Japan's Dairy Industry Overview

Japan stands as a formidable force in the global dairy landscape, recognized for its innovative dairy processing technologies and extensive consumption of ultra-high-temperature (UHT) milk. The industry is marked by a compound annual growth rate (CAGR) of 7%, reflecting robust demand for premium dairy offerings.

Dairy Cattle and Milk Production

As of 2023, Japan is home to approximately 1.63 million head of dairy cattle, contributing to an annual milk production of about 7.5 million metric tons. The country showcases its robust processing capabilities with a milk processing volume exceeding 6.5 million metric tons per year.

Cheese and Milk Powder Production

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

Key Enterprises and Dairy Plants

Significant enterprises supporting the Japanese dairy sector include Fonterra Japan and Yili, both known for their high international quality standards. Major dairy plants such as Meiji Dairies Corporation, Morinaga Milk Industry Co., Ltd., and Snow Brand Milk Products Co., Ltd. are pivotal in the industry. 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 satisfy domestic demand, the country imports over 300,000 metric tons, indicating a significant gap between local production capabilities and consumption needs.

Recent Industry Events

Japan's role in the global dairy sector was underscored by hosting the 25th Obihiro IFCN Dairy Conference. Fonterra has been expanding its presence in Japan's premium dairy markets, while Yili focuses on producing top-quality products. Meiji Holding Co.'s interest in acquiring assets from Fonterra has intensified market competition. 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 larger 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. The integration of Nestlé's Nescafé RTD cold coffee products underscores the established ready-to-drink coffee segment, highlighting Japan'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.

Other Notable Trends

Japan is among the top importers of South Korean ice cream, with imports valued at 1.5 million USD in July. It is also a significant supplier of ice cream to China, with exports worth $539,000 by the end of July. Cheddar shipments have risen by 143%, fueled 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 with the Government of Sri Lanka, further demonstrating Japan's active role in international cooperation. Reduced whey imports due to trade pressures highlight challenges, particularly with Chinese retaliatory tariffs. The JICA supported the establishment of the ₹90.70 crore automatic curd plant at Karimnagar Dairy. The Asia-Pacific region, including Japan, is emerging as the fastest-growing area, driven by increasing population and rising disposable incomes. Japan is at the forefront of East Asia's expanding mozzarella market share. Japan could be an important alternative sales channel for Ukrainian dairy producers. Although Japan has its domestic milk production, climatic limitations and scarce pastures restrict its animal husbandry capacity, creating potential opportunities for imported dry milk.

Modified: 2025/11/07