Where has all the Butter Gone?

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"Psst! Hash? Heroin? Crack?" "Have you got any half-salted butter?" (image source: Urtikan.net)

Open International Trade is a fine thing in theory but when supermarket shelves begin to run out some 6 months after the problem was first flagged in the country where an abundance of butter is produced, it makes you wonder…

The story of France’s great butter shortage has been doing the rounds of the English-language press for some months now. The schadenfreude evident in their headlines has made entertaining reading but what exactly is behind it all? How can a major agricultural producer like France actually start running short of such a basic supply as butter?

The butter shortage certainly exists. According to surveyors Nielsen (specialists in consumer behaviour polls), more than one third of demand for butter was left un-sated in French hypermarkets between the 16th and 22nd of October last, but much of this dissatisfaction, they note, was precipitated by a “strong acceleration of sales” that were prompted by “shortage risks” that were widely flagged in the media.

According to the pollsters’ research, supermarkets have so far been affected to a more significant degree than the larger hypermarkets (aka les grandes surfaces in French) and sales of margarine were up by 15% in the same period.

If there was one country in the world that one would imagine would never be in danger of running out of butter, it is France. It forms a vital component of so much that the French produce, from cooking to the manufacture of its beloved pastries.

Today, however, we live in a world where a “free market” dictates such anomalies as grain producers in Ireland being forced to sell below cost. It also dictates that even though France produces more than enough milk to feed its citizens several times over, you will be lucky if you walk into a supermarket in France today and come away with a 500g packet of butter.

The worldwide demand for French butter and pastries are part of the problem. Last week, Minister for Agriculture Stéphane Travert said on national radio that the butter shortage was partially due to “a reduction in the supply of the raw product (milk) over the summer period, coupled with strong demand from foreign countries… which led to a price increase.”

Towards the end of the week, however, a leaflet information campaign was launched by representatives of milk producers to get the message across that the butter shortage “does not exist”. The absence of butter from the shelves of certain supermarkets does not, they say, stem from a lack of milk supply. Many farmers who produce milk are taking issue with the accusation of lack of supply and are saying that the issue is with shops not paying for the butter rather than them not producing. On empty or near-empty shelves that would normally be full of butter, various messages were left by the campaigners, such as “If this shelf is empty, it’s because the shop doesn’t want pay a fair price for butter!”.

“This is a problem concerning commercial negotiations between dairy companies and distributors,” declared a spokesman from the FNPL (Fédération nationale des producteurs de lait – national milk producers’ association).

Behind it all, the world demand for butter has certainly increased and increased at a dramatic level never seen before. After decades of naysaying nutritionists declaring butter to be a bad thing, the rowing back on that position over the last few years has seen an explosion in demand for butter.

In international butter markets, gamblers using this commodity as a betting chip have driven the price of butter from approximately €2,500/tonne in April 2016 up to €7,000/tonne last summer. The current butter crisis in France is a case of the flip-side of free trade writ large. If such insanity continues, it will surely feed into the increasingly dominant mindset of tightening borders and returning to some form of protectionism.

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