Butter shortage as milk fat production increases

The reason given for the high prices is that there is a shortage of butter. Is that really the case, or is this too simplistic an explanation? 

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It can't really be due to milk production or the fat percentage in the milk. The fat percentage in the milk does fluctuate annually, but the trend is generally that the average produced liter of milk contains an increasingly higher percentage of fat and protein. That is the case in Europe, it is also the case in New Zealand and it is also very clearly observable in the US, although it has only been playing a role there for a relatively short time.

Other application of milk fat
So it is not really due to the availability of raw material. Perhaps it is due to a changing range of dairy products that the industry is putting on the market. The fat in (cow's) milk is first extracted as cream. In the past, this was usually used to make butter, but that has changed considerably over the years. The large dairy companies in the Netherlands hardly have any butter factories left. FrieslandCampina still has a factory in Lochem and one in Den Bosch, but they are about to close their doors. In addition, there are still a few private companies that make their own butter, from cream that they buy elsewhere. 

Last year, so little butter was produced in the Netherlands that Belgium, which produces less than half the amount of milk of the Netherlands, surpassed its large northern neighbor in terms of butter production. That will probably remain a one-time event, because even in Belgium, fewer and fewer butter producers remain.

Classic butter and the rest
However, it is difficult to determine the exact amount of butter produced in the Netherlands and neighbouring countries from the figures, because the data on 'classic butter production' are considered confidential for the Netherlands, among others. Only totals are available on the amount of butter, butter oil and cream per member state. These do indicate a slight decrease in the production of milk fat per country, but do not provide insight into the shifts within the fat segment. However, a focus on the production of milk fat alone would not correctly reflect the change in allocation. 

Mozzarella for künefe dessert
There are at least three major changes in the application of milk fat that are leading to a more limited availability of cream for the production of butter. For example, there is the strong rise in mozzarella production. This cheese, originally from Italy, is very popular as an ingredient in all kinds of convenience foods, salads and other fresh applications. Mozzarella factories have sprung up like mushrooms in recent years and this trend is set to continue for a while. In Belgium, for example, mozzarella production increased by 2023% in 18 and by 2024% in 8, as a result of which around 50% of Belgian cheese production now consists of mozzarella. 

Market researchers predict an almost unstoppable growth in this segment for the coming (many) years, and the returns are attractive. A nice side effect is that mozzarella contains more milk fat on average than, for example, Gouda foil cheese. In addition, a trend is visible in the more traditional cheese types that consumers are choosing more flavour again, and that often means a (full) fat cheese.

Foodservice and yoghurts
Another application that requires a lot of milk fat is food service. Fresh cream (or preserved cream) is a widely used product for cooking or adding to all kinds of preparations. This is also a still growing market segment, with good export opportunities.
Finally, the Greek yoghurt trend also plays a role. Consumers are buying full-fat yoghurts again, with a higher percentage of milk fat, sometimes up to 10%. This mainly concerns Greek or Turkish yoghurts.