Tuborgh said at the moment there was simply no more milk ©123RF
Tuborgh said at the moment there was simply no more milk ©123RF

Arla chief predicts butter and cream shortages

6 July 2017

Europe could face butter and cream shortages this Christmas, the head of one of the UK's biggest dairy producers has said.

Peter Tuborgh, chief executive of the dairy cooperative Arla, which produces brands including Anchor and Cravendale, said he expects the price of butter to increase sharply as demand grows following a period of low production levels.

Speaking to the BBC’s Today Programme, Tuborgh said: “We need to see that the demand slows down a bit, because at Christmas time there will simply not, in Europe, be enough butter and cream. I know it from our forecasting.”

Tuborgh said it was difficult to predict exactly how prices would be affected, but said increases were already happening and some labels in Europe had already doubled in price.

“There is simply not more milk; all milk is utilised and the milk flows into where the profits are,” he said. “At the moment we are all striving to get as much butter and cream out of our products.”

In the UK farm-gate milk prices in May were 26.78p a litre, according to the Department for Environment, Food and Rural Affairs. This is lower than February’s peak of 27.47p, but still above 2016’s yearly average of 22.57p. In May last year, farm-gate prices were just 20.44p a litre.

Farmers “hit the breaks” in 2016 in response to a glut in production said Tuborgh, caused by the imposition of sanctions on Russia around the same time as EU production quotas were dropped. 

Some countries saw milk production decline by up to 10%, he added.

In response to Tuborgh's comments, the National Farmers Union (NFU) said the “constant boom and bust dairy cycle” was unhelpful for farmers at the end of the supply chain. 

The NFU's chief dairy adviser Sian Davies called for better market information and signals to help farmers better plan ahead for demand. 

“Only a few months ago farmers were being told there was too much milk; it’s gone full circle,” she said. “This isn’t sustainable from a farmer point of view, and we need to find a better mechanism to work together with the processors.”

She added: “It’s no surprise that milk buyers are worried about milk volumes falling. Confidence within dairy farming is at an all-time low – mistrust in the market dynamics and suspicion about how milk buyers are treating their supply base, coupled with the lack of direction on the impact of Brexit on the dairy sector.”

The UK is not the only country facing butter shortages. A similar surge in demand for full cream milk products in Australia has put pressure on suppliers that had been downsizing their herds because of high production costs.

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