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Japan Faces Butter Meltdown

• Japanese fans of cake, buttered toast and Hollandaise sauce may need to start hoarding soon.The island nation is facing another likely shortage of butter this fiscal year, according to a report by the Japan Dairy Association.
• It's the second year of butter shortages that last year left supermarket shelves dry, amid tight import controls and falling domestic production of raw milk. Shortages are usually most acute near the Christmas season when consumers buy cakes.
• The JDA estimates a 7,100 ton shortage of butter in the year that started in April. The organization estimates domestic demand will rise 0.9% on year to 74,700 tons.
• Also fueling the shortages is a long-term fall in raw milk production in Japan. Producers prioritize making drinking milk first, often leaving little left to turn into butter. Raw milk production has fallen 14% from its peak in the year that started in April 1996 through fiscal 2013, according to data from the agriculture ministry.

This is the additional Information from the website.

Japan's butter makers agreed to boost supply by about 30% by mid-December, ahead of a Christmas cake-baking rush, seeking to avert a shortage caused by sagging domestic production of raw milk and import tariffs.

Four major makers will increase butter output to 1,846 tons in December from 1,393 tons in November, according to a statement submitted Thursday to the Agriculture, Forestry and Fisheries Ministry by dairy and agricultural groups.

The four companies are Megmilk Snow Brand Co., Yotsuba Milk Products Co., Meiji Holdings Co. and Morinaga Milk Industry Co. They were responding to a request by the ministry Nov. 27 to fulfill their "social responsibility" of meeting year-end demand.

Japanese households have been facing a shortage of butter after last year's abnormally hot summer left the country's cows exhausted and unable to produce enough milk.

It might seem that Japan could fill the butter gap by importing foreign butter, but it isn't that simple. A government-affiliated body imports some 137,000 tons of dairy products each year, and those seeking to import beyond that amount must pay steep tariffs--a step to protect domestic producers. While the governmental body is importing an additional 10,000 tons in the current fiscal year as an emergency step, private trading companies can't easily step in to add to the supplies.

Among other dairy products, butter output tends to be hit the hardest by a drop in raw milk production because raw milk is usually processed for drinking milk and fresh cream first and made available for butter at last.

The declines in raw milk production since last year have caused a nationwide shortage of butter as Japan's butter for home use is mostly covered by domestic production, a ministry official said.

Tetsuo Ishihara, managing director of the Japan Dairy Association, said the shortages may eventually ease. "The impact of the hot weather was felt until the first half of this year, but it seems like cows are recovering from the damage as it wasn't so hot this summer," he said.

Butter production in Japan rose 0.5% in October compared with the same month a year earlier, after declines that had continued since July 2013.

Still, Japan's milk industry is facing a long-term problem: a decline in the number of dairy farmers.

The agriculture ministry has asked for 239 billion ($2 billion) of budget for the next fiscal year beginning in April to aid farmers, an increase of more than 50 billion from the current fiscal year.

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