But­ter has be­come more ex­pen­sive be­cause peo­ple are buy­ing full-fat dairy prod­ucts, and red meat costs more too, though as herds get re­built af­ter the drought lamb and beef should be­come cheaper

Financial Mail - - FEATURE / BUTTER - Colleen Goko gokoc@bdlive.co.za

Con­sumers need­ing a bit of but­ter to make their bat­ter bet­ter are hav­ing to pay a heavy price for this dairy lux­ury. But­ter prices have risen over 30% since Jan­uary 2016. But those hop­ing to find com­fort in a meat binge will also be dis­ap­pointed, as prices have risen about 17% over the same pe­riod.

The spike in the but­ter price has been at­trib­uted to chang­ing con­sumer habits as well as the on­go­ing drought in the West­ern Cape — about 50% of all milk in SA is pro­duced in the East­ern and West­ern Cape, and wa­ter is one of the most im­por­tant in­puts in dairy pro­duc­tion.

On the other hand con­sumers have been opt­ing for full-cream and full-fat prod­ucts, which has left less cream for but­ter pro­duc­tion. And the prover­bial cherry on top is that win­ter is gen­er­ally a low-pro­duc­tion time for dairy cows.

Viccy Baker, founder of in­de­pen­dent con­sumer web­site Re­tail Price Watch — which tracks the prices of house­hold goods in SA — says the big­gest price in­creases in but­ter oc­curred dur­ing 2016.

“While prices con­tinue to rise, the rate ap­pears to be slower in 2017, pos­si­bly be­cause of re­sis­tance from the con­sumer. It is in­ter­est­ing that Lur­pak, a pre­mium brand which is al­most dou­ble the price of other but­ters, has kept its pric­ing sta­ble through­out,” she says.

Ac­cord­ing to Baker’s data the av­er­age price of the Clover 500 g tub of but­ter at Check­ers, Sho­prite, Pick n Pay and Spar was R45.25 in Jan­uary 2016. Shop­pers can ex­pect to pay R61.84 in July 2017 — a 36.7% leap in price. For the Spring­bok un­salted 500 g tub, the price last year was R43.45 but this year it is R59.99, up 38.1%. The Lur­pak 250 g of but­ter was sold for R50.52 in Jan­uary 2016 and now costs R49.99 – a de­crease of 1%.

SA is not the only coun­try ex­pe­ri­enc­ing a short­age. The UK and the US are in the same boat. All three coun­tries could look to im­port­ing but­ter to en­sure sup­ply.

Ac­cord­ing to the In­ter­na­tional Trade Cen­tre data for 2015, the world’s top but­ter-ex­port­ing coun­try is New Zealand. In sec­ond place is the Nether­lands and in third Ire­land.

New Zealand’s own sup­ply could be un­der pres­sure af­ter it an­nounced that it ex­pected to pro­duce less milk this year than in pre­vi­ous years.

De­spite the low pro­duc­tion of milk in SA due to sea­sonal change, the price of milk it­self has fallen back to pre-drought lev­els, says Baker.

As for meat, farm­ers slaugh­tered their herds dur­ing the drought and the sur­plus of sup­ply then meant lower prices. But now that herds are be­ing re­built, prices are on the rise.

Karabo Takadi, agri­cul­tural econ­o­mist at Absa, says beef prices in­creased sig­nif­i­cantly in the six months to June 2017. He says the av­er­age class A beef price was

17.2% higher at the end of June than at the end of Jan­uary 2017.

“The ex­cel­lent re­cov­ery in rain­fall af­ter the drought boosted the re­vival of pas­tures,” he says. The long-term re­sult of im­proved rain­fall would be in­vest­ment in live­stock, which would ul­ti­mately be a tasty boon for con­sumers.

“We should see im­proved live­stock pro­duc­tiv­ity and pro­duc­tion in the next two years. This should in­crease sup­ply, which could even­tu­ally lower the con­sumer prices of pro­tein foods.”

Mean­while, says Takadi, the high costs of beef, lamb and mut­ton could sway South Africans to switch to cheaper meat such as pork and poul­try. The na­tional lamb price in par­tic­u­lar is at a record high at just be­low R75/kg.

“With the poul­try in­dus­try faced with bird flu out­breaks, pro­duc­tion costs may in­crease due to the added biose­cu­rity mea­sures and pro­duc­tion losses. As a re­sult, poul­try pro­duc­ers may also start to de­mand higher prices. This may in turn re­sult in a shift to­wards pork prod­ucts as an al­ter­na­tive to poul­try,” says Takadi.

Baker’s data shows that lean beef mince cost R69.87/kg in Jan­uary 2016 and jumped to R73.53/kg in Jan­uary 2017. The av­er­age cur­rent price is R81.86.

Lamb braai chops cost R104.10/kg last year Jan­uary. To­day, the av­er­age cost is R124.81.

The cost of pork rash­ers has in­creased more slowly, ris­ing to R85.77 in July 2017 from R79.41 in Jan­uary 2016.

What it means: Chang­ing con­sumer habits have helped to bring about a steady in­crease in the price of but­ter

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