Japan’s growing demand for dairy products and constraints on its domestic milk production offer ample room for more U.S. exports. But the U.S. dairy industry says that opportunity is at grave risk without swift action to secure a strong trade agreement with the nation.

National Milk Producers Federation, U.S. Dairy Export Council and nearly 70 dairy companies, cooperatives and organization are urging U.S. Trade Representative Robert Lighthizer and U.S. Agriculture Secretary Sonny Perdue to move quickly to finalize an agreement.

In a letter to the two officials on Monday, the groups pointed out the U.S. dairy industry is at a significant disadvantage to its largest competitors due to their preferential trade agreements with Japan.

The Japan-EU Agreement and the Comprehensive Agreement for Trans-Pacific Partnership have allowed the European Union, New Zealand and Australia to position themselves to seize sales from the U.S. dairy industry.

“It is clear that increasing our market access in Japan is urgently important to the U.S. dairy industry,” the groups said.

The U.S. exported $270 million in dairy products to Japan in 2018, making it the fifth-largest overseas market. And there’s room for further growth with per-capita consumption of dairy products in Japan increasing 4% annually.

Japan is the largest cheese importer in the world and a significant buyer of whey, lactose and other dairy products, according to USDEC.

Without a trade agreement, the U.S. dairy industry stands to lose $1.3 billion in exports over a decade, costing dairy farmers $1.7 billion in farm income, the groups said.

An economic impact report commissioned by USDEC and conducted by Tokyo-based Meros Consulting found the toll would climb to $5.4 billion once Japan’s agreements with the EU, New Zealand and Australia are fully implemented over 21 years.

A successful trade agreement with Japan will put the U.S. industry on the path to compete effectively, the groups said.

“Securing robust dairy export opportunities with this overseas market will be critical to restoring confidence for our dairy farmers and processors across the country,” they said.

Processors weighed in on the importance of the Japanese market and the need to secure a trade deal in a press release form NMPF.

“Eroding dairy competitiveness in Japan is at a critical point. The time to re-level the tariff and access playing field is right now,” Stan Ryan, president and CEO of Darigold, said.

Darigold supplies more than half of American-style cheese exports to Japan, and those sales will soon be lost as competitors' trade deals take effect, he said.

Leprino Foods risks losing sales and growth opportunities, Sue Taylor, the company’s vice president of dairy policy and procurement, said.

“We invested heavily in developing lactose and whey protein exports several decades ago and, more recently, mozzarella exports into this important market and believe that the market has significant growth potential,” she said.

Last September, the U.S. and Japan announced their intent to open negotiations on trade. In December the USTR submitted to Congress a summary of the administration’s objectives.

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