LONDON — The UK’s largest milk buyer has warned that the price of butter could soar over the second half of the year and predicted a Christmas cream shortage.
Peder Tuborgh, CEO of dairy giant Arla Foods, told the BBC that butter prices would rise sharply over the coming months because not enough milk is being supplied by farmers to producers.
He did not predict how much prices would rise, but said it would vary across European countries.
The National Union of Farmers said this was “scaremongering.”
Butter and cream prices have risen significantly over the past year. The Department for Environment, Food and Rural Affairs told the BBC milk prices had fallen by 0.6% per litre in May compared to April, but that they were up 31% compared to May 2016.
Arla’s warning of an undersupply comes after a slowdown in production last year, due to a glut in the market that drove prices down. Dairy farms have been particularly sensitive to price changes, and between 2013 and 2016 more than 1,000 dairy farms in the UK closed due to low milk prices.
Arla Foods is a cooperative owned by dairy farmers across Europe.
NOW WATCH: Money & Markets videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.