In Poland, butter is much more than a tasty (and caloric) dairy product to spread on breakfast toast. In its own way, it is also a matter of state. And for some time now a huge economic and social problem. So much so that his Government has had to take a desperate measure: put up for auction a thousand tons of the nation’s emergency reserves, a fund of strategic assets that includes other valuable assets for the country’s security, such as oil, vaccines. , cereals or meat.
All to stop a Price escalation that goes beyond Warsaw or Poland and even affects Spanish companies.
A peculiar auction. A few weeks ago the Government Agency for Strategic Reserves (RARS), a Polish Government office in charge of managing the stock of food, drugs or fuel that the country conserves for emergencies, issued a peculiar notice. More for the detail than for the background. Those responsible announced the auction of part of their reserves to stabilize market prices, something reasonable and expected. What is surprising (or not) is what the RARS decided to put out to tender: no more and no less than a thousand tons of butter.
Big butter… To be more precise, the agency decided to sell a thousand tons of frozen butter in 25 kilo blocks, unsalted bars, made with cow’s milk cream and packaged and labeled so that those who bid on them could keep the merchandise for 24 months. The auction was not aimed at everyone either. It was launched specifically for wholesalers, entrepreneurs who are dedicated to the dairy sector.
The announcement was launched on December 17, the conditions of the process were published on the RARS website and just a few days later the TVN24 channel revealed that there were two companies that met the requirements and presented offers that the authorities considered appropriate to obtain the huge batch of butter: Mlekovita and Milkpol Polska, both with offices in Poland.
…and at reduced prices. If there is something that stands out in the RARS auction, beyond the enormous amount of product that was put on the market, it was its price. The Polish Government put out to tender butter for a minimum price of 28.38 PLN/Kg without VAT, equivalent to 6.64 euros. Not bad if you take into account that, as CNN recalls, two weeks ago the price in Polish supermarkets was much higher: depending on the brand, it cost between 39.9 and 49.9 zlotys per kilo; that is, between 9.3 and 11.7 euros. The value provided by the RARS was in any case the minimum starting price, so it was already apparent during the bidding that the final sales value could be higher.
Why auction the reserve? To control market prices. Warsaw openly recognized this two weeks ago, when announcing the tender, when it recalled that merchandise has entered a spiral of upward prices that transcends Polish stores. “Recently the price of butter has increased considerably in world markets, mainly due to the shortage of milk,” the Executive noted. “This situation also affects Poland. To stabilize it, RARS announced a tender for the sale of large quantities.”
One decision, three keys. It may seem like an exaggeration, but it is better understood if three keys are used. The first is that auctions like the RARS are not strange. In 2019 China had to draw on its emergency pork reserves and Canada did something similar in 2021 with maple syrup.
The second key is the relevance that butter has in Polish kitchens. Statista estimates that in 2023 the average per capita consumption would be close to six kilos per year, considerably above the 4.2 that was recorded in the country two decades ago. Poland would in fact be in the “TOP 10” in the world in per capita intake.
Price earrings. The third key is what explains why Warsaw has decided to get rid of a thousand tons of butter from its emergency reserve: the escalation in prices that butter has been experiencing for some time, which has taken it to historic highs in recent months. As a reference and if you look at the values of the last five years, in summer its price had already accumulated an increase of more than 70%.
The FAO has spoken out about its increase in price and the upward price curve can also be clearly seen in the reports of the European Commission or the Italian firm CLAL, which publishes updated information on wholesale butter prices in the European market. Western and international scale. Its last value corresponds to December 20 and placed the ton between 7,170 and 8,300 euros.
A sum of factors. To understand this upward drift, several factors must be taken into account, such as the drop in production, the costs of livestock farming, the effect of the war in Ukraine, extreme weather, the diversion of resources towards more profitable productions or the loss of stock. in a market in which butter has occupied part of the space of palm oil.
Recently, on the eve of Christmas, Euro News took stock of the situation in the sector and calculated that in the 27 states of the EU the price of butter had skyrocketed by 19% between October 2023 and the same month of 2024. In some countries the increase was even greater. In Slovakia the increase reached 49% and in Germany and the Czech Republic it was around 40%. In practice, this means that a 250 g bar costs between 2.4 and 4 euros in German stores, depending on the brand.
The case of Poland. In the case of Poland, Euro News speaks of a price increase of 11.4% between the beginning of November and December alone, a percentage that rises above 49% if we look back at last year.
This increase has already led some families to switch from butter to margarine. It has also turned the bars of this product into an unexpected political weapon in the country, with exchanges of reproaches between parties that have an electoral appointment in May and face year-on-year inflation that significantly exceeded that of the European Union as a whole.
Images | Nemesia Production (Unsplash), Quinn Dombrowski (Flickr), Mike Mozart (Flickr) and European Commission
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