The Strategist

"Butter crisis" breaks out in France

11/10/2017 - 14:24

A real "butter crisis" has erupted in France: buyers of French hypermarkets will face a sharp deficit of butter in the near future.

Refrigerating sections in the French supermarkets became especially gloomy. Clients, still spoiled with a choice between butter from Normandy, salty butter from Brittany, low-fat diet and flavored products, will now face a dramatic shortage of even plain butter, Der Spiegel reports.

France is the undisputed leader in the consumption of butter per capita: an average French citizen eats eight kilograms of butter a year. The second place with six kilograms is occupied by Germany.

Now a real "butter crisis" broke out in France, and local media dubbed it almost a national emergency. For many French, butter is an essential attribute of the cuisine: baking fish, meat or vegetables, cooking pastas and sauces - it all starts with this dairy product.

Where did the butter shortage come from? According to experts, one of the reasons is a change in eating habits around the world. For many decades, butter was thought to be the cause of vascular disease due to the cholesterol contained in it. Today, many experts in the field of nutrition believe that natural fats are the best natural protection against these very diseases.

As a consequence, consumption of butter is increasing, not only in industrialized or Arab countries, but especially in Japan and China. According to the World Food and Agriculture Organization, by 2026 the demand for dairy products will jump by 20%. The export of French butter to new markets has risen sharply recently, by almost 50% since the beginning of the year. As a result, the price for 1 ton of butter rose from EU 2,500 to 6,500 from April 2016 to October 2017.

However, the boom in butter sales abroad is not the main reason for the sharp deficit in France. Last year, the country produced about 450,000 tons of this product, despite high prices for hay and a growing number of bankruptcies among dairy farmers.

In fact, a sharp contradiction between small dairy cooperatives and large retail chains underlies the decline in supply. "Processing companies and retail giants are simply blocking each other," complains the French Agriculture Minister Stéphane Travert. According to the Association of Milk Producers, the dispute is all about "the right price".

Recall that since 2015, the EU has canceled quotas for milk production, and despite the growing demand, large retail chains in France refused to adjust prices.

Dairy cooperatives quickly began to export their high-quality goods to more profitable regions, and the assortment of butter in supermarkets became much scarce, while demand rose by as much as 20% only in the last week of October.

Some companies had to temporarily stop production due to lack of the product. For example, part of employees of Francois company, a manufacturer of high-quality puff and shortcrust pastry, found themselves temporarily unemployed. "It can kill us," says Claude François, director of the company.

Experts note that the situation can still improve. At the moment, several hypermarket chains, such as Super-U, Intermarché and Auchan, have agreed to raise the prices by 10-15%. However, small French farmers, who are at the beginning of the production chain, are likely to leave the market at all.