On May 25 the Ministry of Agriculture, Forestry and Fisheries (MAFF) of Japan announced its intention to import up to 21,000 metric tons (MT) more of non-fat dry milk (non-fat dry milk) through March 2018.
Article continues below
The volume announced on May 25 would be in addition to the 13,000 MT of non-fat dry milk imports announced on January 27, 2017.
Lower milk production in Hokkaido, increased demand for drinking milk, sufficient butter stocks, and steady demand for yogurt contributed to MAFF’s decision. MAFF’s ability to import up to 34,000 MT of non-fat dry milk this fiscal year should alleviate the Japanese dairy product industry's concerns regarding a possible non-fat dry milk shortage.
Data through the end of March 2017 show Hokkaido milk production falling over the last two quarters year-on-year. During May 2017 travel to the Tokachi region, home to the five largest dairy farms in Hokkaido, FAS/Tokyo observed ongoing reconstruction of bridges and roads and FAS/Tokyo heard from dairy farmers about how damage to pastures as well as forage and silage crops has continued to affect production.
Milk production outside of Hokkaido, almost exclusively used for drinking, has continued to fall over the last year. A recent uptick in the national consumption of drinking milk has increased demand for and shipments of drinking milk from Hokkaido to the rest of Japan.
Falling total milk production and increased allocations of Hokkaido milk production to drinking milk has reduced available supplies of milk for processing into non-fat dry milk and other products.
Following three years of highly publicized butter shortages, MAFF took extraordinary measures in JFY 2016, importing nearly one quarter of total domestic butter distribution over that period to ensure sufficient supplies through Japan’s peak winter baking and confectionary producing seasons.
With relatively flat butter consumption and substantial butter imports, stocks on hand have steadily accumulated over the last two years, driving Japan’s 2017 calendar year-beginning butter stocks 32 percent higher year-on-year.
Further indication of current stability in the Japanese butter market can be seen in the fill rates of JFY 2017 butter tenders, of which over 70 percent of the total volume has gone unfilled.
In stark contrast to butter, last year ALIC tendered for less than three percent of JFY 2016 non-fat dry milk distribution.
Healthy consumer demand for yogurt in 2016, combined with the recent drop off in butter and non-fat dry milk production, contributed to an 18 percent year-on-year decline in non-fat dry milk stocks at the end of March 2017.
As a result, JFY 2017 non-fat dry milk tenders have been significantly overbid, with buyers seeking several times as much volume as ALIC has offered. ■
A clipper system will move quickly across the northern Plains into the Midwest Friday and the Northeast by Saturday, bringing a wintry mix of rain and snow showers ahead of a sweeping cold front.