Japanese Butter Imports Holding

WASHINGTON - Jun 17/08 - SNS -- Japan will continue to import dairy products as part of its WTO minimum access commitments, with butter dominating the market, while imports of natural cheeses decline, reports the U.S. agricultural attache for the country.

Some of the decline in cheese imports reflects stronger world markets. Those advances come at a time when domestically produced products are also going up in price because of higher transportation and milk production costs, with major dairy manufactures in Japan raising retail prices 5% to 20%.

The run up in international grain prices is having a large negative impact on the livestock sector, which is nearly wholly dependent on imported feed grains. After years of relative price stability, dairy producers and food retailers are increasingly passing higher input costs on to consumers. According to Ministry of Agriculture, Forestry, and Fisheries (MAFF) statistics, the average farm gate price of milk was about 80 yen per kg in 2007. Because imported dairy products have also become more expensive, diary price increases may lead to small reduction in consumption later in the year.

Japan's national fluid milk output in 2008 is projected to reach 8.1 million metric tons (MT), up 1% from last year. Farmers in Hokkaido, the major dairy region in Japan, started raising output last fall to meet strong demand for cream and butter

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