In an appearance on Vikerraadio on Monday, Estonia Farmid OÜ board member and one-time minister of agriculture Jaanus Marrandi explained that Estonian producers have been exporting large quantities of cream to Europe, leading to a shortage of it back home and an expected price hike on butter to come next month.
“We actually need to sell off half the produced amount, either as raw milk or as dairy products, by exporting it out of Estonia,” Marrandi said, explaining that Estonia actually produces significantly more milk than it consumes.
He said that the richness of milk decreasing during the summer months is related to cows’ calving, noting that cows calve more in the spring and summer, which also increases the number of milking cows and the amount of milk produced. When milk quantities are bigger, the milk itself is slightly less rich as well.
The agricultural company board member clarified that the butter shortage Estonia is experiencing isn’t due to this decrease in the richness of the milk, but rather the export of the cream out of Estonia.
“In recent weeks, the price of cream has gone up in Europe and likely worldwide, and as a result it’s more profitable for processors to sell cream in high volumes to Europe,” he said.
Selling cream in large quantities is also easier and cheaper for producers than selling butter batch by batch, he continued, adding that selling cream also eliminates the cost of producing butter.
Butter prices set to rise up to 15 percent
The cream shortage in Estonia has affected the prices of butter and other dairy products made from milkfat as well.
According to Prisma Peremarket procurement director Kaimo Niitaru, compared with last August, the retail price of the five top-selling Estonian butters has gone up by around 5 percent; this increase also accounts for the change in VAT.
“As of Friday morning, we’ve been informed of price increases,” he said. “These will apply starting toward the end of September somewhere, and in the range of 10-15 percent.”
Niitaru explained that these price increases will depend primarily on how long this cream shortage will last and how high the demand for cream is.
Selver and Coop reported that butter prices in their stores have not yet gone up. Coop Estonia purchasing director Oliver Rist wrote, however, that they have received information from producers about plans to raise prices.
“This will primarily affect 82 percent butter, and the price change may reach store shelves around a month from now,” Rist added.
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