Quake in Japan's Dairy Heartland May Mean Milk, Butter Shortage

(Bloomberg) -- Japan’s dairy industry is at risk as a widespread power outage persists following a strong earthquake in the country’s northern island of Hokkaido.

The lack of electricity in Hokkaido, which produces more than half of Japan’s milk, is creating challenges for the island’s farmers. The farms can’t use milking machines on their cows, and any milk supplies can’t be refrigerated. If it drags on, there may be an impact on dairy companies’ ability to procure the raw ingredient, said Mizuho Securities Co. analyst Hiroshi Saji.

Quake in Japan's Dairy Heartland May Mean Milk, Butter Shortage

Companies like Meiji Holdings Co., Megmilk Snow Brand Co., and Morinaga Milk Industry Co. said production at their Hokkaido factories -- which produce milk and products such as butter, cheese and yogurt -- has been halted. They were not certain when the factories would start up again.

“We are concerned about the future impact,” Morinaga spokesman Yukitoshi Otsuka said. “We have a lot of chilled and frozen products, and they don’t stay fresh for long.”

Cows must continually be milked to prevent inflammation and health issues. Even if farmers rely on generators, without the ability to transport the milk, storage space can run out and they will have to dump the milk.

About half of the island had electricity as of Friday morning. Officials are aiming to restore 80 percent of the power demand by the end of day, according to the ministry of economy, trade and industry, which could help ease the situation.

The government will be keeping an eye on price increases or product shortages of dairy products and vegetables, Kyodo reported, citing Ken Saito, minister of agriculture, forestry and fisheries.

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