Japan's dairies and cake lovers just cannot seem to catch a break.
The weakening yen is making it more expensive for farmers to import the U.S. corn their cows eat at a time when record crops have reduced livestock-feeding costs around the world. And while Japanese demand for milk is increasing and prices of some dairy products are at record highs, domestic production is the lowest in three decades even as rising output everywhere else creates a global surplus.
Prime Minister Shinzo Abe's bid to revive growth with unprecedented monetary easing sent the yen to a seven-year low against the dollar as Japan has slipped into a recession for the fourth time since 2008. The currency's slide compounded the profit squeeze on a dairy industry already losing market share to imported cheese and milk, while the government pushes free trade pacts that it says will boost supplies and lower costs.