Atmosphere of butter scarcity remains in Japan

The supply of domestic butter in fiscal 2015 is likely to surpass demand, the Japan Dairy Association (J-milk) has announced, saying household butter will probably not disappear from tables nationwide as it did in late 2014.

According to J-milk's forecast, the production volume of butter in fiscal 2015 will be 63,300 tons, up 2.7 per cent from the previous fiscal year. If this is combined with 12,800 tons imported through state trade, supply is expected to exceed the demand for 74,800 tons by 1,300 tons.

The Agriculture, Forestry and Fisheries Ministry decided in May to import 10,000 tons of butter in response to the J-milk's forecast that supply would fall 9,900 tons short of demand. The latest forecast indicates that shortage will be averted with the help of the emergency imports.

An atmosphere of scarcity remains, however, as a number of supermarkets are limiting the purchase of butter to one pack per customer. The retail price of 200 grams of butter has also stayed high at around the ¥430 (S$ 4.77) level, up about 6 per cent from the previous year.

The production volume of domestic raw milk keeps declining, and it is unlikely that the sense of a butter shortage will be dispelled anytime soon. The volume of raw milk peaked in 1996 at 8.65 million tons, then fell by more than 1 million tons to 7.33 million tons in 2014.

Raw milk is processed for drinking on a preferential basis, with butter on the back burner because it keeps well.

"The production volume of butter won't get back to normal unless raw milk supplies recover," according to a member of a major dairy products maker.

The number of cattle farmers has fallen due to fierce business conditions such as the increasing cost of imported feed triggered by the weakened yen. To stop farms from going out of business, the agricultural ministry's commission will compile a guideline sometime this year to review the concept of raw milk trading.

However, increasing transaction prices just to protect farmers' profits is highly likely to result in a hike in retail prices. In light of the upcoming Trans-Pacific Partnership free trade agreement, it is essential to strengthen the production base.