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Chill Out, Pie-Makers. There's No Butter Shortage Looming

Thursday, September 04, 2014

As you may have heard, butter is back. Lots of us are spreading it on our toast and even adding it to our coffee. (By the way, we've both tried that, and we're not fans). We may even be thinking ahead to holiday pies.

But over the last few weeks, there have been several reports suggesting that supplies are dangerously low, creating the prospect of a butter shortage.

Could it be? Foodie aprons seem a bit ruffled by the prospect.

But after checking into it, we're pretty well convinced that there's no cause for alarm.

Experts tell us that it's pretty unlikely the U.S. will run out of butter, although it will probably be a little pricey as we start the fall holidays. And it's not the recent trends fetishizing fat that are to blame for high prices and low stocks.

It's a complicated mix of factors. And a key one is exports.

Fifteen years ago, our dairy farmers were exporting virtually no butter.

"Since the early 2000s, we've basically gone from zero exports of butter to where its 10 or 11 percent of our market. That's an incredible growth rate," Brian Gould, a dairy economist at the University of Wisconsin, tells The Salt. "The industry as a whole has recognized that the export market is the growth market for dairy. There's no doubt about that."

And this has drawn down current supplies of butter fat significantly, he says. U.S. supplies (or stock, the term dairy economists use) were 40 percent lower this past June, compared to June 2013, according to U.S. Department of Agriculture figures.

Where's the butter going? Saudi Arabia, Morocco and Egypt are top importers this year, according to the American Butter Institute, an industry trade group. When New Zealand, a previously big butter exporter, experienced a drought a couple years back, the U.S. filled the gap, he explains.

Add to this a steady uptick in domestic consumption. Yes, Americans are eating more butter, in all its glorious forms. In fact, since 2000, domestic consumption of butter fat has gone up almost 50 percent. "In 2013, there was 1.7 billion pounds of butter consumed. In 2000, it was 1.2 billion," Gould says, citing USDA figures.

But those numbers have been creeping up slowly, year by year. Between 2012 and 2013, when news began to spread that full-fat foods maybe not being as bad for us as we once thought, there was a less than one percent increase in domestic butter use, he notes.

Still, the upward domestic trend is not to be discounted. "By dairy standards, the incremental increases are pretty strong," says Peter Vitaliano, vice president of economic policy and market research at the American Butter Institute.

As we'll report later this week, researchers who track changing eating habits through surveys say Americans' evolving attitudes towards the harms of fat and cholesterol seem to be leading more people back to butter and away from formerly lauded substitutes like margarine.

So, why is a shortage unlikely?

There's a limit to how much we'll pay. During the recession in 2009, people bought less butter, and prices dipped, Gould says.

This year, butter has gotten pretty pricey, at nearly $2.50 a pound on the Chicago Mercantile Exchange in July. That's up from $1.50 a pound at this time in 2013. On the retail side, Land O'Lakes was going for $5.58 a pound on Thursday at a supermarket in Maryland just outside of Washington, D.C.

And there's signs the international market might not pay high prices forever, either.

"We've seen over the last couple of months a decrease in exports, which means those [domestic] stocks are going to start increasing," says Gould.

At the end of the day, Gould says, the market has a way of evening out supply and demand.

"I don't see a shortage," Gould says, "The price mechanism will work its magic." He predicts the butter inventory will come back to normal levels next year.

So, don't feel you have to stockpile butter now for your Thanksgiving pies — or make do without.

"It would be very shortsighted for Grandma to go without her pumpkin pie this year," Vitaliano says.

Copyright 2014 NPR. To see more, visit http://www.npr.org/.

Source: NPR

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