The government and ruling parties are considering expanding recipients of compensatory subsidies for producers of law milk for manufacturing uses to so-called outsiders who do not ship their fresh milk through designated dairy farmers groups.
The outsiders of dairy farmers could be required to supply some of their milk production for processing as well.
Under a new framework of subsidy payment, however, it is concerned that when supply-demand balance turns negative, law milk price will decline to bring about a further shrinking of production base.
The Government and ruling parties plan to reach a settlement over the matter of subsidy payments to the outsiders in November. Stakeholders are now focusing how strict conditions will be laid down on payments for the outsiders.
The administration and the parties in power are considering a new condition for the subsidy payment, which requires the outsiders of dairy farmers to participate in demand-supply adjustment programs.
The new condition, under which the outsiders are to be required to ship not only their law milk for human consumption, but also some of their milk for manufacturing uses, is expected to prevent those dairy farmers from “skimming the cream off the top.”
The Liberal Democratic Party intends to complete drafting a plan to reform the compensatory subsidy system for law milk producers for manufacturing uses in the early part of November.