Poland is offloading its strategic butter stockpiles to combat escalating costs.
The butter auction was declared by the country's reserve agency on Tuesday, attributing the global surge in butter prices to a scarcity of milk.
As reported by CNN affiliate TVN24, a local commercial news channel, the agency stated that this measure should help in stabilizing the market prices.
The unsalted frozen butter would be sold to businesses in 25-kilogram (55-pound) blocks, at a minimum price of 28.38 zlotys ($7) per kilo. This is lower than the prices offered by Biedronka, a major Polish supermarket chain, which sells fresh butter between 39.90-49.95 zlotys ($9.84-$12.32), depending on the brand. However, the final auction price could exceed the minimum.
Governments often resort to emergency reserves to bolster supply and decrease prices. While these reserves usually consist of foreign currency or commodities like oil and gold, certain countries keep essential food items for local diets in stock. Recently, China has utilized its strategic pork reserves, and Canada has discharged maple syrup reserves to combat shortages.
In Poland, the escalating butter price has symbolized broader pressures on living expenses. Rafał Trzaskowski, the presidential candidate from the ruling party led by Prime Minister Donald Tusk, accused Poland's central bank of mismanaging inflation and proposed sending the governor some butter as evidence, according to the Financial Times.
Meanwhile, Jarosław Kaczyński, leader of the right-wing opposition Law and Justice Party, posted a picture on X to emphasize the escalating cost of butter amidst an overall increase in living expenses.
Rafał Benecki, chief economist at ING Bank Śląski in Poland, commented on the butter sales, stating that the current government is intervening in advance of elections.
Inflation in Poland was 3.9% in November, significantly more than the corresponding rate across the European Union, according to statistics revealed on Wednesday. The national inflation rate increased to 4.7% last month. Despite being below the 18.4% peak reached in February last year, this issue is impacting household spending, Benecki told CNN. Retail butter prices have gone up by around 20% compared to last year, while wholesale prices have risen by 50%, signaling higher prices for consumers in the future.
According to the European Commission, butter prices in the EU have skyrocketed by 44% this year, as dairy prices have surged worldwide. Last month, the Dairy Price Index published by the United Nations’ Food and Agriculture Organization was 20% higher than its level a year ago. Worldwide butter prices have climbed for the 14th consecutive month to a record high, due to strong demand and scarce inventories, as stated by the UN body.
In November, the UN body's broader Food Price Index, which monitors international food prices, reached its highest level since April 2023. However, the index remains more than 20% below its peak in March 2022.
Businesses in Poland will now have access to cheaper unsalted frozen butter due to the butter auction, as the country's reserve agency will sell the product in 25-kilogram blocks at a minimum price of 28.38 zlotys ($7) per kilo. This move is intended to help stabilize the market prices and alleviate some of the pressures on living expenses caused by the escalating butter price.
