Japan's dairy industry struggles with inflation

Just like in Europe, Japan is struggling with inflation. Inflation rose to 3,6% in October. Although this percentage is not too bad compared to the high inflation rates in Europe, for Japan this is the highest inflation in more than 40 years. 

Dairy farmers are also noticing the consequences of inflation. Thus increased Tokai Dairy Industry recently the milk price increased by 10 Yen to 130 Yen. This was the first increase in more than three years. Other processors also increased payment prices. Nevertheless, dairy farmers are still faced with too high costs. Interest groups even claim that half of Japan's dairy farms will go bankrupt if improvements are not made. Many dairy farmers in Japan buy the grass for the cows. The price of this has increased two and a half times in recent years. Energy prices have also risen. 

Drop in demand due to increased dairy prices  
Japanese consumers are also feeling the price increase in their wallets. The three largest dairy companies in the country (Meiji, Morinaga Milk and Megmilk Snow Brand) pass on the higher milk price to the consumer. For example, they recently increased the prices of dairy products by 2% to 12%. The downside of this is a drop in demand. Further price increases could lead to a drop in demand of up to 8%, the dairy industry believes. This is not only due to more expensive dairy products, but also because a wide range of other (food) products have increased in price. 

In short: Japan's dairy sector is struggling with a difficult inflation dilemma. The fact that producers do not dare to increase dairy prices further is probably also because Japan was still struggling with this around this time last year large milk surplus. This may still be fresh in your mind.