Japan's agricultural sector could soon be reeling from a glut of eggs and dairy products with the closure of schools and restaurants due to the coronavirus pandemic, while the country's largest food bank is paradoxically facing a shortage as the number of users surges.

"The surplus eggs have nowhere to go if the coronavirus is prolonged," said a worker at a major egg company.

The wholesale price of eggs dropped 5.3% to 180 yen ($1.68) per kilogram on May 1 from a week ago, according to Jaz-Tamago, an egg unit of the National Federation of Agricultural Cooperative Associations.

Typically, egg demand rises from late April to early May as hotels and restaurants increase orders ahead of the Golden Week holidays in Japan, which falls on May 2 to May 6 this year. However, the pandemic has thrown a dampener on celebrations this year, particularly after the government declared a state of emergency early April.

The egg production industry has so far managed to clear most stock as home consumption increases and as wholesalers sell more to food manufacturers and pastry shops. But the staff at the egg company said demand from these quarters could fall soon if they start to close due to a drop in business.

The shutdown of schools has also hit hard. Schools typically offer milk with lunch but now that they are closed, demand has fallen away.

The Ministry of Agriculture, Forestry and Fisheries said demand for milk from schools and businesses decreased 86.2% and 10.7% in March respectively from the previous year.

"There is some concern that milk will lose demand," Taku Eto, minister at the Agriculture, Forestry and Fisheries told reporters mid-April and called for consumers to buy more milk, yogurt and dairy products than usual.

It is particularly difficult to adjust supply and demand in the dairy industry. In general, milk production increases in the spring as it is calving season and cows have to be milked.

Hokkaido-based Hokuren Federation of Agricultural Cooperatives, the largest domestic supplier of raw milk, has started promoting on its Instagram account recipes that use milk in the hopes of increasing home consumption. A spokesperson said the company is also trying to stay afloat by offering material to make more powdered skimmed milk.

According to the Ministry of Agriculture, the production of powdered skimmed milk in March increased more than 14% from the previous year. The stock of powdered skimmed milk and butter have also risen to 16.3% and 26.9% from a year earlier.