After three weeks in China, I headed for Tokyo, the capital city of Japan. A country famous for its innovation and strategic thinking, I was excited to see what the Japanese dairy industry looked like.

Firstly, I attended Dairy Conference Japan. Part of this conference comprised a comparative study of dairy farming in 2018, comparing three very different countries in Japan, Canada and the Netherlands.

High consumer demand

My initial perception of the Japanese dairy industry based on previous reports was one of high consumer demand, high-quality milk and a high farmgate milk price.

However, I was surprised to hear that the Japanese dairy industry is actually struggling.

Speakers at the conference mentioned numerous reasons which are contributing to a declining milk pool in Japan.

The root of this decline appears to be coming from succession.

The average dairy herd size in Japan is 53 cows per household – a figure which has increased by only 25% in the last 10 years.

These herds are now starting to decline, with an estimated 1,000 dairy farmers per year leaving the industry.

It is also a very different situation to Ireland, in that beef prices are very strong in Japan right now, with many farmers making more money from beef.

Some farmers are using Wagyu sexed semen aiming to supply the high-end beef market, which has very strong consumer demand.

Investment

Japanese dairy farmers are not willing to invest in their businesses, as they cannot see the next generation milking cows.

There seems to be an issue around poor management of dairy farms and getting new people into the industry.

Physical capital, human capital and social capital were all management issues on dairy farms, particularly on small-scale pasture farms.

Larger farms do want to expand and grow.

However, all feed is bought in and finding labour is a constant challenge for these large-scale farmers.

What is keeping the Japanese dairy industry going is government supports, which is ultimately supporting a high domestic milk price. The sustainability of what I was hearing was questionable to say the least.

Different diet

Coming to Japan, I was under the impression that there was huge potential for grass-fed dairy products.

However, I quickly realised that the Japanese diet is very different to anything else I had experienced.

Fresh fish-sushi was something I became accustomed to quickly.

What was noticeable was the quality of their food and its freshness. Although milk supply and the consumption of whole milk is declining, yogurt and cheese consumption is increasing.

This is good news for Irish dairy exporters, especially considering the recent trade deal between the EU and Japan which came into effect on 1 February 2019.

The EU-Japan trade agreement will significantly reduce the price of EU food produce for Japanese consumers.

Robotic milking

It was interesting to hear Kees de Koning from Wageningen University in the Netherlands speaking at the dairy conference in Tokyo about the Dutch model of dairy production.

As de Koning explained, the next generation of dairy farmers in the Netherlands have more spare time due to innovations such as robotic milking.

He added that the Netherlands does not want huge-scale dairy farms due to social responsibility and society perception.

Instead, the family farm will continue to be the preferred model.

“Mega farms put farmers further away from the consumer. They paint the wrong image in the minds of the consumer of what a farm should be. Family farms are perfect, as they are part of local communities,” said de Koning.

The Dutch researcher also highlighted the importance of being transparent and to show the public what you do.

De Koning’s contributions led to many questions from the 150 Japanese dairy industry leaders present.

However, the comment that caught the most attention was when de Koning explained that the Dutch cow's diet is made up of 80% grass on a dry matter basis.

“Cows in the Netherlands are outside grazing from March/April right through to October/November and this adds to the quality of our milk and enhances animal welfare standards,” he said.

This intrigued the Japanese audience as the majority of dairy cows in Japan are fed on concentrates, which is imported.

Grass-fed dairy

As I listened to the discussion, it was interesting to hear an industry leader from the Netherlands promoting grass-fed dairy as a product with a unique selling point that was grabbing the attention of Japanese consumers.

For me, having travelled to the Netherlands previously, the details of the percentage level of grass in the diet of cows and the number of days at grass were questionable.

However, the reaction from the Japanese dairy industry representatives at the conference was very interesting, especially considering Ireland’s production system and ability to produce milk from grass.

Influencers

A few days later, I visited the headquarters of J-Milk in Tokyo.

J-Milk is a unique organisation, which brings dairy farmers, dairy businesses and retailers together to promote the Japanese dairy industry from farm to fork.

My host for the day was Yoshinori Suzuki, vice-president of J-Milk.

Working a lot like Ireland's National Dairy Council, J-Milk uses the term milk influencer for professionals working in the fields of medicine, nutrition and education.

These milk influencers can have a big influence on the eating habits of general consumers and convey the health and nutritional value of milk and dairy products.

From speaking to Suzuki, it was clear that, despite the challenges of producing milk in Japan, dairy plays an essential role in the Japanese diet.

“Japanese society has the oldest population of all other Asian countries. With an aging population, milk plays an important part in aiding the health of our society,” said Suzuki.

The direction of the domestic dairy industry in Japan will be worth following over the next five years.

Will it be a case that Japan will sign more trade deals to feed its population of 127m people or can Japanese dairy farmers and processors revive their industry?

Joe Lyng is a 2018 Nuffield scholar from Co Kilkenny and his research topic is titled ‘value in the marketplace for grass-fed dairy products’. Joe has visited China, Japan, Australia and New Zealand to research his Nuffield study, which will be published in 2019.