Price for butter at historic high

There is a European butter crisis looming: the demand for butter has grown a lot over the past few years, but the supply has actually dropped. This will lead to huge price spikes and even shortages in some countries.

High demand, lower production

Over the past three years, the European butter demand has grown 7 % and the global butter consumption is also on the rise. Butter has managed to portray a better image, which led to increased demand: it is now considered an organic product more than an unhealthy product.

The downside is that the butter production has dropped. “Ever since September 2016, the EU milk deliveries have dropped, which results in lower milk fat supplies, the actual basis for butter”, Renaat Debergh (from the Belgian Dairy Industry Confederation) told VRT.

Those two factors combined have resulted in a record price for butter. “The price was 6.5 euro per kilogram in October, a historic high. I have not experienced that before. The price was only at three euro a year ago”, Debergh said.

Shortage in France

The situation has already resulted in higher prices for butter-related products in Belgium, but the France actually has butter shortages. France has a strong focus on local products, which leads to a higher French butter demand. However, those manufacturers cannot meet demand and have also refused to ship to several major chains because their pricing is too low. The media attention for the current situation has also led to a huge surge in butter acquisitions.

However, a price correction is to be expected soon, because dairy farmers will also increase their production following the increased demand. There is already a slight drop on industrial level. “Consumer pricing lags behind a bit, just as the price increase lagged behind. Inevitably though, the price for consumers will also drop.”