Global butter, milk fat demand surges driving prices higher

GLOBAL – The global demand for butter and milk fat has risen sharply, pushing prices upward as consumer preferences shift and production challenges persist. 

Reported by industry analysts, this trend is driven by a growing appetite for natural, full-fat dairy products across major markets, including the European Union, the United States, and China.

The shift away from processed alternatives like margarine has fueled this surge, with butter regaining favor for its clean-label appeal.

In the European Union, the world’s largest butter producer, countries like France, Germany, and Ireland are seeing steady demand. Per capita butter consumption has slightly increased from 9 pounds in 2011 to 9.2 pounds in 2023, according to industry analysts. 

However, butter prices have climbed to an average of US$5,700 per ton in 2023, up significantly due to lower milk production caused by adverse weather and strict environmental regulations. 

“Cheese production is more profitable, so we’re diverting more milk there, which tightens butter supply,” said a dairy processor in Ireland. This shift has strained milk fat availability, further inflating prices.

In the United States, butter consumption has reached a 50-year high, with Americans eating 6.5 pounds per person in 2023, according to the U.S. Department of Agriculture. 

Retail butter prices have risen to US$4.81 per pound, driven by higher feed costs, labor shortages, and growing export demand, particularly from Asia. 

A Wisconsin dairy farmer noted, “Consumers want natural butter, and we’re producing more high-fat milk to meet that demand.” The preference for full-fat dairy, supported by evolving nutritional science, has also boosted products like cream and cheese.

China’s expanding middle class and urbanization have spurred demand for butter in Western-style baked goods and dairy products. 

Imports, mainly from New Zealand, rose 10% in the first half of 2024, as domestic production struggles to meet quality needs for premium applications. 

Despite a forecasted 1.5% drop in China’s milk production in 2025, consumer demand is expected to grow, further straining global supplies.

Globally, dairy production faces challenges from rising feed and energy costs, supply chain disruptions, and seasonal fluctuations. 

A report by RaboResearch projects 0.8% milk supply growth in 2025, supported by favorable feed costs and better weather, but geopolitical risks and trade tensions could disrupt markets.

The U.S. remains a milk fat-deficit nation, relying on imports to meet demand, while innovation in premium butter products continues to add value for producers and consumers alike.

Subscribe to our email newsletters that provide busy executives like you with the latest news insights and trends from Africa and the World. SUBSCRIBE HERE