France faces a butter crisis

By: Buyi Wang

Behind a supermarket’s shelf empty of butter lies complicated factors leading to the shortage.

For long, butter has been the staple and pride of French society. Whether it’s a plain croissant or a chocolate crepe, butter makes up the majority of the ingredient. However, concern takes over as France, the biggest butter-consuming country in the world, sees the shelves of its supermarkets become devoid of butter. On the Internet, someone teases the shortage by auctioning a buttered toast. At pastry shops in Paris, owners complain about the rising price of butter, which almost tripled from 2016 to 2017. As the shortage continues to disrupt French society, people start searching for the leading factors.

A shortage takes place when there’s strong demand and weak supply. International demand has indeed surged as countries such as China and United States consume increasingly amount of butter. Meanwhile, discoveries that sugar instead of butter shall be blamed for health issues have broken the bad reputation that calcifies around butter. A pursuit of more natural food has also made people choose butter over its artificial substitute: margarine.

Unfortunately, the rising demand has been accompanied by a fall in supply. “New Zealand, the world’s largest dairy producer, exported 11% less butter”¹ in 2017 due to harsh weather conditions. Domestic supply is also troubled by the rigid pricing system. In France, the price of butter is decided annually and remains fixed throughout the year. Thus, even though the actual market price is rocketing, what farmers gets paid for is still the annual contract price, which is lower. The monopolistic French supermarkets simply refuse to rise the price they pay for butter. In Germany, “butter prices in supermarkets rose by 72% in the year to August, rather than France where they rose by just 6%”². As a result, French farmers export their products abroad, where profits are higher. The end of E.U’s milk quota has also damaged supply. Before the quota was introduced in 1984, EU protected its agriculture sector by promising to buy up excess supply of milk and butter. The decision has led to what people refer to as “milk lakes” and “butter mountains’- an extreme case of excessive supply. To decrease excess production, the EU introduced the milk quota, fining countries for excessively producing dairy goods. However, as global demand rises, EU removed the quota in 2015, encouraging its farmer to enlarge production. As production increases, the price of dairy products falls, driving down profits for many farmers and forcing them to exit the market, causing at last a decrease in total production.

With the shortage, consumers might end up paying more for the same butter product than before. The rising price and falling quantity have also forced many producers to cut down production. “Claude Francois, the owner of a small pastry producer in the central Cher region, has cut her workers’ hours by 70% because she cannot source enough butter to maintain output”³.

The crisis also poses a political impact. During the political campaign, Emmanuel Macron promised to protect farmers’ benefits from monopolistic retailers. Even though France is distinguished for their agricultural products, farmers earn an exceptionally small income. “Last year a third of farmers earned less than 350 euros ($403) a month, the Agricultural Mutual Assistance Association (MSA) said, a third of the net minimum wage”⁴. Under the butter crisis, the profit of the farmer is once again threatened by the powerful supermarkets. The French president could see support wane if he keeps on failing to protect farmers’ benefits.

To solve the crisis, in the short run, the government should immediately create a meeting between the supermarkets and farmers, encouraging them to come up with a new price that satisfies both sides. In the long run, France should dismantle the current price system for butter, allowing the price to fluctuate according to the market throughout the year.

Even though the French Agriculture Minister, Stephane Travert states that the shortage is due to the hoarding behavior of certain customers and would end soon, there’s not yet a sign to prove that. Nevertheless, the shortage hasn’t changed the pride that French people hold for its butter. “We use French butter or nothing,” said a baker in central Paris⁵.

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