Butter prices rise alongside demand
Butter is back, and consumers should prepare themselves to pay more for the product as international prices surge.
But manufactured goods produced on a large scale such as biscuits and cakes will not become more expensive, because butter is generally not used to make them.
Croissant lovers will have to fork out more because the genuine article is baked using butter.
Despite the fact butter is more expensive, New Zealanders have a growing taste for it. Supermarket chain Countdown said that between 2011 and 2016 Kiwi consumers had bought 2.5 million more blocks.
Since May last year, the global butter price has gone from US$2800 to US$5954 a tonne – a 120 per cent increase.
Foodstuffs spokeswoman Antoinette Laird said the international global price had lifted by 75 per cent since last August, but a 500-gram block of Pams butter had gone up only 29 per cent in the same period, with the average price now sitting at $4.48.
‘‘This is because the business works hard with its suppliers to keep this vital household staple affordable. If dairy prices remain at high global levels then it is inevitable this will eventually start to affect local prices,’’ she warned.
Once the auction prices were advised, it took about three months for the changes to flow through the supply chain to retailers.
ASB rural economist Nathan Penny predicted after this week’s GlobalDairyTrade auction that butter was set for another surge after prices dipped by 6 per cent in August.
‘‘In our view, butter’s [price] fall during August is akin to a motor racing pit stop. Pull over, refuel, change tyres and then go again. In other words, we think that butter and milk fat prices can go higher yet,’’ Penny said.
Laird said butter was gaining in popularity as people looked for natural unprocessed foods, which affected demand and pricing.
The managing director of ingredients maker Bakels, Brent Kersel, said most big bakers used butter substitutes such as margarine because they were cheaper. Cakes and pastry used in pies were made with margarine.