The big fat problem

This has inspired the production sector to produce more fat. Growth in US milk production pushed 3.1% more butterfat into the supply chain each year over the decade to the end of 2022. Compare that to the growth in cheese production of 2.5% p.a. over the same period and slowed to 2% in the past 5 years. Butter consumption grew just 1.5% in the past decade, picking up a little in the past 5 years, but slowing in 2022. So…where’s the fat gone? Use of cream has gradually increased but data from the US industry has always been poor on cream output and consumption.

This trend has been similar but less worrisome in the EU where fat content in milk is growing at a slower pace, but consumption in production of cheese and butter is also slower.

Global trade in butterfat hasn’t helped. Butterfat demand (as AMF and butter) into developing markets has expanded less than 1% p.a. over the decade to 2022 – hence on a per-capita basis it has shrunk.

Butterfat content of raw milk continues to rise with trends in cattle breeding that are expected to continue at least into the medium term.

Cheese is the major consumer of butterfat, consuming 37% in 2022 across the top exporters, but in the EU this stretches to almost 44%. Broadly, while demand for cheese is growing, the changing mix of cheese types to favour pizza types (as food service use revives to full strength) combined with a declining fluid demand will mean a higher % of surplus fat will be looking for a market.