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We’re paying more for butter and milk. Way more.

Shea Huffman Sep 12, 2014

Prices for dairy products like butter and milk have risen to record highs in the past few months in the U.S. due to a number of global factors, reports the BBC.

Prices for milk futures on the commodities markets have risen 26 percent over the last year, while the average price for a gallon of milk has risen about 5.7 percent to $3.64 in August, according to the U.S. Bureau of Labor Statistics.

The price of butter has also risen sharply, with U.S. customers seeing a 62 percent increase compared to last year, with an average price of $2.75 per pound for the second week of September.

The report from the BBC cites a number of possible reasons for the price increases, including a decrease in government regulation that depleted surpluses, greater demand from China, a drought affecting New Zealand’s dairy farms and greater demand for pizza in the Middle East.

There may be some relief on the horizon, however, in the form of Russian sanctions. From the BBC:

In August, Russia implemented a one-year import ban on dairy and other food products from the European Union, US and other Western nations in retaliation for economic sanctions over Russia’s role in the Ukraine crisis.

That removed an estimated $6.6bn (£4bn) in annual dairy trade from the global market. In 2013, the EU alone exported $3bn of dairy to Russia, of which cheese accounted for more than one-third.

In response, the European Commission has announced it will provide financial support to the dairy industry, subsidising private storage of cheese, skimmed milk powder and butter until they can be sold at a later date.

The glut of dairy products has weakened the international market and caused prices in Europe to drop.

U.S. dairy consumers could see similar relief in 2015, when suppliers start to build up surpluses once again.

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