Food & Drink

New challenges for the Japanese cheese market

by Masanao Okuda

Kyodo

With the Japanese cheese market facing an imminent threat from imports due to multilateral free trade pacts, a mom and pop factory in Hokkaido is striving to offer quality products that can compete with Europe’s best.

Ryota Kikuchi, who opened his cheese factory, Chikap, with his wife in late 2013, is looking to bump sales with a new 12-square-meter cheese-maturing chamber that will increase the factory’s production capacity by 20 percent.

“We want to compete with European products, which are high in quality and low in price,” Kikuchi, 37, says, conscious that the task promises to become more challenging once the 11-member Pacific trade pact takes effect in December and a free trade agreement between Japan and the European Union is expected to enter into force early next year.

Under the economic partnership agreement with the EU, Japan will eliminate duties on around 94 percent of all imports from the 28-nation economic bloc by 2035, enabling Japanese consumers to enjoy cheaper European produce.

The agreement, formerly known as the Trans-Pacific Partnership (TPP), is a now-revised version of the 12-member pact from which the United States withdrew. It will enable people in Japan to buy cheaper farm products imported from foreign competitors.

It is a huge undertaking for a small cheese factory to take on increased price competition.

“The challenge is whether I can raise the level of taste,” Kikuchi says. “It’s difficult, but I will continue trying and learning by trial and error.”

Despite the challenge, Kikuchi hopes that Japanese consumers’ taste for cheese will grow, long-term.

Cheese eating is on the rise in Japan as people continue to shift to a more Western-style diet. The consumption of cheese has marked a 5 percent year-on-year increase to 338,000 tons in fiscal 2017, according to government data.

Against this backdrop, the number of cheese factories has grown across the country. However, raw milk — the core ingredient for making cheese — has shot up in price, with some types surging by nearly 60 percent in five years, hitting the profitability of cheese factories.

Regarding trade negotiations, Kikuchi says the government should be transparent in explaining the process and that the Japan-EU trade agreement gave the impression of “having gotten a sudden result.”

Referring to bilateral trade talks underway between Japan and the U.S., Kikuchi says, “The framework of the (new) TPP will become meaningless if Japan makes more concessions (with Washington) than on the TPP.”

But a dairy farmer in Hokkaido has confidence in domestic products, downplaying a possible influx of imports under free trade agreements.

“I don’t take it seriously,” says Takahiro Abe, 40, who runs a farm in Betsukai, an eastern Hokkaido town that is the nation’s largest raw milk producer.

Abe deems domestic products as superior because people perceive Japanese-sourced goods to be safer. He quickly adds, however, the government “should keep in mind that the farming industry supports the foundation of our nation.”

Aside from threats from cheap imports, domestic dairy farmers are facing a serious labor shortage, with long work hours causing difficulties in attracting workers.

Abe introduced a milk-pumping robot at his dairy in January. The machine saves the up to 10 man-hours of labor per day.

“I brought in the robot in anticipation of a manpower shortage,” says Abe, who manages some 160 heads of cattle with his wife and one employee.

With Abe’s farm still suffering a serious worker shortage, especially with the loss of some staff in recent months, he plans to accept foreign trainees under the technical intern program next spring. But until then, he has other pressing problems.

A powerful earthquake hit Hokkaido in September and triggered a prefecture-wide blackout, forcing farms including Abe’s to discard raw milk.

While still dealing with the fallout from the disaster, Abe and his fellow farmers must continue their efforts to explore new ways to overcome trade-related concerns.