Are butter market signals reaching farm level?

Published 5 September 17

Given the rising prices for butter on the wholesale markets, we would expect to see an increase in butterfat levels coming off farms. However, despite the high prices being commanded for butter at one end of the chain, the incentive to produce for it has not yet been passed down to farmers. Recent milk price changes show that any increases have been applied generally, rather than with a butterfat focus.

This lack of incentive shows in the butterfat figures for delivered milk. The average butterfat percentage of milk was 3.96% in June 2017, 0.02 percentage points above June 2016. Early indications suggest butterfat will be at a similar level for July, keeping it above 2016 for another month. However, this increase isn’t significant, and won’t provide noticeable relief to the tight supply situation in the butter market. 

2017.09.07 Butterfat