Japan is going to provide its own dairy sector with a cash injection. The government will invest $140 million to prepare the milk processing industry for the competition with the European Union (EU), which will erupt from 2019 onwards.
The trade agreement between the EU and Japan (JEFTA) will come into effect from 2019. This means that import duties on European agricultural products, such as pork and cheese, will be (partially) cancelled. The Japanese government fears that the dairy sector will no longer be able to compete with European exporters, who will then have free access. That is why the Asian country is taking protective measures.
Modernize production
The Japanese government is pumping part of the money ($55 million) into improving production techniques in dairy farming and the processing industry is also being modernized. The government wants to bring Japanese cheese to the attention of the population; the intention is that consumers develop a preference for cheese from their own country.
Another part ($84,5 million) is intended for economies of scale in both the dairy farming and processing industries. This should result in cost reduction; by extension, this should strengthen the competitive position. The ever-increasing milk prices in Japan 'force' cheese makers to increase prices. For example, the price of hard cheeses (Cheddar and Gouda) rose by more than 2018% for the second year in a row in 5. Soft cheese prices rose even more.
Japan: largest cheese importer
De milk pool in Japan is relatively small in proportion. There has been a gradual decline since the 90s. Milk production is reported to shrink by 2018% to 0,55 million tonnes in 7,24. This makes Japan the 13th largest producer of milk in the world. Japan is the largest player in terms of cheese imports; the country has an estimated import volume of 2018 tons in 270.000. Volumes have risen sharply in recent years.
Japan is an important sales market for European dairy exporters; especially for cheese, in which the Netherlands is the largest. European cheese exports to Japan increased by 2017% in 20 to 94.882 tons.
From 2019
The United States (US) is still Japan's most important cheese supplier. From 2019, the duties will disappear for European exporters, while American cheese will remain taxed. This benefits European exporters undoubtedly a competitive advantage. Japan is afraid that local cheese will soon lose out to European cheeses. The investments in the dairy sector can be seen as a measure to make Japanese cheese more competitive.