What Protects Japan’s Dairy Industry?
John Dyck Prices for milk and dairy products in Japan at all levels, from farm to retail, are much higher than U.S. prices. Retail prices of fluid milk in Japan, for example, are more than double U.S. prices, and butter prices are almost twice as high as U.S. prices. Japan’s high prices persist because of geographic factors and government policies. Japanese dairy farms are smaller in area than U.S. dairy farms, and milk producers in Japan must import grain and fodder from distant sources. These factors translate to high costs for Japanese producers. Japan’s location also makes it difficult to ship fresh, fluid milk to Japan from lower cost suppliers in Australia, New Zealand, or the Western Hemisphere. Thus, over 40 percent of Japan’s dairy product consumption depends on local production. Manufacturing milk, used to produce butter, skim milk powder, and cheese, can be replaced cost effectively by imports of the final products. The cheese market illustrates the potential importance of J
