Overview of Japan's Dairy Industry

Japan is a significant force in the global dairy landscape, renowned for its innovative dairy processing technologies and widespread consumption of ultra-high-temperature (UHT) milk. The industry reflects a compound annual growth rate (CAGR) of 7%, indicative of a strong demand for premium dairy offerings.

Dairy Cattle and Milk Production

As of 2023, Japan maintains approximately 1.63 million head of dairy cattle, producing about 7.5 million metric tons of milk annually. The country's milk processing volume exceeds 6.5 million metric tons per year, showcasing its robust processing capabilities.

Cheese and Milk Powder Production

Japan produces around 58,000 metric tons of cheese annually. Additionally, the production of milk powder and whey is approximately 200,000 metric tons per year, highlighting the diversity of its dairy product offerings.

Key Enterprises and Dairy Plants

Prominent organizations supporting the Japanese dairy sector include Fonterra Japan and Yili, known for their high international quality standards. Major dairy plants include Meiji Dairies Corporation, Morinaga Milk Industry Co., Ltd., and Snow Brand Milk Products Co., Ltd. Notable dairy farms include Ariake Farm, Northern Farm, and Ouchi Farm.

Export and Import Dynamics

Japan exports around 30,000 metric tons of high-quality dairy products annually. However, to meet its domestic demand, the country imports over 300,000 metric tons, indicating a significant gap between consumption needs and local production capabilities.

Recent Industry Events

Japan recently hosted the 25th Obihiro IFCN Dairy Conference, emphasizing its pivotal role in the global dairy sector. Fonterra has been expanding its presence in Japan's premium dairy markets, while Yili focuses on top-quality products. Meiji Holding Co. has shown interest in acquiring assets from Fonterra, intensifying competition in the market. Despite a reduction in the number of dairy farmers to under 10,000, Japan remains committed to sustainable food production initiatives. Noteworthy developments include Meiji Co.'s launch of functional yogurt targeting skin health and Morinaga Milk Industry Co.'s expansion into Singapore.

Economic and Market Influences

The Nikkei 225 experienced a sharp 8.8% decline amidst broader economic contexts, such as the U.S. imposing a 24% tariff on Japan. Despite these challenges, Japan absorbed $417 million in dairy products between July 2024 and March 2025, reflecting a 21% growth in exports. Japan's integration of Nestlé's Nescafé RTD cold coffee products further confirms the established ready-to-drink coffee segment, highlighting the country's dynamic market landscape. Japanese giant Meiji Holdings is part of the bidding war for Fonterra’s assets, competing with Bega Group and other international players to acquire parts of Fonterra's business.

Other Notable Trends

Japan is one of the top importers of South Korean ice cream, importing products worth 1.5 million USD in July. It was also among the top ice cream suppliers to China, with exports valued at $539,000 by the end of July. Furthermore, cheddar shipments rose by an astounding 143%, driven by increased demand from Central America, the Caribbean, South Korea, and Japan itself.

On September 30, the Japan International Cooperation Agency (JICA) finalized a grant agreement in Tokyo with the Government of Sri Lanka, further demonstrating Japan's active role in international cooperation. Reduced whey imports to Japan due to trade pressures. Chinese retaliatory tariffs and non-tariff barriers pose significant hurdles, as seen by reduced whey imports to Japan.

Modified: 2025/10/08