Yahoo Finance A butter and cream shortage is expected by Christmas, warns Arla boss
An insufficient supply of milk being produced by UK farmers could force up the price of butter and cream, resulting in a shortage by Christmas, the boss of dairy giant Arla has warned.
Speaking to the BBC, the firm’s chief executive Peder Tuborgh, said consumers will feel the impact across Europe in the coming months, indicating that price increases may vary between European nations.
Arla, whose brands include Anchor and Cravendale, is owned by dairy farmers and has annual revenues of €9.6 billion euros (£8.4 billion).
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“At the moment we are trying to get as much butter and cream out of our producers,” he said.
However, Tuborgh’s comments have been branded as “scaremongering” by The National Farmers Union.
It recognised that there have been “record prices” for wholesale cream and butter in recent weeks, adding that the “constant boom and bust dairy market cycle” helped “no-one, most of all farmers”.
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“That said scaremongering about lack of milk supply going forward only serves to concern consumers,” it said.
“It’s no surprise that milk buyers are worried about milk volumes falling. Confidence within dairy farming is at an all-time low – mistrust in the market dynamics and suspicion about how milk buyers are treating their supply base coupled with the lack of direction on the impact of Brexit on the dairy sector.”
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Arla’s boss explained that milk supplies were running low because producers had exercised caution and “put the brakes on” in 2016, after experiencing a previous over-production of milk, and consequently lower prices.
A spokesman for industry body Dairy UK said there had been “significant increases” in wholesale prices for butter and cream recently.
It added: “To what degree price increases are transmitted to consumers is a matter for retailers.”
According from a statement from the Department for Environment, Food and Rural Affairs said while farmed milk prices had fallen by 0.6% per litre in May 2017 compared with the previous month, they had risen by 31% compared with May 2016.
UK milk production has also risen by 4.7% in May compared with April, almost equalling production in May 2016, it added.
