Arla foreshadows boom in butter costs by Christmas

According to BBC News, Arla has warned that the UK could face a butter and cream shortage this Christmas.

“The first sign we will see of it, is that the price of butter rises very sharply,” says Peder Tuborgh, chief executive of Arla. Tuborgh adds that consumers will feel the impact across Europe in the coming months, however price rises will differ between European nations.

Dairy UK says that the global oversupply of milk less than two years ago, “illustrates the fact that dairy markets are inherently subject to fluctuations and a sudden surge in milk production, or unseasonable weather which depresses production, can have a significant effect on wholesale prices for commodity products like butter and cream.”

The National Farmers Union adds that the “constant boom and bust dairy market cycle” helps “no-one, most of all farmers”. It says that while there have been “record prices” for wholesale cream and butter in recent weeks, farm-gate prices have failed to keep up, adding that the “lack of strong upward movement in farm-gate milk price” is “extremely concerning”. “That said, scaremongering about lack of milk supply going forward only serves to concern consumers.”

“It’s no surprise that milk buyers are worried about milk volumes falling. Confidence within dairy farming is at an all-time low – mistrust in the market dynamics and suspicion about how milk buyers are treating their supply base coupled with the lack of direction on the impact of Brexit on the dairy sector,” says the NFU.

In a statement, the Department for Environment, Food and Rural Affairs has said that while farm-gate milk prices fell by 0.6% per litre in May 2017 compared with the previous month, they have risen by 31% compared with May 2016. It also says UK milk production has increased by 4.7% in May compared with April, almost equalling production in May 2016.