A nationwide butter shortage is taking a bite out of bakers’ wallets right before the holidays.
Stocks of butter in U.S. cold storage facilities dropped 10% in August, and year-over-year, there was a 22% decline, according to the New York Post.
U.S. Department of Agriculture data shows that butter stocks crater during the holiday season, but it also shows that the supply of butter this August was the lowest in the past four years.
Dwindling supply and static demand have led to a huge spike in the price of butter for bakers and other consumers; August grocery prices rose 13.5% year-over-year, but the cost of butter rose 24.6%, according to The Wall Street Journal.
Compounding the problem is the competition that the holidays offer for cream, with some producers opting to sell it toward eggnog and cream cheese production instead of butter.
“A strong pull of cream into cream cheese and eggnog production has given butter makers [in the Northeast] the option to sell cream into those channels as opposed to churning. A few butter manufacturers report they are not churning at all right now,” a USDA dairy market report noted.
For producers in the American West, the USDA reports that “Cream inventories are tight in the West, but contacts say they can generally find supplies needed to meet their current production needs.”
Midwestern butter producers, meanwhile, continue to be buffered by strong demand.
“Plant managers say production lines are busy trying to fulfill orders even at near-record market butter prices,” the USDA market report notes.
Butter makers are now trying to juice production and get more of their products out into the market.
“We want to run the assets we have harder when we can get more milk off-farm,” Joe Coote, chief executive of Darigold Inc., told The Journal.
Striking a balance, however, is key. With key ingredients like cream in shorter supply, producers have warned grocery stores and other food businesses not to have holiday fire sales on butter.
Marshall Reece, senior vice president at Associated Milk Producers Inc., warned retailers, “Don’t go crazy. You can’t have a fire sale on butter, we won’t be able to supply you,” according to The Journal.