The heat wave also triggered… “Raising prices does not cover the rising costs.”
Many households that purchase milk, yogurt, and other dairy products on a daily basis have recently experienced a series of price hikes, and many feel that the prices have become more expensive. The background is the rise in various costs, but even a series of price hikes has not been able to cover the cost increase. Dairy farmers continue to close their businesses due to financial difficulties. The time may come when it will be difficult to obtain domestically produced milk. What is happening?
Another Price Hike…
Yotsuba Dairy (Hokkaido) manufactures and sells dairy products such as Yotsuba Milk. According to the company’s website (homepage), the company raised the price of its products on August 1 of this year, raising the price of unadjusted milk by an average of 8%. The company also raised the price of unadjusted milk by an average of 8% on April 1 of this year.
Yotsuba Dairy is trying to gain the understanding of consumers by explaining the reasons for the price hikes in detail on its website. The two reasons for the price increase are (1) the rising cost of cattle feed and (2) the rising cost of fuel and materials. The feed consists of corn, soybean meal, and other grains and grasses, most of which are imported. The recent depreciation of the yen is another factor driving up import prices.
It is not enough to raise prices to cover all cost increases.
If we raise prices, demand will surely drop,” said Mr. Kato, who is the president of Isonuma Farm (Tokyo, Japan).
The owner of Isonuma Farm (Hachioji City, Tokyo) says, “If we raise prices, demand will surely drop. The successive price hikes for dairy products have also had a negative impact,
I have heard that many dairy farmers have not been able to cover the cost increases over the past year or two,” said one of the owners of Isonuma Farm in Hachioji City, Tokyo.
said an official of J Milk, an industry organization for producers and sellers of raw milk. The largest cost increase is in feed. In addition, electricity costs are high because cows are sick in the summer when it is hot, and kerosene is used in the winter to keep cows warm. For a large dairy farmer, the electricity bill alone is 10 million yen a year,
The electricity bill alone can amount to 10 or 20 million yen a year,” said a J-Milk official.
(J-Milk official, same as above). The cost of gasoline for trucks carrying feed and materials is also rising.
COVID-19 crisis “destroyed our plan to repay our funds.”
In addition to these high current costs, dairy farmers are facing structural problems that are accelerating the number of people going out of business.
Total domestic demand for milk is about 12 million tons per year in terms of raw milk. Of this, domestic production is around 7.5 million tons. The shortfall is imported. In order to increase domestic production, the dairy industry has been borrowing money to invest in increased production for the past 10 years.
Dairy and livestock industries require larger initial investment and investment for expansion than rice paddies and field crops in agriculture.
The recent investment for expansion depends on the dairy farmer, but it is said to be in the tens, hundreds, or even billions of yen.
There, demand for milk and other dairy products has plummeted due to such factors as the cancellation of school lunches due to the COVID-19 crisis at home. Dairy farmers invested in scaling up, but,
‘s plan to repay the funds fell apart.
J-Milk officials cannot hide their bewilderment.
Furthermore, Russia invaded Ukraine, which is considered the breadbasket of Europe, and the prices of feed and energy soared, putting many dairy farmers under pressure from rising costs.
Dairy farmers had difficulty finding successors, and the aging of the farming population contributed to a long-term decline in the number of dairy farmers. According to the Ministry of Agriculture, Forestry and Fisheries’ statistics on livestock production, the number of dairy farmers in Japan was 12,600 in February of this year.
An official of the Central Dairy Council, a dairy farming advisory organization, commented on the decrease in the number of dairy farmers,
The number of dairy farmers has been decreasing by 3-4% so far, but the latest figure is about 7-8%, which is an extraordinary decline,” said an official of the Central Dairy Council, an organization that provides guidance to dairy farmers.
This is an unusual decline.
For dairy farmers, they are facing financial difficulties due to low income at a time when repayment of funds for investment in scale expansion is in full swing. There is no prospect that these conditions will improve.
Calf Price Slump” to Follow
Dairy farmers are further hindered by the slump in the price of calves. According to J-Milk officials, dairy farmers milk female cows and market male Holstein calves when they are born.
The price of calves, which used to be a supplemental income for dairy farmers, has slumped, and now it is a triple punch,” said an official of the Central Dairy Council.
Dairy farmers in Japan continue to face difficult business conditions. For consumers, it may be difficult to obtain safe and secure domestic milk and other dairy products. From the viewpoint of food security, we are facing a difficult situation.
Interview and text by Hideki Asai： Hideki Asai PHOTO： Aflo