1996 Volume 5 Issue 1 Pages 22-32
The purpose of this study is, (1) to review the process of the Milk Demand-Supply Adjustment Plan (MDSAP) which was implemented in 1979, and (2) to percept the future issues of the plan under import liberalization of the World Trade Organization. The MDSAP has been implemented by the Central Council of Dairy Farmers (CCDF), without legal support of the government. The CCDF is a co-operative organization which is composed of 47 presidents from each prefectural milk marketing board and holds about 94 percent of the market share of raw milk shipped into Japan. The methods of implementing the plan have been modified, so the process can be divided into 3 stages. 1st period 1979-82. The gap of demand-supply for milk increased with over supply due to weak demand for consumption, sharp increases in domestic production and imported milk products, and the effects of economic stagnancy after the oil-shock (1974-78). The CCDF installed a milk production quota scheme and encouraged dairy farmers to feed surplus milk to calves. Milk promotion activities by the board, caused the consumption of milk to rise. 2nd period 1983-87. The demand for milk increased throughout this entire period. The CCDF expanded the base quantity, suspended feeding surplus milk to calves and encouraged producers to ship more milk. The CCDF also applied "side payment" to some marketing boards as a means of maintaining producers' prices. 3rd period 1988-Today. The CCDF changed the method of forecasting the demand quantity. The new method uses two criteria: an absolute base quantity and a variable base quantity. The board suspended the absolute base quantity in areas of decreasing production, while the variable base quantity is allocated to areas with increasing production. In the future, higher custom duties should be imposed on Japan's imports of milk products in order to protect domestic dairy farmers. The reason for this, is that domestic dairy farmers typically face higher production costs.
