[Xixi]

You are forgetting a "small" difference between Japan and Iceland: Japan is overpopulated and doesn't have enough land to grow its own food, thus relying on importations to feed itself. On the other hand Iceland is mostly empty.

As you can imagine the price of land is quite different...

[Retric]

68.4% of Japan is forests. (Just look at some aerial maps). The issue is japan is not flat not that it's overcrowded. Even still they have enough room for 1.2 million cows which is horribly inefficient use of farm land.

PS: They have had rice subsidies over 700% and it's still not cost effective to convert more forests to farmland. Growing food in doors works due to subsides but it's hardly necessary.