May 13, 2016 1:00 pm JST

In Japan, Haagen-Dazs has to let its cows graze

TOKYO -- Letting cattle graze could play a key role in solving a labor shortage and lowering the cost of dairy farming in Japan.

     On the archipelago's northernmost main island of Hokkaido, this is already taking place in a farming community that has been dubbed "the hometown of Haagen-Dazs." Hamanaka has earned that nickname because it is where Takanashi Milk Products, based in Yokohama, Kanagawa Prefecture, just south of Tokyo, gets the raw milk it needs to make the ice cream in Japan, on licence from the U.S. brand. Dairy farmers belonging to JA Hamanaka, a member of the Japan Agricultural Cooperatives, produce the raw milk.

     Up until around 1994, Japanese farmers tended more than 2 million dairy cows. Since then, the number has fallen 30% to 1.37 million. The number of cows kept by JA Hamanaka dairy farmers, however, has remained unchanged over the past 10 years. One way these farmers have managed to maintain their milking herds -- as well as the kind of productivity necessary for Takanashi to keep up with Japan's Haagen-Dazs habit -- has been to let their cows graze.

     This contrasts with the 90% of Japanese dairy farmers who keep their herds inside cow houses, mainly using imported grain as fodder.

     According to Japan's agriculture ministry, the average annual cost of keeping a dairy cow in Japan is 810,000 yen ($7,371), up 20% from 10 years ago. Roughly 50% of this goes for feed.

     JA Hamanaka dairy farmers have successfully reduced their feed costs by letting their walking milk factories graze for 70% of their calorie needs.

     In 2009, JA Hamanaka and some local companies jointly launched Rakuno Okoku, a dairy products maker that keeps 230 cows, all of which graze.

     The company's name means "the kingdom of dairy."

     There is a trade-off in allowing dairy cows to graze. It is more labor intensive. Let the cows out to dine on grass, and they have to be rounded up to be milked. Those confined to a barn, meanwhile, require little effort to milk.

     Rakuno Okoku cuts down on labor by simply leaving the cows by themselves when they are out at pasture.

     Hokkaido is known for its low production costs. Still, keeping 100 dairy cows there requires about 20 million yen worth of fodder every year. But the more land a farm has, the less feed it will have to buy (grass and other grazeable plants are essentially free). A large farm can to some extent let a farmer hedge against price swings on imported feed.

     According to the head of JA Hamanaka, government farm subsidies often find their way to equipment makers. As a result, he said, farmers have paid little attention to reducing costs by letting cows feed on grazeables.

     In fiscal 2015, 61 billion yen of the government's supplementary budget went toward subsidies for the so-called "livestock clusters" project, an attempt to improve profits in the livestock sector. The outlay represented a 200% jump from a year earlier.

    The subsidy supports up to 50% of the costs of leasing farm equipment. This has made milking robots popular among dairy farmers despite costs of between 100 million yen and 200 million yen, depending on how many modifications have to be made to the cow houses.

     The trend also comes despite massive piles of debt the farmers are required to take on.

     Still, all the subsidies and risk-taking have not improved Japan's raw milk supply.

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New Zealand's largest dairy producer, Fonterra Co-operative Group, already operates in Hokkaido, at least experimentally, in cooperation with local dairy farmers. Yasuhiro Saito, president of Fonterra Japan, said the government's subsidy-heavy initiatives are making farmers less cost sensitive.

     He also said Japan would be better off were the government to pour all the subsidy money into research and development. Something similar has happened in New Zealand and Ireland, and one result has been improved varieties of seeds for plants that livestock can graze on and that suit those countries' climates.

     In Japan, only 3% of the country's livestock farmers let their animals graze. One reason is that unlike Hokkaido, with its vast expanses of land, much of the rest of Japan does not lend itself well to grazing. Were farmers to try, many would see their costs rise.

     Masayuki Senda, a project leader at the National Agriculture and Food Research Organization, noted cattle need more than a few patches of grass on which to graze. In addition, farms set on slopes would require cows to expend too much energy on climbing up and down, possibly reducing the amount of milk production by 40% to 50%, compared to animals kept in cow houses.

     So Japanese dairy farmers in less friendly confines than Hokkaido, those who have little choice but to continue their traditional farming methods, need to find ways to lower their feed costs.

(Nikkei)

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