Where's the butter? Shortage of milk spreads stocks thin

At an elementary school in Osaka Prefecture, the children's favorite butter-flavored buns used to be served once a week. The tasty rolls were dropped from the lunch menu in February.

Salad oil has also replaced butter in curries and stews.

The changes were not made for nutritional reasons; it was simply because butter was in short supply.

Domestically produced butter is scarce at retail stores because of a shortage of raw milk and higher prices of butter imports.

A shortage of butter for commercial use began to hit cake shops and restaurants last fall. The problem has now spread to homes.

Worse, butter makers are planning to raise retail prices in April, when raw milk prices are set to increase. The move will likely keep butter off more mealtime tables.

A second-tier supermarket chain in Tokyo put up a notice at outlets that states: "Butter stocks may run out due to a drop in production."

Butter products arrive two to four times a month at the chain's stores. Packs generally sell out the same day they are put out for sale.

The Seijo Ishii supermarket chain in the Tokyo area began to limit per-customer purchases of butter in November.

"We are afraid the short supply will continue to the end of the year," an official said.

Major supermarket chains managed to secure supplies, but "competition is tough to lay in stocks," a Tokyu Store official said.

Ito-Yokado has stopped listing butter in its ads because it isn't sure about future supplies.

Japan's domestic production accounts for about 86 percent of total butter demand. But domestic raw milk production was cut in fiscal 2006 after a glut forced farmers to dispose of not only surplus milk, but also dairy cows.

Now, milk is sold mainly for higher-priced drink or cheese production.

In fiscal 2006, milk for butter and skim milk production dropped 7 percent from a year earlier. The first 10 months of fiscal 2007 saw a further 4 percent drop. Domestic butter production fell from 85,500 tons in fiscal 2005 to 78,000 tons in fiscal 2006.

The drop came just as international prices of butter shot up due to a drought in Australia, higher grain prices and increased consumption in newly developed countries.

Some food makers switched from imports to domestic butter, leading to drops in the volume of butter stock. The stock rose to 19,700 tons in January for the first month-on-month jump in seven months, but it was still at 80 percent of the level a year ago, according to the farm ministry.

Raw milk production is expected to climb in fiscal 2008, but how much will go to butter production is unknown.

Calpis Co., known for its quality butter, expects fiscal 2008 production "to be about 70 percent of a year ago."

Yotsuba Inc. plans to raise prices of its six butter products by 30 yen to 60 yen in April. Other makers are expected to follow suit.(IHT/Asahi: March 14,2008)