The price of butter is sky-high and ‘not going to come down,’ says supply chain expert—here’s why

As we enter the holiday baking season, one key ingredient will be harder to find: butter. 

And the lack of supply is already driving prices up. In January, the average price of butter was $3.67 per pound, according to the Federal Reserve Bank of St. Louis. In September, it was up to $4.70 per pound.

“Prices are not going to come down,” says Scott Grawe, a professor of supply chain management at Iowa State University. 

As of today, Trader Joe’s has the lowest price, and Target the highest:

• Trader Joe’s: $3.69 per pound
• Costco/Kirkland butter: $4.37 per pound
• Walmart/Great Value butter: $4.48 per pound
• Target/Good & Gather: $4.69 per pound

Milk production in January 2022 was down 1.4% from the previous year, according to a USDA report.

Due to the increasing cost of feed and an ongoing labor shortage, buying and maintaining cows is more expensive for farmers than in previous years.

And while some technological innovations fueled production, environmental factors did the opposite. Extreme temperatures, floods, droughts, along with frequent and intense storms “weighed on productivity growth,” according to a USDA report. 

“Such conditions can affect the availability and quality of feed as well as the physiological functioning and reproductive health of dairy cows,” the report reads. “Negative environmental conditions also lead to the distribution and resiliency of parasites and pathogens that affect animal health.”

Processing plants are also weathering an ongoing labor shortage. Plus, cold storage reserves are running low.

In August 2022, there was about 282.6 million pounds of butter in storage, down from the 362.7 million pounds in August 2021, according to a USDA report.