The U.S. faces a butter shortage ahead of the holiday season. According to the U.S. States Department of Agriculture, the amount of butter sitting in U.S. storage facilities in August fell 10% month-over-month. However, the amount was down 22% compared to last year. For instance, warehouses had only 282 million pounds of butter last month compared to the 362 million pounds in August 2021.
Unfortunately, supplies are tight around the nation. In a report, officials say demand is outpacing supplies in the West, where producers are on reduced production schedules. Meanwhile, butter makers in the Midwest say, “spot loads of cream are very tight to unavailable.” “In the Northeast, retail butter demand is picking up, but tight inventories are causing some producers to regulate supplies across existing orders.”
The Cost of Butter Raises
As supplies dwindle, the price of the product has surged. It has outpaced all other food on the Consumer Price Index. In August, the cost of groceries rose 13.5%, but butter prices rose 24.6%. Earlier this summer, Tanner Ehmke, lead economist for dairy and specialty crops at CoBank, projected that “historically high butter prices are all but certain to continue for the remainder of 2022.” Per Ehmke, the supply problem results from U.S. dairy farmers and butter processors struggling to increase production due to increased feed, energy, cows, and labor costs. “Some churns are slowing production due to tight US milk supplies and short staffing at plants,” Ehmke said.
According to the USDA, monthly milk production dropped in the past several months. U.S. milk production was down by almost 1% this year from January through June. In addition, labor shortages only “aggravated existing supply issues,” Ehmke added. And with tight milk and cream supplies, Ehmke warned that cheesemakers might start to face production issues as a result. “Competition for scarce milk will put cheese makers at a disadvantage to butter manufacturers better positioned to pay higher milk prices,” Ehmke said.
