LONDON: The European Union currently has a stockpile of 82,000 tonnes of butter and 232,000 tonnes of skimmed milk. These are expected to rise to 113,000 tonnes and 282,000 tonnes respectively by February 2010 as intervention buying continues.
Low demand and excess production on the Continent are the main reasons for the stockpile. However, the European Union has launched an investigation into why dropping wholesale prices have not been reflected in retail prices, thereby exacerbating the drop in consumer demand.
Wholesale butter prices dropped by 39 percent year on year, skimmed milk powder prices by 49 percent, cheese by 18 percent and milk by 31 percent - but retail prices moved by just 2 percent.
The EU wants to work with national competition authorities to find out who has reaped the benefit. It is also reportedly examining subsidising the use of butter in prepared foods, such as ice cream and baked goods. When last run (in 2006), this scheme used up about 400,000 tonnes of butter, and might be helpful in stabilising prices.
Source: Grocer
