Boerenbusiness Analysis
French butter shortage threatens to derail
There is a drastic shortage of butter in France. The shortage is so dire that French supermarkets are struggling with empty shelves. A drama for the average Frenchman, because he cannot live without butter. How come?
France is the country of wine and cheese, but also of bread and pastries. Nowhere in the world is butter consumption as high as in France. The Frenchman consumed about 2015 kilos of butter in 8. In the same year, a Dutchman consumed 3 kilos of butter, while the average butter consumption in Europe was 3,8 kilos.
An American consumed about 2015 kilos of butter in 2,6, a Chinese only 0,1 kilos of butter. Only Germany, with a butter consumption of 6 kilos per person, still comes a bit close to France.
Explosive question
Butter consists of 82% animal milk fat. The rest is water. Butter is a natural product and has not undergone any chemical processes, like margarine or low-fat margarine. In the 90s, butter was increasingly regarded as a culprit for obesity. Butter is also said to raise cholesterol.
For several years now, butter has been promoted again and consumption is increasing. The high vitamin A content in butter is essential for bone growth. Vitamins D, E and K are also richly represented in butter. That's why diet gurus are increasingly prescribing butter. It is estimated that the demand on the world market has increased by 5% in the past year.
Especially in the United States (US) animal butter gets all the praise. McDonalds therefore decided to exchange vegetable butter for the animal version. This, logically, consumes large volumes. Since 2010, butter consumption there has increased by 28% to 875.000 tons. Butter is also hard to come by in Asia (particularly in Japan). Butter is mainly used there as a raw material for the fast-growing confectionery industry.
Derailed butter price
The worldwide production of butter has actually decreased by 5%. This is mainly due to the shrinking milk production in 2016. In France, production then shrank by approximately 3% to 26,1 million tons of milk. Since approximately 1 liters of milk are needed for 22 kilo of butter, this has a significant impact on butter production. In the first months of 2017, French milk production was also behind previous years.
The wedge between supply and demand has led to European butter prices completely out of sync in 2017. In September, the ZuivelNL quotation was worth almost €700 per 100 kilos. Last February, butter was still worth €397 per 100 kilos. Historically, that was the top end of the butter price. Only in 2007, 2011 and 2013 did butter briefly exceed €400. The fact that milk prices have soared through €0,40 per kilo this summer is due to butter.
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The butter price in the Netherlands in 2017 is well above the 5-year average. In France, at the end of September, butter even cost €800 per 100 kilos. That is a price increase of 200% in 20 months. The large French supermarkets, such as Carrefour, refuse to follow the price increases. The large grocers are sticking to the prices that have been agreed for 2017. Every year in February, supermarkets and butter suppliers negotiate a fixed butter price for that year.
The derailed butter price led to the craziest situations in France. For example, this summer, confectioners bought butter on a large scale from the supermarket, instead of from the wholesaler. This is because the prices there were much lower. In the Netherlands and Germany, consumer prices for butter did rise. Local confectioners also increased their prices.
Empty shelves
Meanwhile, the suppliers have stopped supplying the French supermarkets. French consumers are increasingly complaining about empty shelves on Twitter. It is feared that shortages will pile up as winter progresses. The unrest is expected to last at least until February, when the butter price will be discussed again.
It is striking that there seems to be more butter in circulation in Europe. Butter and cream prices in the Netherlands and Germany, for example, have been sliding down rapidly these weeks, as a result of an increasing supply from Eastern Europe (Poland). Given the empty shelves, there is currently no trace of an alleged wider butter supply in France.
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Wouter Job
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