October 17, 2008

Japan's dairy farmers set to increase milk prices

Dairy farmers in Japan have reached an agreement with milk companies to raise raw milk prices from March 2009 onwards to pass higher feed costs to consumers.


Farmers will increase prices by JPY 10 per kg, following a JPY 3-increase back in April, according to Kadotani Hiroshige, executive director at the Japan Dairy Council.


Feed costs for dairy animals have surged 50 percent in the past two years to JPY 65,000 per tonne in July as corn and soy reached record highs, the council said. Feed demand in Japan may drop if higher costs push for a decrease in dairy herd, leading to a fall in grain imports.


Kadotani said the price increase is necessary to sustain milk supply and dairy farming.


Raw milk supply in Japan fell 0.1 percent on-year to 2.63 million tonnes in four months ended July 31, the council said, adding that they had originally planned to increase supply by 2.3 percent to 7.87 million tonnes in the year to next March.


Japan's largest milk product maker, Meiji Dairies, plans to increase product prices to reflect raw material costs. The company spokesman said Meiji had not decided when and how much they would increase, but they would take into account the consumption trend and other production costs.


Meiji's milk sales in the three months ended June 30 dropped about 10 percent in volume after the company increased retail prices of dairy products by 3 to 10 percent in April, the spokesman said.

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