December 27, 2022
Dairy sector in Japan affected by rising costs and lower production
Dairy farmers in Japan are badly affected by rising production costs due to higher prices of formula feed for milk cattle, following the Russia-Ukraine conflict, The Japan Times reported.
More Japanese dairy farmers are shutting down their businesses as they are hit by production cuts for raw milk after past oversupply.
One of the major dairy product-producing regions in Japan, Hokkaido, has decided to reduce production for 2023, raising concerns about the effects on the region's dairy farmers.
Data from Japan's Ministry of Agriculture, Forestry and Fisheries found that there were 13,300 fewer dairy producers nationwide as of February 1 than there were a year earlier. Hokkaido, which produces more than 50% of the raw milk consumed in Japan, had 5,560 producers, a 2.8% decrease. Over the past 20 years, the number has been decreasing nationally at a rate of about 4% per year.
A local industry official said this year in Hokkaido, close to 200 dairy producers have already withdrew from or decided to shut down their businesses, because many of them have been struggling to pay back loans they took out in the past to expand butter-making facilities to address supply shortages, as well as deal with higher feed costs and production cuts.
A Hokkaido dairy industry association increased the wholesale price of raw milk for drinking by 10 per kg, beginning with shipments in November. This decision was based on an agreement reached in discussions with dairy producers.
The Japanese government has decided to increase grants for raw milk producers in fiscal 2023 for the production of processed dairy foods by the second-largest margin ever, in addition to other support measures like subsidising feed costs.
But these assistance programmes do not appear to be sufficient to allay the worries of the dairy farmers in Hokkaido. Another farmer said others are being forced to give up on continuing their businesses due to fundraising difficulties, or being unable to find successors to take over their operations, so with a policy of production cuts in 2023, the farmer fears that theymay not be able to continue running their business.
A senior official at a dairy producer said there is a possibility of increased demand for locally produced raw milk, and pinned hopes on a growth in dairy exports.
- The Japan Times