Permalink : http://hdl.handle.net/2115/75299

This paper aims to test the effects of countermeasures implemented by the government to deal with recent butter shortages by making supply and demand adjustments. Since 2007, the food market in Japan has frequently faced an insufficient supply of butter, mainly because of a decrease in raw milk production. The government has devised two countermeasures in parallel, namely, butter imports through the National Import Control System (NICS) and Provisional Measures (PM) to support the additional production of milk products. The NICS has added an enormous volume of imported frozen bulk butter to the domestic market. The authorities concerned, however, have not been completely able to overcome butter shortages, especially as regards the refrigerated kind used for cooking, which accounts for approximately 60% of total butter consumption. The reason is considered to be imperfect product substitutability between frozen bulk butter and the refrigerated kind, due to smal-scale consumption and low profitability when subdivided packaging of bulk butter is involved. On the other hand, PM has promoted increased production of butter in spring and early summer through a switch in uses for raw milk, contributing to an elevated supply of refrigerated butter. These analyses have led us to the conclusion that effective supply and demand adjustments have substantially depended on not only imports by NICS but also vertical coordination in the uses for raw milk between agricultural cooperatives and milk processors in the private sector. It is important to recognize that such coordination does not work well without government interventionin the form of PM. The succeses of countermeasures for butter shortages are deemed to reflect the complementary relationship between the government and coperatives.