Why Is Butter So Expensive – Major Reasons

There’re many reasons why butter is so expensive which stem majorly from the low shortage of milk supply in recent times.

This article walks you through all information you need to know about why butter is so expensive, what drives the price of butter, the reasons why there’s a butter shortage, and other topics that shall be extensively discussed in this article.

Why Is Butter So Expensive?

Low production of milk, high cost of labor, shortage of labor, and overall high production cost of labor, among other factors, are the major reasons why butter is so expensive.

According to a United States Department of Agriculture report, there were about 282.6 million pounds of butter in storage in August 2022, down from 362.7 million pounds in August 2021.

Let’s now go into detail about the major reasons why butter is so expensive.

1) High Cost Of Production

There has been a progressive increase in the cost of butter production globally from 2021 to 2023 which is attributed to the increasing cost of vegetable oil which is the key ingredient used for butter production.

Ukraine tops the list of major vegetable oil producers globally and the current Russia-Ukraine war has negatively impacted the production and supply of sunflower oil, which is the major vegetable oil used to produce butter and it’s mainly produced in Ukraine.

However, they’re also alternative vegetable oils used in butter production such as palm, soybean, and canola.

Producers of butter have resorted to making use of these alternative vegetable oils but sadly, the supply of these vegetable oils is low thus resulting in an increase in the price of these limited available vegetable oils.

When the high production cost of purchasing vegetable oil which is the key ingredient used in producing butter is passed on to the cost price of butter, it makes the price of butter so expensive.

2) Low Supply Of Milk

In recent years, the supply of dairy milk for butter production has been extremely low which has been attributed to extreme weather conditions.

Dairy cows are very sensitive to extreme weather conditions.

Furthermore, dairy cows eat less during hot weather conditions and hence produce less milk and vice versa.

In the past few years, scientists have recorded unusually prolonged hot weather conditions that have negatively impacted the production of milk by dairy cows.

3) High Cost Of Purchasing And Feeding Diary Cows

Since there have been unusually prolonged hot weather conditions in recent times which has negatively impacted milk production in dairy cows, it’s ideal to suggest that herders should purchase more dairy cows to compensate for the low production of milk by the existing cows.

Sadly, the price of purchasing new dairy cows has skyrocketed thus making it difficult for these farmers to be able to buy numerous dairy cows.

On the other hand, the cost of dairy cow feed has also skyrocketed which makes it difficult for herd farmers to be able to purchase enough food for their cows.

According to the U.S. Department of Agriculture, the price of a bushel of corn was $7.26 in May 2022, compared to $5.91 at to the price at May 2021.

4) High Labor Cost

There has been a progressive increase in labor costs in all works of life and cow production is not left exempted.

On the other hand, there has been a shortage of labor force in recent times which has negatively impacted the production of dairy cows as there’s not enough labor to cater to the production of dairy cows on a large scale.

What Drives Butter Prices?

Global milk production is the major factor that drives butter prices.

Sadly, in recent times there has been a global decline in milk production as the United States, Australia, and other top mild-producing countries recorded a major decline in milk production since 2021 till date.

Additionally, the cost of other ingredients used in producing butter, the cost of purchasing and feeding dairy cows, the supply of milk, the cost of labor, and labor availability, among other factors are the key drivers of butter prices.

Why Is There Going To Be A Shortage Of Butter?

According to recent statistics, there has been an unusual progressive increase in the cost of butter production, high cost of labor, shortage of labor, and low supply of milk which would likely result in the shortage of butter in the future.

What Is The Price Of Butter Per Pound?

According to the Federal Reserve Bank of St. Louis, the price of butter was about $3.69 in January as against $4.75 in September last year.

However, here’re the recent price of butter per pound at different stores.

  • Walmart/Great Value butter: $4.48 per pound
  • Trader Joe’s: $3.69 per pound
  • Target/Good & Gather: $4.69 per pound
  • Costco/Kirkland butter: $4.37 per pound

Submission

Low production of milk, high cost of labor, shortage of labor, and overall high production cost of labor, among other factors, are the major reasons why butter is so expensive.

This article explores in detail the reasons why butter is so expensive, the prices of butter per pound, and what drives the price of butter, among other information about butter production.