Butter by the ton. Government agency sells off reserves

"Recently, the price of butter on global markets has significantly increased, primarily due to a shortage of milk. This situation has also affected Poland. To stabilize the market, the Government Strategic Reserves Agency has announced a tender for the sale of large quantities of butter," the statement published on Tuesday on government websites explains.

The tender announced by RARS is for the sale of frozen butter in 25 kg blocks. In total, the Agency intends to sell about 1,000 tons of the product. The minimum sale price for butter is 28.38 PLN/kg (excluding VAT). The opening of offers related to the tender will take place on December 19, 2024.

According to the announcement, the sale will be divided into tasks: Task 1: Frozen butter in the amount of 497 tons – produced by the Dairy Cooperative MLEKOVITA

Task 2: Frozen butter in the amount of 300 tons – produced by the Foreign Trade Enterprise of Dairy Cooperatives "LACPOL"

Task 3: Frozen butter in the amount of 200 tons – produced by Polmlek Grudziądz LLC

As explained, the frozen butter has a shelf life of 24 months.

The butter sold by RARS comes from the Agency's food reserves. These reserves are created to ensure the continuity of supplies necessary for the functioning of the economy and to meet citizens' basic needs.

"The emergency action by RARS should contribute to stabilizing butter prices in the market," the statement concludes.

"Strategic reserves exist to act in situations like this, when, for various reasons, butter prices have increased so significantly. The Government Strategic Reserves Agency is fulfilling its statutory duties. If such a need arises in another area, the Agency will act accordingly," said Tomasz Siemoniak, the Minister of the Interior and Administration, during a press conference on Tuesday, asked about the tender organized by RARS.

"Certainly, these actions should help increase the supply (of butter on the market), and the price should decrease. However, this depends on the market, and I hope the results will be relatively quick," added the minister.

Meanwhile, Deputy Prime Minister and Minister of National Defense, Władysław Kosiniak-Kamysz, explained that the current butter prices are influenced, among other factors, by high milk prices. "Some dairies are paying 2.50 PLN per liter of milk. This is reflected later in the price of butter," he added. "Of course, production costs and energy prices are also factors, as they too have an impact. And this is not just a Polish issue; high butter prices are being seen across Europe," he said.

"There is one positive thing, though: a return to traditional products. In Poland, we may not have had such a shift, but in European countries, there was a time when butter consumption declined. Now, there is a return to butter," said Kosiniak-Kamysz.

At the beginning of January this year, the median price of butter was 6.99 PLN per pack, according to research by the PanParagon company. By December, the price had risen to 9.11 PLN, which represents an increase of about 30% over the year, according to the analysis. The analysis included receipts dated from the 1st to the 6th day of each month in 2024.

According to data collected by the DlaHandlu portal, the average price of butter has risen to 8.6 PLN.

In early December 2024, the Food and Agriculture Organization of the United Nations (FAO) reported: "World butter prices increased for the fourteenth consecutive month, reaching a new record high due to strong internal and international demand amid tight inventories, particularly in Western Europe. Cheese prices also rose, reflecting limited availabilities to meet growing import demand for spot supplies."

"The primary issue impacting prices is the insufficient supply of milk in the European market relative to demand," said Michał Bieńkowski, an analyst from BNP Paribas, in an interview with the TVN24 business editorial team last week.

He added that butter fat, used in butter production, is derived from milk. Other factors he mentioned include unfavorable weather conditions for dairy farmers in certain parts of Europe and strong demand for butter from the European Union, including Poland.