Butter Prices Will Probably Stay High

Sept. 26, 2022
Labor and materials are pressuring dairy farmers and processors.

Butter has increased in price more than just about any other food commodity, and the situation isn’t going to improve anytime soon, according to industry observers.

Butter prices hit a record of more than $3.20 a pound in commodity trading in September, a rise of nearly 40% for the year. In grocery stores, prices rose 25% for the 12 months ending in August, compared with 14% for all grocery products. Stocks on hand at the end of July were the lowest since 2017 – a concern because the usual pattern is to build up stocks in the first part of the year to handle demand in the winter holiday baking season.

Factors at play include decreased supplies and rising prices for milk and scarcity of labor, especially for second shifts.

Butter producers are warning retailers that they may not be able to meet demand, especially for grocers who discount butter aggressively to attract traffic: “Don’t go crazy [on promotions]. You can’t have a fire sale on butter, we won’t be able to supply you,” an executive at Associated Milk Producers Inc. told the Wall Street Journal.