We explore and investigate Japanese dairy markets. We first provide an overview of consumer demand and how it evolved after World War II. Using historical data and econometric estimates of Japanese dairy demand, we identify economic, cultural, and demographic forces that have been shaping consumption patterns. Then we summarize the characteristics of Japanese milk production and dairy processing and policies affecting them. We next describe the import regime and trade flows in dairy products. The analysis of the regulatory system of the dairy sector shows how its incentive structure affects the long-term prospects of various segments of the industry. The paper concludes with policy recommendations of how to reform the Japanese dairy sector.
We explore and investigate Japanese dairy markets and policies. Japanese dairy is particularly interesting in the context of Asia because it is the most mature market among Asian economies. Consumers’ income is the highest among Asian countries; consumer exposure to Westernized dairy products has been the longest among the same pool of countries as well. The analysis of Japanese dairy markets, therefore, provides lessons for other Asian countries with emerging dairy consumption in terms of their potential per capita consumption patterns and composition of dairy products consumed. The production side of dairy markets in Japan is also interesting because technology adoption and yield improvements have been rapid but in a context of isolation from world markets. The sector is also facing challenges common to many OECD (Organization for Economic Cooperation and Development) farming sectors, with aging and withering farming population, environmental pressures, and some reconsideration of agricultural subsidies.
We first provide an overview of dairy consumption and how it evolved following World War II. Using new econometric estimates of Japanese dairy demand, we then identify cultural and demographic shifters and economic forces that have been shaping consumption patterns. We answer the question of whether further growth in dairy consumption is likely. We then summarize the characteristics of milk production and dairy processing in Japan. We follow with a description of the import regime and trade in dairy products. We further analyze the regulatory system of the dairy sector and show how its incentive structure affects competition, prices, and the long-term prospects of the industry. These last two parts shed some light on the likely evolution of the supply side of these markets and the relative composition of imports versus domestic supply. Finally, we provide policy recommendations to reform Japanese dairy.
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Dairy Food Consumption, Production, and Policy in Japan
