The economics driving Canada’s “buttergate”

Dairy farmers across Canada have been asked to stop feeding cattle palm oil in response to complaints from consumers who complained about the hardness of their butter.

The situation, dubbed buttergate by the Canadian media, exposed a complicated quota system in Canada that protects dairy producers from price fluctuations but also incentivized and prioritized the industry’s production over consumer preferences.

As the pandemic kept Canadians indoors, they started baking. A lot. Demand for butter and margarine rose 26% for the 12-month period ending on Jan. 31, according to NielsenIQ, a consumer intelligence firm. But to increase supply, instead of adding cattle to the nation’s production population, which totals about 977,800 cows, dairy farmers are suspected of adding more palmitic acids—fats which may come from palm oil or by-products of palm oil processing—to their cows’ feed. This specific livestock feed supplement, which is federally approved for use in Canada, helps increase the output of the fatty portion of milk, known as butterfat. The increased use of the feed supplement is believed to have changed the consistency of the nation’s butter.

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