The unprecedented demand for milk fat is what dairy giant Fonterra is blaming for the global butter shortage.

The fat from about 20 litres of raw milk makes up a single 500g block of butter. That's nearly the total amount that can be milked from two cows in one day.

250 metric tonnes of butter is churned out of Fonterra's Te Rapa factory daily.

But it's still not nearly enough to meet the huge worldwide demand.


Director of operations and supply chain Mark Leslie told NZH Focus it's a global phenomenon.

"The price of butter has surged all around the world and a big part of that is just purely driven by demand for butter products and fat products. And supply hasn't kept up," he says.

He said New Zealand, Europe and the US could not keep up with the demand.

NZH Focus has compared the prices of the cheapest 500g block of butter at major supermarkets here, in Australia and in the United Kingdom.

In New Zealand, the price of the cheapest 500g block is tied between brands Anchor, Tararua and Rolling Meadow at $5.99.

It's $5.58 for 500g of the UK brand, Tesco British Unsalted Butter.

In Australia, the cheapest brand is Essentials Australian Made Unsalted Butter at $5.94. Also, the most expensive brand at $11.18 for 500g is New Zealand's own Mainland butter.

Leslie says it's impossible to predict how high the price of butter could get.

"At some point it will equalise up and you'll see that from extra production coming out of New Zealand or out of [Europe]."

He says they've already taken steps to ensure butter doesn't run out for New Zealanders, including investing in a $20 million expansion of the Te Rapa factory.

Leslie partly blames the spike in demand on eating trends over the past three to five years.

"We've seen some of the likes of McDonald's and other quick service restaurants around the world go from other forms of fats back into having butter in their finished burgers," he says.

"You've seen more and more of this eating out more regularly. If you go into Asia and some other countries... From cream cheese which will go into cakes or whipping cream that'll go into the Italian cafes... All of that product is competing for the fat or the butter fat stream of our milk."

He says it's anyone's guess when the industry will bounce back.