Europe suffers shortages of butter with high demand and lower production

Europe is suffering from a shortage of butter. The high demand and the fall in production of milk resulted in double price for the dairy, this year. The French bakeries want to raise prices of sweets, brioches and croissants that use butter as an ingredient, and the Chief Executive of Arla, which controls the dairy brands Anchor and Lurpak, last week warned British consumers that there wouldn''t be enough butter for Christmas. Wear in Europe has international origins. The combination of a drop in milk production in major countries and adverse weather led the international price of butter to a record in June, according to the Food and Agriculture Organization of the United Nations (FAO). "The limited availability of dairy products for export in all major producing countries" led to significant high dairy prices, among which the butter, the FAO reported this month. The current shortage of supply and consequent high price of butter if you follow one of the longest periods of low prices for dairy products since the collapse of world markets in 2007 and 2008. The favorable climate and the actions of the European Union to liberalize your dairy market in 2015, meant lower prices. They fell by more than 50% between 2014 and 2015, and many dairy producers left the sector, in the entire world, because of unsustainable debts. The European Union responded through voluntary production cuts and subsidies to ranchers who chose to produce less milk. The supply of the five major milk producing regions on the planet fell into 0.4% in 2016. In the southern hemisphere, the bad weather in Australia and New Zealand took the production this year to be below the recorded in 2016, so far. The consumption of butter, on the other hand, continues to grow. Kevin Bellamy, global strategist of dairy in Dutch Bank Rabobank, believes happened a "structural twist" in patterns of demand for butter. This helped limit the fall in price of the product in 2014 and 2015, when the offer was robust. "People are adopting the butter, and more of it comes used in processed foods," he says. Recent studies have also released doubts about the connection between butter and cardiovascular diseases, which sharpened the enthusiasm of consumers. The negative propaganda about the potential adverse effects of some margarine and other vegetable-based folders on health also encouraged the return of consumers to the butter. Raphael Moreau, food analyst at Euromonitor, says that the consumption of butter was spurred by demand for "natural" products, consumers are abandoning products such as margarine. "In the United Kingdom, the consumption of butter was also stimulated by fashion of making cakes, pastries and breads at home," he says. Despite the high price of butter, "many of the producers have no capacity to elevate your production", says Patty Clayton, senior analyst of dairy products in the development of agriculture and horticulture of the United Kingdom, an organization financed by farmers and ranchers. And neither record prices mean that ranchers and businesses can simply transfer more milk for the production of butter, because they need to continue providing fresh milk, cream and cheese. "Dairy farmers need to prioritize consumers in long term," says Clayton. The current shortage would have been less severe if there were the reserve stocks to resort. But robust demand has eroded world inventories. In addition, China came back to the market of dairy products, including butter and cheese, says Bellamy, of Rabobank. Despite the rise in prices of butter in the wholesale, retail and food manufacturers come reluctant to pass on the increases to consumers. But analysts anticipate that this will change when their profit margins suffer compression. "Given the recent inflation in the price of butter, if high continue this will reflect in the prices to the consumer," cautions Clayton, who predicts that will continue to be high pressure on prices for the rest of the year because the production shall not recover in the short term. "Butter prices will rise, but it can take a few months to resume the original levels," says Bellamy. Many dairy producers in Europe and Brazil suffer from a shortage of young cows for inclusion in their flocks, after years of warm prices for dairy products. "Due to the prolonged period of low prices, there''s no stock of young cows," he adds.