July 20, 2007

Japan sees lower dairy production this year

Due to foreseen lower cattle numbers this year, Japan's dairy fluid milk is likewise projected to drop by 1 percent to 8.05 million tonnes from last year, figures from the Foreign Agricultural Service (FAS) of the US Department of Agriculture (USDA) show. 

According to Japan's cattle identification system, the number of Holstein the country's predominant dairy herd -- fell by 2.1 percent to 1.575 million heads on-year as of April 2007 due to shifting trend of breeding F-1 crossbred animals for beef from dairy calf. Beef production has increased by 5 percent due to high prices and restrictions on imported beef, according to FAS.

Moreover, the rising costs of domestic feeds and fuel due to increasing grain and crude oil prices are also seen to contribute to a further drop in Japan's dairy farming operations in 2007. FAS said this can result to marginal operations going out of business or early slaughtering of cows.

Consumption of fluid milk is also projected to decline due to the popularity of tea drinks as well as fruit and vegetable juices. The FAS figures show that utilisation of milk fluid from January to March this year fell by 2 percent to 4.52 million tonnes. On the other hand, milk for processing dairy products such as cream and cheese will remain at the same level from last year at 3.40 million tonnes.

However, cream and cheese production for JFY (Japan Financial Year) 2007 which is from April 2007 to March 2008 is forecast to grow slightly due to direct subsidy payment scheme to dairy farmers. The scheme is aimed to encourage more milk farmers to divert the use of milk to cream and cheese.

The FAS has increased the per unit payments for one kilo of fluid milk for processing by 0.15 yen to 10.55 yen. But the annual quota eligible for payment was lowered by 50,000 tonnes to 1.98 million tonnes, therefore, lower butter and national fluid milk production (NFDM) is seen to reduce by one percent to 79,000 tonnes and 180,000 tonnes, respectively. This reduction would leave over 1.4 million tonnes of extra fluid milk this year to produce more cheese, cream and fermented milk products, according to FAS.

For the full FAS0 USDA report, please click here