That the price of butter has reached record highs in recent months and grocery stores have faced butter shortages is the result of a major increase in demand for milkfat in a situation where supply has always been unable to keep up with demand, according to the Ministry of Rural Affairs.
Industrial and household consumers alike have decided to switch from plant fats to milk fat again, Taavi Kand, head of the Ministry of Rural Affairs' Trade and Agro-Food Department, said in a press release on Tuesday.
"The dairy product market is a global market," he explained. "The ups and downs of the world market have a very direct impact on developments on our market."
"Markets elsewhere are very volatile, and we have seen already how good times can be followed by a low ebb lasting a long time, during which it is the domestic market ensures income for the dairy sector," Minister of Rural Affairs Tarmo Tamm (Center) said.
The producer price of butter in the EU is currently 87 percent higher than one year ago. In addition, the price of butter has been increasing rapidly since this spring on other dairy markets as well, such as in Oceania, including Australia and New Zealand, and the U.S.
In Estonia, both ex-factory and retail prices are at a record high and keep increasing.
The butter output volumes of Estonian dairy firms have been lower than usual in recent months, which also suggests that there is high demand on the market for milk and products made from milk, according to the ministry.
There is no butter in the warehouses of EU intervention measures, which means that supply cannot be increased by tapping into that resource. As milk production in the EU and elsewhere in the world has not increased significantly of late and the prices of other milk products in addition to butter are high, no price reduction can be forecast in the short term.
A minor reduction in prices may occur, however, when the emotional factor behind the price increase subsides.
Editor: Aili Vahtla