The Tsunami that occurred in Japan on mar 11 2011 was a major setback to the local and the international economy. Moreover, the production of rise and its market was significantly altered leading to rice shortages across the globe. It was imperative that the Tsunami cost Japan the dream of securing self-sufficiency in rice reserves. The onset of the Tsunami necessitated the need to import rice, and saw the dawn of rise shortage especially due to the effect that the salty water had on the arable agricultural land. It was evident that production in the agriculturally rice-productive Tohoku region was severely hampered by the Tsunami. This is often the case when salty water flushes over arable land, and cause significant fertility problems to the land.

Short-term price implications

Precisely, the Tsunami caused a shortage in rice produced in japan and consequently, the effect spread across the globe. It is in this light we understand that the shortage led to an increase in prices of rice due to the increased demand for rice. This was further factored by the importing countries. Moreover, there was the need to buy the local rice in the Japanese economy to build on their strategic reserves and further feed the hungry population that had been affected in the disaster (Nanto, 2011). This pulled the prices of rice high and due to the importation quantities deemed necessary, affected the global prices for rice. The increased demand on the global scale reduced the amount that was available for other countries. Consequently, traders increased their prices and the better chunk of the produce went to the well-off economies.

Long- term price implications

The world commodity price for rice eventually stabilized after enough yield was realized in the proceeding season (Nanto, 2011). However, due to the rigidity in the prices of agricultural products, the adjustment period was long and saw the prices decline, and production resume to normal. It would be wise to note that the high yield in the following years 2012 and 2013 were possible due to the anticipation that, the producers had regarded on the prices of the yield. The rise in the price of rice also affected other crops and led to the sale of more units of the alternative commodities such as corn and wheat. We also understand that the commodities of other consumer goods rose in response to the shock. More importantly, the price of corn rose significantly to 16 million tonnes in the years 2010-2011 and 2011-2012 (Nanto, 2011).

Earlier in the year, Japan boasted of rice-stock stability in their strategic reserves, but this was threatened by this disaster, as it affected the most productive regions in the economy. For example, the Tohoku region that accounted for over 26% of the rice that was produced in the year (Johnson, 2012). This setback was a hard hit among the developing countries that have less competitive abilities in terms of the resources necessary to compete in the international market. It was thus evident that most of the output went to the developed countries, and starvation and deficits were experienced in the developing states.