High prices prompt bakers to swap butter for margarine

An increasing number of New Zealand bakeries are quietly switching out butter for margarine to cope with the global butter shortage.

The price of butter has risen by more than 60 per cent since mid-2016, with demand outstripping the supply.

Panic buying at supermarkets across France, for example, has led to near-empty shelves - and has Auckland's Little and Friday cafe owner Kim Evans wondering if she should be stockpiling too.

"There's no alternative for the products that I'm making for butter. I couldn't use margarine... No way."

Across both her Newmarket and Belmont sites, she says they go through 200kg of butter a week to produce her famed donuts.

In response to when butter spiked to a record high in June, she put up the donut price by $1.

Since then, she says she's had a lot of complaints from customers but fears if the cost of butter keeps getting higher, she'll have to again bump up her prices.

"It's quite stressful now trying to make it financially viable to have a business like this. Ten years ago it was, now it's becoming harder and harder," she says.

"The only alternative I can see is to make my own butter."

Baking Industry Association president Kevin Gilbert told NZH Focus bakers are resorting to alternatives to butter.

"They're doing a half, half mix with butter and margarine to maintain as best they can, the butter flavour whilst reducing the price," he says.

"[And] maybe they're looking at alternative products so rather than focusing on a danish pastry for example, maybe they're bringing something in that requires the use of less butter. Otherwise they're going to be passing on the price to the consumer."

He says just this week his supplier told him he's set to pay 8 per cent more for butter - but he doesn't expect it to stop there.

Dairy giant Fonterra's Te Rapa factory churns out 250 tonnes of butter a day.

The director of operations and supply chain, Mark Leslie, says there's no plan to cut down on the cost of production.

"No, not if you want to at the end of the day have the quality of butter that you want out the back end of it.

"You're not going to go and compromise and cut costs," Leslie says.

"And you will see and I suppose that's more the blends and things like that that people may switch to.. But from a cost cutting [perspective], it's very hard to cut out the key costs which is the milk part of it which goes into that."

Evans wants the Government to step in and take the GST off food - a move that could save cafes and bakeries, including hers, from being either forced to close or to cut buttery treats out altogether.