Under the law of Japan,the raw
milk subjected to government subsidies is only material milk
for manufacturing use [autholized milk products (butter,skimmed
milk powder, condensed whole milk with suger added) and other
milk product determind by government ordinance (whole milk
powder ,suger added milk powder, condensed whole milk with
no suger added, and skimmed milk for animal consumption) ]
which makes up 1/4 of the overall raw milk output.
Between fiscal year 1966 [ the year when "temporary Law
for Compensation Price for Producers of Milk for Manufacturing
Use"( Deficiency Payment Law ) was enforced ] and 2000,
the government had determind the average productin cost per
1kg of raw milk and the actual price negotiated between dairy
businesses ( standard transaction price ) each year.The balance
had been paid to producers as subsidies.
In order words, the producers had received guaranteed amount
of money from the government as milk price,which was the total
of the standard transcation price and subsidies ( =guaranteed
However,as the Deficiency Payment Law was amended in May 2000
and re-enforced from fiscal year 2001, the government-determined
guaranteed price and standard transaction price were abolished
and subsidies system, which has allowed deficiency payment,
In the new calculation method
of subsidy price, rate of change, calculated from the past
three-year's average production cost and amount of milk, is
multiplied by aid unit value of the previous fiscal year.
In fiscal year 2001, the subsidy was determind to be the same
price as 2000( 10.30yen/kg ) in order to shift the system
Therefore, from the fiscal year 2001, the price of material
milk for manufacturing use is to be determind by negotiation
between designated raw milk producer groups and dairy services.
The aid unit value in 2004 was 10.52yen/kg, 2005 is 10.40yen/kg
The upper limit ( number limit) of material milk for manufacturing
use, which was determind in conjunction with subsidies, was
set in a same manner both before and after the amendment.
Under the new system, the price of material milk for manufacturing
use has to be referred to in the free trading between the
designated raw milk producer groups and the daily services.therefore,
the price is likely to drop significantly depending on unexpected
demand and supply changes.
Accordingly, "Budget Allocation for Projects to Stabilized
Business by Producers of material milk for manufacturing use"
is enforced along with the subsidies, as a measure to absorb
abrupt change against such situation.The budget allocations
grant 80% of the balance of the transaction price for material
milk for manufacturing use ( without subsidies ) and compensation
standard price ( =average transaction price for the past three
years. The compensation standard price in 2001 was the same
price as the standard transaction price of 61.83yen/kg in
2000) to producers as a compensation, with relying on the
fund from 0.40-yen contribution from producer per 1kg of material
milk for manufacturing use plus 1.20-yen government bounty
per 1kg of material milk for manufacturing use.