Japan’s butter saga: The government steps in
Continuing my obsession with the butter shortage in Japan, I was interested to read today’s news:
Japan’s Farm Ministry said Thursday it ordered the nation’s four major dairy producers to churn out more butter to counter a 230-ton shortage.
…
The Agriculture Ministry asked Meiji Dairies Corp., Snow Brand Milk Products Co., Yotsuba Inc. and Morinaga Milk Industry Co. to release inventory and boost production by up to 20 percent of their monthly average.
“We should go ahead and increase the domestic production, and if that’s not enough we will have to consider a next step, such as making emergency imports,” said Chief Cabinet Secretary Nobutaka Machimura.
After a three-month shortage, you’d think that butter prices would rise, and supply would increase. Instead the government has to force producers to increase output. Like I said before, there’s plenty of milk on supermarket shelves. Why is it necessary for the government to order firms to reallocate production toward butter? It seems that something is going wrong in the market (some kind of market failure), although I don’t really know what the basic problem is.
PS: Some crazy Brit reckons that baked beans could fill the gap.
5 Comments
O_o Japan has a command economy?
Japan used be the most successful socialism country in the history, don’t you know that?
Japan has actually found a new appreciation for margarine.
Socialist? Command Economy? Ehhh… simply more Keynesian than most I would say.
Also, you keep assuming that the market is competitive. What if it isnt? If there are only 4 main butter producers, perhaps collusion on price is the true issue.
If the market is really competitive, all of those four butter producers will be eliminated, so are farmers. The strong protectionism made the industry very uncompetitive. That’s the problem.