The Scottish Agricultural Organisation Society (SAOS) will explore opportunities to ease butter supplies by collective buying and storage, to increase market competitiveness and boost sales.
The study will also look at the potential to forecast future market activity to help mitigate the effects of any instability in the sector.
The SAOS’s study is being delivered through Scotland’s £1M Market Driven Supply Chain Project. The scheme was launched in March to support food and drink supply chains in fully exploiting opportunities in UK and international markets.
Wholesale prices at a record high
Speaking at the Royal Bank of Scotland Food and Drink conference, Scottish cabinet secretary for rural economy Fergus Ewing acknowledged the price of wholesale butter had doubled since the start of the year, with wholesale prices at a record high.
“This is a concern for many of our smaller food and drink manufacturers, who use butter as a primary ingredient, such as our shortbread and confectionary producers and bakeries, who are finding trading tough.
“We have listened the concerns of our manufacturers and this urgent feasibility study will explore opportunities to exploit buying and efficiency savings made available through collaboration, boosting productivity and competitiveness within domestic and global markets.”
Ewing said he expected to see the results of the study within the next month, which would be used to support the industry in whatever way they could.
Butter and cream shortage
In July, Arla Foods boss Peder Tuborgh warned that a butter and cream shortage would see price hikes by Christmas.
The UK was facing “significant inflation” on butter and cream, because there wasn’t enough being produced, said the Arla Foods chief executive.
Speaking in July, Tuborgh told BBC’s Today programme: “Particularly in the area of butter and cream, we need demand to slow down a bit, because by Christmas time, in Europe, there will simply not be enough milk and butter around.”
Meanwhile, a Scottish dairy boss has called on the sector to “think big” and increase production in order to make the most of the economic uncertainties posed by Brexit.