There is a big desire in Japan to effectively use paddy fields to increase domestic cereal feed production. But, because of the big difference between the use price for feed in stock farming and the production cost of rice as feed, the ratio of financial assistance by the government could be extremely high. Thus, improving the profitability of the feed rice producers, and reducing the government’s financial burden, become important issues. As far as rice producer profitability is concerned, it is necessary not only reduce expenses related to rice production, but also those related to distribution, including drying and hulling.

However, the details related to these points have not been understood clearly and there is some confusion. The purpose of this paper is to clarify the characteristics of distribution costs and the circumstances of farming and agricultural cooperatives through case studies, interviews and various statistics.

The user price of feed rice is equal to around 30 yen/kg based on prices of imported corn or other cereals. On the other hand, the usage fee for agricultural cooperative’s or other farm’s rice processing facilities for drying and hulling is 20-30 yen/kg. If farmers do it with their own equipment the cost may become lower. If it is only drying, the total cost may become 5-10 yen/kg lower and at same time the storage cost can become a little lower, too. In the case of selling through the national federation of agricultural cooperatives, the distribution costs, such fees for storage, freight and commission, is around 15-20 yen/kg.

In this paper, I analyze the example of a large-scale poultry facility that achieved a feed rice after harvest of around 20 yen/kg through direct trade and the use of a compound feed factory. In the case of unpolished rice use, long-distance distribution total costs are about 40 yen/kg. In the case of unhulled rice use and regional distribution, it becomes about 20 yen/kg. This difference becomes equal to approximately 100,000 yen per 1 hectare.

Today, though rice feed production is increasing, it is thought that the formation of a regional system of low-cost use for feed rice should be given top priority.