- pp.1-98, 2014-03-25
1. Purpose of Study Since the mid 1970s, the market showed tones of oversupply in milk and dairy products. Production adjustment, consumption rise, qualitative changeover and enhancement of competitiveness have become a critical issue. Conditions of operation in dairy farming are especially severe and managerial response is needed in a various way. One of such responses is a milk plant business. In this paper, firstly the nation-wide viable structure of milk plant and milk plants owned by farmers will be highlighted. Secondly, the importance of milk plants owned by farmers will be clarified using empirical analysis from a viewpoint of management economics as a managerial strategy of future milk plants. 2. Research Approach To clarify the critical issue of this research, three approaches were taken: the results of previous studies on milk plant were validated using statistical analysis at first. In the second place, nationwide existence of milk plants especially those owned by farmers were identified and analyzed through a quantitative study using questionnaire survey. In the third place, the milk plants owned by farmers were studied on managerial strategy by qualitative analysis or empirical analysis. 3. Research Results This research showed the following new findings: Firstly, based on the statistics and questionnaire survey, products of milk plants are drinking milk, milk beverage, fermented milk, butter, cheese, and ice cream including gelato. Concerning the structure of existence of milk plant owned by farmers, those in Hokkaido investigated by this research are in operation, while many other plants in Honshu suspended or closed their business. Secondly, from a detailed survey of actual conditions, it became clear that two types of management strategy: One is the milk plants owned by farmers producing raw milk in-house (a type to assist farmers) and the other is the milk plants owned by farmers purchasing raw milk from the outside (a type to contribute to the local industries). One example of the type to assist farmers is Ikeda Bokujo, a private limited company in Shiga Prefecture. Ikeda Bokujo is a diversified company running the following four businesses: a raw milk production, a gelatos shop “Kousou” at a municipal camping ground called “Aikyo-no-mori”, a farmer’s restaurant called “Kousouan”, and a camping ground. In view of their development stage, they started their business from feeding two cows for milking. The first stage of development was a scale expansion of feeding cows in 1970s. The second stage was an opening of Italian gelato shop processing and selling gelato in 1997 after they experienced excess production in 1980s. The third stage was after openings of the gelato shop and the farmer’s restaurant in 2003. In this process, diversifying business required business management skills and marketing ability, without which they cannot become what they are today. They have been expanding their business from the primary industry to the secondary, and the tertiary based on their safe products and local production for local consumption with credibility from consumers including property management service. In particular, (1) reasonable and flexible use of family labor, (2) private financing using their own funds and low-interest financing, and unsecured loan, (3) a year-round processing cycle using their in-house raw milk and locally-produced fruits to produce various Italian gelato, (4) a multi-channel distribution route with the farmer’s restaurant and mail order business, and (5) management of camping ground. A basic factor in sustaining their business is that they implemented high-value added business by diversifying their in-house raw milk. Among their activities, the farmer’s restaurant business was highly acclaimed and won the Minister’s Prize from the Minitry of Agriculture, Forestry and Fisheries at the Contest of “Shoku (food) and Amenity” in 2012. The other example of the type to contribute to the local industries is Itoshima Milk Plant, a private limited company in Fukuoka Prefecture. This company is a milk and dairy products sales company jointly established by farmers and a dairy cooperative. The excess supply of raw milk brought by an increase of milking cows led them to tackle with the issue by expanding consumption by their independent activity to process milk by themselves and by dealing with consumers directly. Characteristics of their management are (1) a product concept and branding of their milk “Ito Monogatari”, (2) a system of one-day collecting, processing, and selling milk, (3) setting market price high by farmers, (4) promotional activities such as farmers’ receiving pre-orders, distribution of leaflets in papers, tasting events, hand milking experience for children held by major supermarkets, (6) response in case of food poisoning at outsourcing milk plants, (7) construction of milk plant by the dairy cooperative and an implementation of business to process yogurt using the plant under a lease, (8) vending machine sales of milk, (9) strengthening sales network for gift like fruit jams produced locally around Itoshima with mass merchandise outlets by crossing prefectural borders, farm stands, and roadside stations, (10) Internet shopping, (11) challenge in sales network for Asian market as export of yogurt to Hong Kong, (12) promotion of aggressive linkage of farming, industry, and trade initiatives locally to produce raw milk soaps and shochu (distilled spirit). Because of import liberalization for beef in April, 1991 and Uruguay Round commitments in 1995, dairy management became severer. It is on the discussion table how to handle milk and dairy products in the Trans-Pacific Partnership (TPP) negotiation recently. In the future, farmers owning milk plants should share time for conversation on “shoku (food)” and agriculture with consumers communicating their aspiration and philosophy. However, it is not so easy to become a successful milk plant by utilizing the two types of management strategy written in this paper. For successful dairy management, it is important to distribute products produced by themselves directly to consumers and farmers need to continue to be creative to sell their products at first. Second, even with their new initiatives farmers should keep in mind that they are dairy farmers. Third, producing good things is not enough. Farmers should communicate good points directly to consumers and make them regular customers. Forth, it is significant for farmers to change in the way of thinking on milk plant management such as new business and product development.