The Japanese government has announced their intention to import an additional 10,000 metric tons of butter by October in an attempt to avoid a shortage during the holiday season come years end.This could mean good things for US dairy producers and exporters.
“Last year in Japan, butter was difficult, if not impossible, to find on store shelves during the holidays,” says Sara Dorland, analyst with the Daily Dairy Report and managing partner at Ceres Dairy Risk Management, Seattle.
Last fall, shortages of butter were widespread throughout the country, and stores that still had stocks of butter were rationing shoppers purchases. This year, the Agriculture, Forestry & Fisheries Ministry is planning to avoid those issues.
The traditional Japanese diet does not include an abundance of dairy products, and consists mainly of fish, rice and vegetables. However, the demand for butter increases dramatically near the end of the year as the Japanese celebrate the Christmas season by eating whipped-cream filled sponge cake
“At the root of the problem is a wider dairy deficit that has dairy farmers prioritizing their milk sales, most of which are being used for drinking milk,” says Dorland. “Milking herds have also been cut over recent decades as demand for dairy products has dropped due to an aging Japanese population. The nation’s dairy farmers—along with the general population—are also aging,” says Dorland. “And they have been forced to cut production amid falling demand.”
According to the Agriculture, Forestry & Fisheries Ministry, there were nearly 82,000 dairy farms thirty years ago, with 2.11 million cows. That number has dropped to 19,000 milking 1.4 million cows.
In May, the Japan Dairy Association reported concerns that the nation would again face a shortage of 7,100 metric tons of butter. In addition to butter, the country faces a 5,000 metric ton milk shortage as well, and is expected to add imports of powdered skim milk as well.
“The news from Japan could have mixed reviews in the United States. For those already producing nonfat dry milk and butter, the potential for increased exports is likely welcome news,” says Dorland. “However, for buyers of butter, this development could cause concern about domestic butter availability in the second half of 2015 if exports to Japan increase.”
The powdered milk manufacturers in the US are competitive when it comes to selling powdered milk to Japan, but US butter carries a hefty price compared to butter from other areas of the world. In June, Dorland figured that US butter was priced 46 cents over German butter and outpriced New Zealand butter by nearly 80 cents per pound.
“U.S. butter prices that are less competitive than international alternatives could be good news for domestic users, but the news out of Japan could also redirect butterfat away from the United States and to Japan, thereby limiting butterfat available for import,” says Dorland.
Source: Dairy Today, AgWeb.com