The price of butter has risen to a record high in Europe: bakeries and confectioneries face challenges

By: Trademagazin Date: 2024. 10. 14. 11:55

The price of butter has set a historic record in Europe, which presents serious challenges to bakeries and confectioners, especially in preparation for the upcoming Christmas season. Several factors are behind the price increase: increasing demand, limited supplies, and the trend of dairy processors turning to cheese production. According to the Reuters news report, which was seen by Pénzcentrum, analysts expect a longer-term easing in prices, but this will probably not happen overnight.

According to data from the European Commission, the price of butter rose to $8,706 per ton on the world market at the end of September, which represents an 83% increase compared to the same period last year. This significant price increase particularly affects smaller bakeries and confectioneries, which are already struggling with high raw material costs, such as chocolate and sugar. According to Paul Boivin, director of the French Federation of Bakers and Confectioners (FEB), price increases will be inevitable for small businesses.

“Major food industry companies have already secured their butter stocks, but the impact on smaller players will be significant”

Boivin said.

The decline in global milk production and its effects

Global milk production declined in 2023, contributing to the current butter shortage. Although there was a slight increase in 2024, milk supply is still tight compared to demand. According to Michael Harvey, Rabobank’s dairy industry analyst, producers are increasingly focusing on cheese production, as it is the most competitive and profitable product in the current market situation.

In the European Union, milk production increased by 0.7% between January 2023 and July 2024, while butter production decreased by 1.6%. In contrast, cheese production rose by 3.2% during the same period. Similar trends can be observed in the United States: according to USDA data, butter prices are expected to be 15% higher in 2024 compared to the previous year, which is also caused by the declining number of cows and lower milk yields.