Japanese Dairy Industry
By Karmella Dolecheck, M.S. Candidate, University of Kentucky, Dairy Systems Management
Please enjoy a brief overview of the Japanese dairy industry. Although I have never been to Japan, my sister has lived there for two years and I would like to visit someday.
Introduction
Full-scale dairy farming did not begin in Japan until after World War II. Even then, demand for milk was not high until the 1970s. Since, Japan has been one of the fastest growing dairy industries. Between 1975 and 1990, European countries increased cow numbers by 70% while Japan increased by 160%. Average production per head each year grew from 5,600 kg in 1985 to 8,000 kg in 2010. Now, yearly production per cow in Japan outranks France, England, Australia, and New Zealand.
Production
Dairy is Japan’s second biggest agriculture commodity (not surprisingly, rice is the first). It represents about 1.3% of the total farms in Japan, but 10% of agriculture products. One draw to the dairy industry is that a single dairy cow provides the income of 52 acres of rice fields. Another advantage of dairy over rice is consistent, year-round income and less weather dependency.
With about 30,000 dairy farms and 1.8 million dairy cows, Japan averages 72 cows per herd. Japan has experienced similar trends as the US in regards to decreasing herd numbers but increasing herd sizes. Holsteins make up the majority of the dairy population, though some Jersey and Brown Swiss can also be found.
The majority of dairy farms are tie stall facilities found in narrow valleys or land located on the outskirts of urban areas. However, pasture dairies are becoming more and more popular as the older generation of rice farmers is unable to use all of their land. Additionally, some large pasture dairies exist on the island of Hokkaido because its northern climate is unsuitable for rice production.
Like most countries, the largest production expenses on Japanese dairies are labor (23%) and feed (46%). The majority (78%) of feed used on dairies in Japan is purchased rather than grown. A large portion of feed is imported and, therefore, production costs are highly dependent on international grain markets and currency exchange. Some local by-products used in dairy rations include soybean meal, coffee grounds, brewer’s grains, bean curd (tofu), and oil cake.
Only 15% of dairies are part of corporations and 80% of dairies have no full-time employees, making it more family reliant than other agricultural industries in Japan. The biggest modern problem on dairies is lack of young people willing to continue on the operation.
Structure
A subsidy program for Japanese dairy production has been in place since 1965. As part of this program, the government attempts to prevent market and price instability by setting production ceilings based on supply and demand.
In addition, producers organized a planned production system to protect farms from low prices in 1979. Although technically voluntary, about 97% of dairy producers operate according to these guidelines. This system works through the Japan Dairy Council who allocates production allowances to regions of Japan that, in turn, assign production allowances to individual farmers.
Before 2001, deficiency payments were awarded to dairy farmers annually based on the difference between the cost of production and the price received for raw milk. Therefore, a dairy farmer’s income included the base income from the milk processor they sold to and deficiency payments from the government. Now, farmers receive the market price and a fixed payment recalculated each year based on the milk demand and supply, as well as production costs. This new policy has a built-in security measure that goes into effect if the price of milk is below the past three-year average.
Dairy Consumption
Japan produces approximately 7.5 million tons of raw milk every year. Sixty percent of that milk is used strictly for drinking. The remainder becomes cheese, butter, ice cream, yogurt, and other products. There are close to 700 processing facilities located throughout Japan, but most of these are small. Japan’s rate of domestic self-sufficiency in milk and dairy products is 69%, which is higher than most agricultural products in the country (wheat = 14% and beef = 39%).
Along with dairy farm growth, dairy consumption has increased in Japan. Initially occurring as a result of school lunch programs, per capita consumption of milk and dairy products increased by 48% between 1975 and 1990. In 1965, raw milk weight consumed yearly per capita was 38 kg. In 2010, this number was 86 kg. Even after this increase, consumption compared to other countries is low. This is partially because the Japanese people do very little cooking with dairy products (milk, butter, cheese, etc.). High prices also contribute to low milk consumption. The average price of a liter of milk in Japan in 2009 was 214 yen or $2.09. In comparison, the average price of U.S. milk in 2009 was $0.82 per liter.
There are six kinds of drinking milk sold in Japan: whole milk, low-fat milk, fat free milk, component adjusted milk, processed milk, and milk beverages. The term “milk” means that raw milk was heated for sterilization, but has had no other component added to it. The Japanese Ministry of Health, Labor, and Welfare dictates that whole milk contain more than 3.0% of fat and more than 8.0% of non-fat solids. Component adjust milk refers to the milk with 1.5 to 7.9% non-fat solids. Processed milk is a mixture of milk and milk products (butter, cream, or skimmed milk powder). Milk beverages are some combination of dairy products and non-dairy products.
Dairy Education
In 1998, the Japan Dairy Council initiated the Committee for the Promotion of Dairy Educational Farms. After 3 years of research, they developed a program called the “Dairy Educational Farm Certification System.” This system allows for dairies who meet safety and hygiene requirements to be classified as “appropriate to seek education from.” In 2008, another certification program for facilitators to carry out education activities on farms began. Three hundred and nine farms and 556 facilitators were certified by 2011. Together these certified farms and facilitators educate the public about the dairy industry, emphasizing contributions the dairy industry makes to society.
References
Campo, I. S. and J. C. Beghin. 2005. Dairy Food Consumption, Production, and Policy in Japan. C. f. A. a. R. Dvelopment, ed. Iowa State University, Ames, Iowa.
Japan Dairy Council http://www.dairy.co.jp/eng/menu.html
Nakatsuji, h. Livestock Production. L. o. A. P. System, ed. Hokkaido University, http://ocw.hokudai.ac.jp/Course/Faculty/Agriculture/AgricultureInHokkaido/2009/page/materials/AgricultureInHokkaido-2009-Text-05.pdf.
Suzuki, N., and H.M. Kaiser. 1994. “Basic Mechanisms of Japanese Dairy Policy and Milk Market Models: A Comparison with United States Dairy Policy.” Journal of Dairy Science 77: 1746-54.
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