer Bankruptcies Decrease for the First Time in 3 Years; 80% See 'Increased Profits' in FY2025, a Record High; 'Negative Spread' Risk Expands Behind Strong Performance

Teikoku Databank, Ltd. conducted a survey and analysis on the occurrence of business suspensions, closures, and dissolutions among "rice dealers" (rice wholesalers and retailers).

SUMMARY

The number of business suspensions, closures, and dissolutions among "rice dealers" in FY2025 was 75, a decrease for the first time in three years. This is believed to be influenced by unexpected "profits" generated from rice inventory due to persistently high rice prices, leading many rice dealers to operate profitably. However, this strong performance is merely a temporary boost from transient profits, and there is a high likelihood that the "negative spread" risk due to future declines in rice market prices will become apparent.

[Note]

"Rice dealers": Refers to "rice and wheat wholesale trade" and "rice retail trade" in TDB's detailed industry classification.

Scope of aggregation: Business suspensions/closures/dissolutions refer to cases where corporate activities have ceased without special procedures (business suspension/closure) or dissolution has been confirmed through commercial registration (excluding "deemed dissolution"), excluding bankruptcies (legal liquidation).

Aggregation period: April 1, 2000, to March 31, 2026.

'No Rice to Sell' to a Turnaround: Rice Dealer Bankruptcies Decrease for the First Time in 3 Years

The business of rice dealers, who were struggling with a situation of "no rice to sell," has taken a turn for the better. In FY2025 (April 2025 - March 2026), the number of business suspensions, closures, and dissolutions (hereinafter "bankruptcies") among "rice dealers," who specialize in wholesale and retail of rice, was 75, a decrease for the first time in three years from the previous year (82 cases).

Regarding the management of rice dealers, adverse factors such as poor harvests due to heatwaves and droughts, coupled with consumer panic buying due to earthquakes, led to a severe shortage known as the "Reiwa Rice Turmoil" from the summer of 2024. As a result, some rice dealers who could not secure sufficient sales volume in the initial stages or incurred losses by purchasing at high prices were forced to suspend or close their businesses early.

Even as supply gradually recovered with the distribution of new rice from the autumn of 2024, supermarkets and other mass retailers continued to limit sales quantities. As a result, consumers and restaurant operators who "wanted to buy rice reliably regardless of price" flocked to rice dealers with their own unique distribution channels in FY2025. Among distribution and retail businesses, rice dealers who relatively held inventory saw a dramatic increase in selling prices for old rice and even rice purchased just before the rice turmoil, due to extreme shortages and soaring prices, generating unexpected "profits." Sales of minimum access rice and other imported rice, which were cheaper than domestic rice, also performed well, contributing to the survival of rice dealers who were struggling with cash flow.

Looking at the profit and loss situation (on a net profit basis) of rice dealers in FY2025, 80% of companies saw "increased profits" from the previous year as of April. This was the highest in the past 20 years, and the number of companies in "deficit" fell below 10% for the first time, reaching a minimum. The average operating profit margin (trimmed mean of the top and bottom 10%) for FY2025 was approximately 5.0% for about 240 companies. This was a significant improvement compared to 1.8% in the previous year, and their "earning power" recovered to a level generally considered standard. For rice dealers who had been struggling with rising logistics costs and securing funds for wage increases, and whose profit margins had long hovered around "0%," this can be said to have reached the necessary profit level. However, the benefit from increased profits generated by the recent price surge is significant, and it is difficult to say that this is an essential improvement in competitiveness through management efforts.

Currently, in addition to consumers moving away from rice due to persistently high rice prices, the smooth harvest and market supply of Reiwa 7th year rice are contributing to a shift from a rice shortage to a "rice surplus." In this situation, some rice dealers are starting to see their high-priced inventory become excessive, and in the rice distribution field, the "negative spread" risk, where they are forced to lower prices due to the normalization of market prices, is becoming serious. As the unprecedented price surge that prevented bankruptcies comes to an end, concerns are growing that rice dealer bankruptcies will increase again in FY2026.