Demand for dairy drives butter deficiency

October 9, 2017

The price of butter has reached record highs, with a price increase of 70% in the last two months alone. The shortage of butter has proved a real threat to the price, which is showing no sign of slowing down, creating panic within the market.

The shortage of butter is the result of a combination of a reduced production, an increased demand, as well as lower import availability. These factors resulted in an all-time high prices for June.

A previous overproduction of milk in 2016 has caused farmers to reduce their output this year, resulting in insufficient milk being supplied.

Additionally, an increase in demand has been created by multiple factors, such as the weakened pound following Brexit which has attracted international buyers to the UK, triggering British cream, amongst other products, to go abroad.

The increasing demand is also the by-product of the increasingly popular and positive trend towards healthier eating, as well as the quest for flavour, with consumers looking to switch to dairy and meat fats, and away from sugar. This trend has been rising within the last 3 to 5 years with dairy fat now recognised as being naturally more healthy over its substitutes, such as margarines. The popularity further soared in 2014 where butter featured on the cover of Time Magazine.

Those in the food industry have picked up on this consumer demand which started with butter, and has now moved to additional dairy products, such as; milk, ice cream, dips, yogurt and cheese. This trend and demand is also evident in America with McDonald’s already switching to butter from margarine. The increasing global requirement of cream has ultimately contributed to the shortage of butter.

The desire for dairy has created a knock-on effect in other areas: We are consuming less skimmed milk in place of the full fat alternative, meaning there is less cream which was taken from it to use. Additionally, products that were already butter based, such as croissants and other iconic French pastries are at risk of the ever-increasing butter prices, as well as the thread of the shortage of butter within the marketplace.

The market is panicking at the news of the butter shortage and subsequent price increases, causing manufacturers to stockpile butter and cream, pushing prices up further.