Milk Shortage in Europe Has Long Reaching Consequences

milk

Europe could be on the brink of a shortage of one of its most prized exports— milk.

Yes, that versatile ingredient which is so ubiquitous in domestic and foreign kitchens all over.  It may not seem like it, but this is a BIG DEAL.  

Why, you ask?  

Because we’re not actually talking about just milk here... we’re talking heavy cream, light cream, half and half, condensed milk, evaporated milk, whole milk, 2% milk, 1% milk, skim milk, butter, etc.  These foundational ingredients are essential to other foundational ingredients like cheese, ghee, cream sauces, roux, pastries, ice cream… you get the point!  

Make no mistake about it, milk is a highly impactful commodity that has long reaching consequences.  I am willing to bet that it is so widely used in your daily diet, that you won’t even realize how much you consume until you notice something “just doesn’t taste right.”

It may already be that you are feeling the pinch in your wallet when grabbing that bar of Kerrygold butter at Whole Foods (or is it Amazon?).  The reality is that milk, cream, and butter prices are already up 20 to 30 percent over the last few months.

Fall is unofficially here. #PSL ✨🍂🎃

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Unfortunately, the prices may still climb as the holiday season, one of the most popular times to use these ingredients, approaches. Think of the heartier, richer diets everyone adapts to in the colder months. More cakes, more hot coffee, more hot chocolate, and more pumpkin spice lattes with a twist at your local Starbucks.  

With consumption going up and supply dwindling, this means ‘alternative butters’ (I’m looking at you Fabio), butter from other countries (hello New Zealand), or cutting back on a small yet important part of the holiday season diet.  

With all this doom and gloom, it is a natural first question to ask…how could this even happen? And the truth is, there are a lot of factors contributing to the shortage.

To clarify, when I talk about the European Union (EU), I am referring to the main producers of the highly prized European milk, which are France, Germany and some in the United Kingdom.  

A couple years ago the market actually had more of a supply than it knew what to do with.  Imagine one person trying to drink a gallon sized glass of milk in an hour, what happens is…well, we all know how that story goes! This was the case in 2015, when the co-ops that run the European dairy shares realized that they needed to cut back production in order to stabilize falling prices.  

This kicked off the perfect storm of how we got to where we are now.

Just as production subsided, demand shot up, and not just domestically.  Parisians seemed to be consuming more pastries than ever before, clotted cream was becoming more common in middle class households in London, and Germans were devouring more Butterkuchen than in previous decades.  

The real boost to demand though, actually came from the Chinese.  

Lady Drinking Latte at Chinese Market

The EU’s demand, coupled with a new outlook of the Western diet in the Far East, proved to be an insatiable appetite of dairy products. The first warning was that New Zealand, Russia and Turkey had been supplying the Chinese with their butter needs for a little while and the sheer size of China could not be satisfied by the exports of all three countries.

As demand for quality branded products from the EU grew, so went the reserves of supply without proper replenishment.  Thus, leaving a massive hole to fill in the global trading market of the EU.

The silver lining is that there’s not a crisis quite yet, but there is definitely a storm brewing.  Peder Tuborg, CEO of one of the largest dairy producers in the EU, Arla Foods, has been quoted saying that the largest price hikes have already happened, there may be a few aftershocks, but after the market recovers, prices should go back to where they should be.  

This may still take months, though.

cronut

For all of the pros of globalization, the average consumer will never be able to have their cake and eat it too.  As markets open up to other markets, there will always be friction, there will always be a dip in quality once the production scale increases, and there will always be the ‘hindsight strategist’ saying, “this could have been prevented...” These ups and downs happen because humans are fickle, trends go up and down and policy shapes perspective.  

So, this Christmas, when I am savoring my $15 cronut, Santa may have to wash his vegan chocolate chip cookies down with almond milk.