Butterfat boom to benefit dairy farmers

“Have you heard of a butter board?” 

I can still hear the question clearly, from the first video I ever stumbled across on TikTok explaining the trend. 

If you are as I was then, wondering “What in the world is a butter board?” the answer depends on who you are. For me, it was a platter covered in softened butter and topped with herbs, garlic, and other flavors, to be enjoyed by swiping a piece of freshly sliced bread across the board. If you are a dairy farmer, the answer, simply, is opportunity. 

In a report released late last year, Corey Geiger, lead dairy economist for CoBank, details how the consumer trend toward eating more butterfat is good news for dairy farmers.

A ‘churning’ tide

“Going back to our great-grandparents and grandparents’ generation, dairy was getting clobbered from margarine,” Geiger says. His report explains that butter’s competition with margarine began in the 1950s on a price comparison basis, and heated up in the 1970s and 1980s, when popular nutritional opinions discouraged consumption of butterfat.

Today, there is research supporting the reversal of that trend. As Geiger’s report says, fats are back in vogue, and consumers are responding by eating more full-fat dairy products such as yogurt, cheese, and — you guessed it — butter boards. 

“We went through a period starting in 2015 when, for a number of reasons, milk prices were rather lackluster,” says Peter Vitaliano, vice president of economic policy and market research for the National Milk Producers Federation. “The prices of cheese, nonfat dry milk, and whey were rather depressed. That’s what mostly drove the milk price down, but the price of butter went up fairly significantly…. Butter was helping to keep the prices of milk from being even worse at a time when market prices were generally somewhat depressed.”

Dairy farmers, Vitaliano explains, are effectively paid for their milk based on how four dairy prices are performing: butter, cheddar cheese, nonfat dry milk, and dry whey. He says in 2015, the value of butter started accounting for roughly 60% of the milk price, when it had been about 40%. He says this trend started to decline in 2019 and through the pandemic, but butter was back around 60% last year and is projected to remain there this year.

Breeding for butter

With full-fat dairy products being in higher demand, Geiger says dairy farmers can try to adjust feed rations and breeding programs to increase fat and protein components in milk. 

“Through genetics and feed, we’re always striving to increase the component value in the milk because we don’t get paid for the water that we ship out,” says Simon Vander Woude, owner of Vander Woude dairy in Merced, California. “Today, in the last couple of years, it’s been more the butterfat that has been carrying the milk price, and so through genetics and feed, we can bump those numbers up in the milk that we produce.” 

However, he admits there is a limit to how much you can change while maintaining the health of the cow.  

“It’s still a living biological creature that we’re working with, every single day,” Vander Woude reminds. “We’re working with that cow in her rumen, and every day we’re just trying to continuously adapt what we feed her to make sure that we’re getting the most value we can out of that cow.”

On the ‘whey’ up

Geiger titled his report “The Butterfat Boom Has Just Begun.” He explains that the U.S. is a milk-fat-deficit nation, importing a significant amount. 

He says from 2011 to 2022, U.S. butterfat production increased 27%, from 7.3 billion pounds to 9.3 billion. During the same period, butterfat imports surged 120.6%, to 287.7 million pounds. This includes the trendy Irish Kerrygold butter, which has 2% more fat than regular butter. 

“I gave a presentation at the Dairy Practices Council in Nashville, Tennessee, and an Irish dairyman was there,” Geiger recalls. “I remember directly what he said. He looked at me and he goes, ‘Irish dairy farmers would give their right arm for the opportunity that’s in the U.S. right now.’ And that opportunity was the domestic market and the butter demand.”