A Butter Shortage Is Sending Prices Through the Roof Just Before Peak Baking Season 

Post-pandemic inflation has driven up the price of everything, including groceries. Consumers can look for ways to ease the pain – perhaps cutting down on name brands – but cost increasings are hard to avoid when they affect underlying food staples. It's why a butter shortage is so hard to stomach. Butter seems to be in everything… or at least everything that tastes delicious.

The price of butter was up 24.6 percent over the 12 months ending in August, according to the Wall Street Journal, a shocking increase that was nearly double the increase of U.S. grocery prices overall over the same period – which itself was 13.5 percent, the largest annual increase since 1979. The butter price increase is reportedly being driven by supply shortages: The U.S. has the lowest amount of butter in storage facilities since 2017. As a result, butter prices were said to have reached $4.77 per unit in the four-week period ending August 27, which is also the most expensive butter has been since 2017.

The reasons for the shortages are multifaceted. Milk production, which apparently usually sees year-over-year growth, recently saw a production decline as increases in underlying costs hurt dairy farmers. Exacerbating the problem is that, as the WSJ explains, butter is actually at the bottom of the milk hierarchy, with milk typically being sold to bottlers, followed by makers of products like ice cream and cheese, before the remainder is churned into butter. Toss in ongoing labor shortages at processing facilities and simply increasing production isn't always an option.

Meanwhile, the timing is especially problematic: The winter holidays are also prime baking season, when butter demand is expected to increase. The USDA said suppliers in parts of the country are worried about being able to meet all of the orders from retailers. But at the same time, the industry also has concerns that record high prices may cause consumer demand to be lower than in the past. As a result, despite the shortage, producing more butter can also be risky business.

"What happens when orders stop?" Trevor Wuethrich, president of Grassland Dairy Products, told the WSJ. "Now everyone is holding $3 butter and the market crashes."

So, if you're planning on doing a lot of baking this winter, keep an eye out for any sales on butter. It might be an opportunity to build up your own butter reserves.