For a country that consumes more butter than any other, the current butter shortage is a serious matter. For a few weeks now the butter shelves in the supermarkets have been bare, much to my daughter’s dismay: she can no longer eat her Vegemite and butter on toast.
Apparently, the troubles began with the end of European milk quotas in 2015 which led to farmers immediately rushing to produce dairy. But that triggered a collapse in milk prices, which drove some producers back out of the market.
But now there is a big increase in global butter consumption, with buttery pastries becoming increasingly popular with Asian consumers (especially the Chinese – which incidentally I witnessed during our time there) and with butter coming back into vogue after decades of westerners eating margarine believing that it was a healthy alternative.
So rising butter demand and falling supply results in increased prices. However, the price increases have not been transferred to French supermarket shoppers and so French butter producers have resorted to selling their butter abroad for a better price.
Why not just increase the price of butter to customers you ask? This is not possible due to rigidities in France’s system of pricing and distribution – big retailers refuse to pay more for the product and there are strict restrictions on foreign competitors. This situation is likely to continue until annual negotiation meetings due in February 2018.
I can’t imagine the French population surviving until then. We’ll have to wait and see.