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We’ve all heard about butter prices rocketing these past few months. Around this time last year, if you had a tonne of butter in the shed, you could have struggled to get €3,000/t, with €2,500/t more likely. Today, prices have crossed the €6,000/t mark.
What’s driving this remarkable increase? Two things: one, there’s a shortage of the stuff; and two, butter is en vogue. Fats are seen as natural and healthy again so butter is best.
But the shortage of butter is real. French bakeries have cried sacre bleu and wanted to hike the price of croissants because they have found it difficult to source enough of the yellow stuff this year.
The problem has reached the Irish market now. The standard 454g packet of butter has resisted any price increase on Irish shelves, leaving the butter bosses curious as to what was driving the enormous price increases.
However, The Dealer notes that Irish retailers have raised prices to the consumer by as much as 20% in the last week.
So, what has all this meant for the dairy farmer?
Talking to one dairy chief this week, I asked what the rising butter prices have meant for the strengthening Irish milk prices.
“The butter price is the milk price,” he said, without even a hint of irony.
He was right, too. The market for other products is far from buoyant or robust. Skim milk powder (SMP) fell below the intervention price of €1,698/t this week.
Butter was often seen as the byproduct to SMP but it’s the other way around now. For every tonne of butter you make, there are two tonnes of SMP to deal with. When you still have 350,000t of SMP sitting in intervention sheds across Europe, there’s little to be optimistic about on the powder side of things.
The salted soothsayers and protein prophets are optimistic about the price, too. They are predicting that there will be no softening until April of 2018 at the earliest.
Dairy commodities such as butter see spikes around key events such as Thanksgiving and Christmas, but the current butter surge has been a continuous upward curve for a year now.
Butter prices continuing to rise? Won’t somebody think of the scones!
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