Butter shortfall sees France face a croissant crisis

An employee places all-butter croissants for sale at the bakery
An employee places all-butter croissants for sale at the bakery "Le Capitole" in Nice, France. Baker Frederic Roy is calling for the government to create a "traditional" label for croissants baked on the premises with additive-free flour and high-quality local butter. REUTERS/Eric Gaillard
Margaret Donnelly

Margaret Donnelly

Some supermarket shelves in France are sitting empty and the price of croissants on the rise, creating a headache for the government just as it tries to make the food chain fairer for farmers.

Soaring prices in France come as butter makes a resurgence among consumers, but production of butter has not increased to the same extent.

For French consumers, where butter makes up about a quarter of a croissant's ingredients, they price is being passed back onto them, or in some cases they have not been able to source their daily pastries.

Irish butter production is running 12pc ahead of last year, according to CSO figures  and Ornua CEO Kevin Lane said recently that butter prices have reached an all-time high in recent months with prices of €7,000/t being recorded, and said prices should start to level off shortly.

Placards notify clients of the butter shortage on shelves with milk products in a supermarket in Nice, France. The placards read
Placards notify clients of the butter shortage on shelves with milk products in a supermarket in Nice, France. The placards read "Dear customers, due to a lack of raw materials, our suppliers are not able to deliver for the moment all our orders of butter" (L) and "butter shortage for unlimited duration, due to a drop in production and a rise in world demand and price conflict with large retailers". REUTERS/Eric Gaillard

"We have a view that butter has peaked. It's typical in normal years that butter is at its highest as we get in to the very important Thanksgiving and Christmas buying period. It's typically done through September and October," he said.

However, others disagree and say butter prices are not yet at their peak in Europe and with Ireland is a significant exporter of butter in Europe, in value terms, demand from Europe could see increased amounts of Irish butter exports. However, Irish butter lags significantly behind its European counterparts in price - €200/t behind the EU average.

Peder Tuborgh, CEO of Danish-based dairy co-operative Arla Foods, said world milk stocks are very low and that there has been a scarcity of milk in the whole world after the very low prices last year.

“There is a big lack of fat, cream and butter products everywhere in Europe. It will not at all be possible to meet demand up to Christmas. It is those forces that are dragging up the prices significantly,” Tuborgh said.

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Butter prices have fallen by almost 20pc in October, but they remain the most expensive in the world.

Rabobank's Global Head of Dairy Kevin Bellamy explained that while the removal of milk quotas has masked an extraordinary consumer trend away from eating margarine and towards eating butter.

Food manufacturers have also moved in the direction of butter as consumers demanded more 'natural' foods, he said.

"Proof of this trend, if needed, is provided by the fact that during the recent period of oversupply of milk, dairy protein prices had to be supported by public buying of skimmed milk powder, while butter prices remained well above the 'safety net' zone.

"Interestingly, while demand and prices for butter have been rising, the low price of dairy protein has meant that often for dairies, the most profitable use of milk has been to make cheese rather than butter and milk powder."

And this, he says, has led to a shortage of butter.

High prices, he said, are already choking off demand among some consumers, and further price increases will see food manufacturers driven to reformulate use to cheaper fat sources.

"Luckily for Irish farmers this will happen in the slack production months - and it will be next season that any price effects will be felt."

Croissant Price

Speaking in his traditional bakery in Paris, Samir Kichou said he had not yet increased his prices because of extra butter costs but may have to soon.

“Because the year-end holidays are approaching, with Christmas preparations and particularly the ‘Galette des Rois’ cake which needs a lot of butter, if there is not a significant decline, we will be forced to pass on the price rise,” he said.

Supermarkets in the capital and others parts of France have left gaps in their butter sections, with some stores displaying signs explaining a shortage for certain brands.

French and Irish dairy farmers have complained that they get little benefit from soaring butter markets, with farming organisations in Ireland saying that Irish dairy farmers should be receiving more for their milk.

“The problem is that on the French market the right signal was not given to dairy farmers, since prices were not adjusted in relation to the drop in dairy supply,” said Dominique Charge, president of France’s federation of dairy cooperatives.

The butter-supply tensions in France highlight the challenges faced by President Emmanuel Macron to honor an election pledge to change practices in the food chain so farmers get a better deal.

Additional reporting by Reuters.

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