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Butter Prices Soar as Dairy Production Declines Ahead of Holiday Baking Season

A decline in dairy production is contributing to a surge in butter prices as American families prepare for the holiday baking season.

The price of butter — one of the most important ingredients for baked goods — has risen by 24.6 percent since last year, for an average price of $4.77 per unit in August, according to the Bureau of Labor statistics. Butter prices outpaced most other grocery store items in inflation except for eggs, which increased by 39.8 percent from last year.

While consumers have been paying 13.5 percent more since last year for overall grocery prices, they are paying even paying more for dairy products at 16.2 percent more. Grocery store prices increased slightly from July to August, after record-high surges from June to July, Breitbart News documented.

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According to the Wall Street Journal, the reason for the increase in butter prices is that milk production has decreased due to cow shortages and labor shortages, among other factors, although farmers have reportedly been increasing their herds.

As a result, there has been a two percent decrease in butter production in July, while butter in cold storage facilities has also declined by 21 percent since last month, the UDSA recorded.

One Minnesota dairy farmer noted that he has had to cut butter production at his facility from five to ten percent because of short staffing.

“It’s the second shift that typically runs over family time that’s become harder and harder to fill,” Marshall Reece, senior vice president with Associated Milk Producers Inc., told the Journal.

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Reese noted that this was not a problem before the pandemic.

Another reason for the decrease in butter production is that hot summer temperatures negatively affect cows’ ability to produce milk, especially in California, where ongoing droughts have resulted in less animal feed, one dairy expert told Bloomberg.

High demand from retailers is also contributing to rising butter prices ahead of the fall and winter baking season.

Reese warned retailers not to “go crazy” in discounting butter during the holiday season because dairy farmers may not be able to keep up with the production to supply the market.

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You can follow Ethan Letkeman on Twitter at @EthanLetkeman.

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