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Japanese dairy farmers are suffering amid surging feed prices and sluggish demand. The government must implement effective measures.
Grain supply has been hit by factors such as Russia’s invasion of Ukraine, causing feed prices to skyrocket, which is the main cause of the dairy industry’s difficulties.
The compound feed Japanese farmers give to dairy cows contains such grains as corn and wheat, and Japan heavily relies on imports of such products. In December, feed prices were about 50% higher than two years ago.
The COVID-19 pandemic caused a drop in demand for milk, mainly from the restaurant industry, and it has not returned. Even though dairy farming costs have increased, farms are reportedly unable to pass on those costs by raising product prices.
Aging and a lack of successors at farms have been persistent problems in the dairy industry, which is facing further blows from the double punch of increased costs and decreased demand. Support for the industry is urgently needed.
According to a survey conducted in March by a dairy-related organization, more than 80% of dairy farmers are operating at a loss. The number of dairy farmers decreased by about 7% year-on-year in February, with the severe business conditions prompting more people to leave the industry.
Raw milk is used to make butter and cheese. Rich in nutrients, milk is indispensable for cooking and making confections. The domestic supply chain must be protected to ensure people can maintain a rich diet.
The government decided to expand a system to cover part of the purchase cost of compound feeds in a package of measures to tackle high prices unveiled at the end of March. Soaring prices of compound feed could continue for a long time. The government must consider strengthening support.
It is also important to reduce dependence on imported feed. In Japan, the self-sufficiency rate of feed such as hay and rice straw is high compared to compound feed. The production and utilization of such crops must be increased.
The government’s dairy farming policies appear to be inconsistent.
Milk production peaked in fiscal 1996 and has been on a downward trend since then. In 2014, there was a “butter shortage” problem. In response, the Agriculture, Forestry and Fisheries Ministry subsidized farmers’ efforts to increase production.
The COVID-19 pandemic broke out just as production was starting to increase, and now there is a surplus of raw milk.
To curb raw milk production, the ministry established a program in March to provide ¥150,000 per head for the early retirement of cows with low milk output.
The program is aimed at improving the supply-demand balance, but there are concerns that increasing production again when demand recovers will be difficult.
The ministry should carefully examine long-term supply-demand forecasts of raw milk and reformulate its measures to strengthen the business foundations of dairy farms.
