The Japanese dairy industry conforms to production guidelines set by the government and based on supply/demand data provided by the Agriculture & Livestock Industry Corporation. In order to assure the stable supply of raw milk, a subsidy system for dairy producers was established in 1965. Since then, the government has set production ceilings in order to prevent market surpluses and consequent market and price instability.

Furthermore, to protect their operations from demand and supply imbalances and depressed prices, dairy producers voluntarily organized a planned production system in 1979.

Since this system has no legal binding power, some dairy farmers choose to operate outside the planned production guidelines. However, these outside operators account for only about 5% of total dairy producers, a remarkable figure for a truly volunteer program.




Annual production allowances, as determined by the Japan Dairy Council and based on demand estimates, are allotted to bloc.
[Hokkaido, touhoku, kanto, toukai,hokuriku, kinki, tyugoku, shikoku, kyusyu, that's 9 bloc]
In turn, the designate associations set production allowances for individual agricultural cooperatives and dairy farmers within the bloc. Allocation formulas vary among the different bloc.



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