By viewing the 25th anniversary of our founding as our "second founding period,” we will accelerate the promotion of sustainability and achieve sustainable growth together with society.
Total domestic demand for dairy products is approximately 12 million tons of raw milk equivalent, domestic milk production is approximately 7.6 million tons, a difference of approximately 4.4 million tons. Our Dairy Ingredients and Cheese Business Division is responsible for importing and selling dairy ingredients, which are indispensable for filling this domestic supply-demand gap.
In this context, the domestic dairy products market is facing difficult prospects for future expansion due to the decline in the working-age population and the aging of the population combined with fewer children, while "health" has become a global trend in the food industry in recent years. This health consciousness is a tailwind for milk, which is considered a "quasi-complete nutritional food," and we recognize that milk has a lot of potential for the future, especially since the rich protein content of milk is attracting increasing attention.
On the other hand, the world's supply of raw milk is almost at a standstill due to climate change and other factors, and milk production is expected to decline in Japan as well, as the number of dairy farmers decreases. We see these conditions in production and imports as both a major risk and an opportunity for Lacto Japan to fulfill its mission of securing the supply of dairy products for the Japanese market.
The global situation is greatly changing at a pace unimaginable in the past five or ten years, with climate change having a major impact on the dairy and livestock farming industries, the pandemic caused by the new type of coronavirus infection, and more recently, the conflict in Ukraine.
Against this backdrop, we at Lacto Japan see the 25th anniversary of our founding in 2023 as our second founding period, and we are actively promoting sustainability initiatives throughout the group. In our initiatives, raising employee awareness of sustainability is becoming important while recently there has been an increasing number of requests from our customers to solve sustainability-related issues. At the same time, sustainability awareness is becoming an integral part of our daily operations. We recognize that this is a very positive environmental change in our sustainability promotion.
Currently, suppliers mainly in Europe and Oceania are leading the way in promoting clean energy, carbon-free, and other sustainability initiatives, and these efforts are becoming a selling point for the company and its products. However, we believe that this trend will spread to the domestic market sooner or later, and we feel that the time is fast approaching when it will become a criterion for users to evaluate products when selecting them.
In order to realize our new management philosophy and long-term vision, we have established six materialities as ESG goals. I believe that it is important for each and every employee to see the promotion of sustainability as a commercial opportunity and to apply it to their sales and other activities, and I believe that this is the demand of the times.
It is also important to think through the social role that our company and we ourselves play in our work. When establishing Lacto Japan, the founding members especially deeply considered and discussed the role we should play in the future. When we are immersed in our work every day, we can become less aware of our roles. In such a situation, we believe that if all employees base themselves on materiality, and if everyone considers and reflects on materiality, it will be of great significance in realizing sustainable growth not only for the company and individual employees, but also for society as a whole.
In addition, as a specific business activity, efforts are emerging to match suppliers that utilize clean energy with sustainability-conscious business partners. Matching requires knowledge of carbon-free and clean energy, which helps to raise employee awareness and expand their knowledge. By steadily implementing such individual initiatives, we hope to accelerate the promotion of sustainability throughout the company.
Furthermore, in terms of organization, we plan to establish a Sustainability Promotion Committee consisting of members from across the company, and to promote company-wide efforts centered on this committee. The progress of individual initiatives is reported to the Executive Committee, and some matters are considered for discussion by the Board of Directors.
Since assuming the position of President, I have continued to focus my wisdom on transforming the company into one that can sustainably grow and develop in the future, and in my New Year's Message for 2020, I called on all employees to "aim to become a 100-year company.”
Some analysts believe that so-called "100-year companies" have the following three elements: continuous communication with the market and business partners, continuous self-improvement in response to changing times while maintaining the philosophy of the company's founding, and global expansion of business. I believe that Lacto Japan is fully capable of achieving these elements.
At Lacto Japan, we will realize sustainable growth together with society and with our stakeholders by incorporating the six newly established materialities into specific activities, aiming to be a "100-year company" of the future.
Lacto Japan Co., Ltd.