France suffers a butter deficit

Food industry’s new challenges

France butter

Bloomberg: it is now difficult to buy butter in France, the biggest consumer of this product per capita.

Parisian newspaper Le Figaro:

“Current deficit of butter in France is the worst since WWII.”

Contents:

Causes

Several factors lead to the current situation in the French market.

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End of milk quotas

On the 1st of April, 2015 EU cancelled the quotas on milk, butter’s main input. This lead to glut of milk, making its prices fall and farmers go bankrupt.

#background Milk quotas in the EU were established on the 31st of March, 1984 to reduce the milk surplus of the late 1970s. They set the production limit for each nation, as well as for each individual producer.

This lead to many milk processors to focus on producing cheese, which, at the time, yielded higher profits than butter.

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Increased demand

Butter demand was supported by the “rehabilitation” of its image. Doctors and nutritionists discovered health benefits attributed to eating butter, which is traditionally linked with cardiovascular diseases and obesity.

In the beginning of last year butter consumption grew in the Middle East and Asia, especially in China.

According to GlobalDairyTrade, average price of butter globally grew from $2574 per tonne in the beginning of November 2015 to $5516 two years later:

Global butter price

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Bad weather

Unfavorable weather conditions during 2016-2017 made farmers unable to prepare the amount of fodder needed for the cows.

Dominique Charge, president of France's federation of dairy cooperatives:

“Current crisis is temporary. Fixing it requires correcting the prices along the whole chain “farmers - processors - merchants”.

But such correction will lead to the inflation of butter prices, which already grew 15-20% last two months.”

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Price war in retail

Fierce competition among French retailers stops them from raising prices, which makes it unprofitable across the country to sell butter.

Thierry Roquefeuil, president of the National Federation of Milk Producers (FNPL):

"This discussion is purely French and is related to the price war between retailers, who refuse to raise prices even for a few cents. Producers see the opportunity to sell their products abroad for higher prices, and it is fair."

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Problems with other products

Last month revealed quite a few problems on the other traditional food markets.

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France: wine

Spring frosts and summer storms resulted in the worst harvest in 60 years. Forecasts see the wine production falling 19% (around 4.9 million bottles) this year:

Wine production in France forecast

#background Wine is France’s most valuable agricultural product: its added value was estimated at 11.5 billion euro last year.

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Japan: tuna

Bad weather and catch lead to the rise in tuna prices. Yellowtail tuna prices raised by 22% in August compared to the same period last year, while bigeye tuna raised by 33%.

Japan tuna price

This was a serious blow to the Japanese sushi industry, ranging from Michelin-star restaurants to conveyor belt chains.

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Italy: truffles

How summer and dry autumn in Italy led to a significant reduction in the harvest of white truffles, widely used in restaurants.

Fortunato Nicotra, New York’s Felidia’s chef:

“This is a huge problem. A year ago I bought big truffles at $1300 per pound. This year, much smaller truffles range from $2800 to $3200.

I can’t double my prices. But I can’t stop using truffles either.“

According to a range of forecasts, shipments in some regions of Italy could be reduced by 90%.

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How it affects businesses and people

Butter deficit is already affecting customers. French supermarket chain Monoprix published the following announcement:

"Dear customers, the store’s management's apologizes for butter shortages, caused by the unprecedented supply retraction, and promises to restore its fool capacity soon."

Restaurants and cafes are among those suffering. Butter deficit leaves patisseries without the key ingredient needed to produce creams and pastry.

Therefore, France’s residents and tourists should be ready to spend more if they want to enjoy a traditional French breakfast.


Also published on Medium.