Not a good time to be a baker in Europe: The butter problem

And it could get worse: There may not be enough milk and cream for the holidays. Photo / 123RF

Now is not a great time to be a baker or a restaurateur in Europe.

The entire continent is running out of butter and it's a "major crisis," says the Federation des Entrepreneurs de la Boulangerie, an industry group for French bakers, in this CNN report.

The shortage comes at a time when demand for butter is booming.

For years, margarine and other butter substitutes were the rage. But now consumption of the real thing around the world is on the rise. Both Europeans and Americans are consuming a half a pound of butter more than they were back in 2010 according to government reports, and the Chinese are thirsty for more milk products now more than ever. Overall, the US Department of Agriculture is forecasting a jump of about three percent in global butter consumption this year.

The growing demand has put a strain on the industry.

Due to a significant fall in prices mainly brought on by a 2014 Russian embargo of European food products, the cost of a bottle of milk in many parts of the continent was lower than a similar bottle of water.

The industry responded by producing less and dipping into their stockpiles, causing a 98 percent decline in inventories. Now, as prices have begun to rise again, there's not enough butter to go around. Things are so bad that the chief executive of one large UK dairy recently warned that there may not be enough milk and cream for everyone at Christmas.

All of this is having a big impact on bakeries, restaurants and other small businesses in the food industry across the continent.

With butter prices rising more than 20 per cent over this time last year and supplies dwindling, many have been forced to increase their own prices to maintain margins or discontinue products altogether.

One owner of a small patisserie in France told CNBC that although she hadn't increased her prices yet, she may be forced to consider doing so if the market doesn't stabilize by the fall.

"In France, if bakeries wish to make croissants, pain au chocolat or patisseries then consumers will have to pay more, " a representative of the French bakers' association told CNBC. "We hope they understand our position because making quality products means charging a higher price at this time.

The group warned that butter shortages "appear to be a real threat by the end of the year."