Soaring Butter Prices Leave a Bitter Taste for European Consumers and Bakers

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Dec 20, 2024 By Laura Wilson

At his Parisian bakery, pastry artisan Arnaud Delmontel meticulously prepares the dough for croissants and chocolate-filled pastries, which later emerge from the oven with a golden hue and an enticing aroma. However, the cost of butter, a crucial ingredient in these delicacies, has seen a significant increase in recent months, with a 25% surge since September alone, according to Delmontel.

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Despite this, he remains steadfast in his commitment to using butter, unlike some of his peers who have opted for margarine in their pastries. "It's a distortion of what a croissant is," Delmontel asserts. "A croissant is made with butter."


The simple delight of butter on warm bread or its rich flavor enhancing cakes and meats has become more expensive across Europe over the past year. This increase in butter prices is yet another challenge for consumers looking to bake holiday treats, following a period of post-pandemic inflation exacerbated by the conflict in Ukraine.


Across the 27-member European Union, the average price of butter increased by 19% from October 2023 to October 2024, with particularly sharp increases of 49% in Slovakia, and 40% in Germany and the Czech Republic, as reported to The Associated Press by the EU's executive branch. Individual country reports indicate that these costs have continued to rise in the months since.


In Germany, a 250-gram block of butter now typically retails for between 2.40 and 4 euros, or approximately $2.49 to $4.15, depending on the brand and quality. The price hike is attributed to a global milk shortage resulting from reduced production, including in the United States and New Zealand, one of the world's leading butter exporters, according to economist Mariusz Dziwulski, a food and agricultural market analyst at PKO Bank Polski in Warsaw.


European butter typically has a higher fat content compared to its American counterpart and is sold by weight in standard sizes, making it impossible for food producers to mask price increases by reducing package sizes—a practice known as "shrinkflation."


The butter shortage in France during the 19th century led to the invention of margarine, but the French remain among the continent's most avid consumers of butter, incorporating it generously in baked goods and sauces. In Poland, butter is so important that the government maintains a strategic reserve, alongside national gas and COVID-19 vaccines. The government recently announced the release of approximately 1,000 tons of frozen butter to stabilize prices.


The price of butter in Poland rose by 11.4% between early November and early December, and by 49.2% over the past year to nearly 37 Polish zlotys, or about $9 per kilogram, according to the National Support Center for Agriculture, a government agency. "Every month butter gets more expensive," remarked Danuta Osinska, a 77-year-old Polish woman, while shopping at a discount grocery store in Warsaw. She and her husband are fond of butter in various dishes but struggle to afford it on their modest pensions, leading them to consume less butter and more margarine, despite the inferior taste.


The rising cost of butter in Poland has become a political issue, with presidential elections scheduled for next year. Critics of centrist Prime Minister Donald Tusk and his Civic Platform party are attempting to attribute blame to them. Other Poles point fingers at the national bank's governor, who is from a different political faction. Some consumers base their shopping decisions on butter prices, leading to price wars between grocery chains that have, in some instances, kept prices artificially low in the past, to the detriment of dairy farmers, according to Agnieszka Maliszewska, director of the Polish Chamber of Milk.


Maliszewska believes that domestic, EU-specific, and global factors contribute to butter inflation. She argues that the primary cause in Poland is a shortage of milk fat due to dairy farmers closing their businesses because of slim profit margins and the hard work involved. Other factors cited include increased energy costs due to Russia's war in Ukraine, which impacts milk production. There is some debate about the potential impact of climate change, with Maliszewska not seeing a connection. However, economist Dziwulski suggests that droughts may be reducing production and that falling milk prices last year discouraged investments, leading dairy producers in the EU to produce more cheese for better profitability.


An outbreak of bluetongue disease, a viral disease transmitted by insects and harmless to humans but potentially fatal for sheep, cows, and goats, may also play a role, according to Dziwulski. The U.S. experienced a butter price spike in 2022, with the average price jumping 33% to $4.88 per pound over the course of the year, as dairy farmers grappled with feed costs and hot temperatures. U.S. butter prices fell in 2023 before rising again this year, reaching a peak of $5 per pound in September. Higher grocery prices in general affected U.S. voters during the presidential election in November.


Southern European countries, which rely more heavily on olive oil, are less affected by butter inflation—or perhaps they simply do not consider it as significant since their consumption is much lower. Since last year, the cost of butter has increased by 44% on average in Italy, according to dairy market analysis firm CLAL. Italy is Europe's seventh-largest butter producer, but olive oil is the preferred fat, even for some desserts, so the price of butter does not cause the same level of concern as it does in parts of Europe where butter is more popular.


Delmontel, the Parisian pastry chef, notes that the rising costs put pressure on business owners like himself. In addition to refusing to substitute margarine for butter and not reducing the size of his croissants, some other French bakers are making smaller pastries to manage costs. "Or else you squeeze it out of your profit margin," Delmontel said.



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Soaring Butter Prices Leave a Bitter Taste for European Consumers and Bakers

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At his Parisian bakery, pastry artisan Arnaud Delmontel meticulously prepares the dough for croissants and chocolate-filled pastries, which later emerge from the oven with a golden hue and an enticing aroma. However, the cost of butter, a crucial ingredient in these delicacies, has seen a significant increase in recent months, with a 25% surge since September alone, according to Delmontel. Despite this, he remains steadfast in his commitment to using butter, unlike some of his peers who have opted for margarine in their pastries. "It's a distortion of what a croissant is," Delmontel asserts. "A croissant is made with butter."
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