The Butter Glut

In Chicago and Manhattan produce markets last week, the wholesale price of butter was down 10-c- from last year (to around 67-c- a lb.) and still melting. For the first time since April 1951, the Agriculture Department was buying up surplus butter in an effort to stabilize the market. In the last six weeks, said Agriculture, it had bought up 1,200,000 lbs. for $818,000. Butter dealers freely predicted that the department might have to buy up 20 to 40 million lbs. in the next couple of months.

Chief reason for the butter glut was the big increase in sales of colored oleomargarine, now permitted in 42 states.* In prewar days, per capita consumption of oleo was only 2.9 lbs. a year compared to 16.7 lbs. of butter. Today it is 7.7 lbs. compared to 8.7 lbs. for butter. This year U.S. margarine output is expected to hit at least 1 1/4 billion lbs., topping butter production for the first time in the nation's history. Another reason for the surplus of butter is increased imports of dried milk (up 90% so far this year to 29 million lbs.). This product is, more & more, replacing fresh milk in ice cream and other foods, with the result that more milk is now being diverted into butter. Butter supplies have also swelled for the simple reason that cows have been bred and fed to produce much more milk than they ever did before.

How can the butter problem be solved? Answered an executive of one of the Midwest's biggest creameries last week: "Butter never will make it unless they yank out the supports and let butter go to a competitive 50-c---or wherever supply & demand pegs it . . . Who can pay 70-c- a lb. for butter when you can get margarine for 30-c-?" Such a proposal would hardly sit well with the dairy farmers. But many a butter dealer last week thought that something could be learned from the experience of potato farmers. Since supports were dropped from potatoes nearly 18 months ago, the market has stabilized and farmers are getting a good profit on their crop.

* The six holdouts: Iowa, Minnesota, Montana,South Dakota, Vermont, Wisconsin.

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