Dairy producers have warned that the EU faces a butter supply crisis by the end of the year, as changing demand and market imbalances send prices to a historic high. Farmers cut their output following a sharp fall in milk prices last year, as the end of the EU’s milk quotas threw the market off kilter. Butter is currently 150% more expensive than it was one year ago, at €612/ 100kg, and the shortfall on the EU market is expected to reach 60,000 tonnes by the end of the year. But the Commission has insisted this is not due to a shortage of milk but to changing demand in the dairy sector. The butter situation results from strong competition for the fat component of milk, an EU official said. It is mainly due to milk fat being directed to cheese production to meet strong demand for cheese, whose manufacture offers better returns than butter. Another reason for the shortfall in butter supply, according to Pekka Pesonen, the secretary-general of the association of EU farmers and agricooperatives Copa and Cogeca, is the booming export market in the US, where consumers are increasingly choosing butter over margarine.