Poland is selling its frozen butter reserves to curb soaring prices
By Hanna Ziady, CNN
London (CNN) — Poland is selling up to 1,000 metric tons (1,102 tons) of its frozen butter reserves to bring down surging prices ahead of presidential elections in May.
The government’s strategic reserves agency announced the butter auction Tuesday, citing significant increases in butter prices worldwide that it blamed on a shortage of milk.
“This emergency action… should contribute to stabilizing butter prices in the market,” the agency said, according to a report by CNN affiliate TVN24, a local commercial news channel. The bidding process is due to start Thursday.
The agency said it would sell the unsalted frozen spread to businesses in 25-kilogram (55-pound) blocks, for the minimum price of 28.38 zlotys ($7) per kilo.
That is well below prices at Biedronka, one of Poland’s major supermarket chains. The retailer sells fresh butter for between 39.90-49.95 zlotys ($9.84-$12.32), depending on the brand, according to its website. The final selling price in the auction could, however, be higher than the minimum price.
It’s not unheard of for governments to tap into emergency reserves in order to boost supply and bring down prices. While such reserves are typically dominated by foreign currency or commodities such as oil and gold, some countries stockpile products deemed important to local diets. For example, in recent years, China has drawn from its strategic pork reserves and Canada has released stores of maple syrup amid shortages.
In Poland, the skyrocketing price of butter has become symbolic of wider cost-of-living pressures. Rafał Trzaskowski, the presidential candidate of the ruling party of Prime Minister Donald Tusk, recently accused Poland’s central bank of mismanaging inflation and offered to send the governor some butter as proof, according to the Financial Times.
Meanwhile, Jarosław Kaczyński, leader of the right-wing opposition Law and Justice Party, posted a picture on X earlier this month of butter being kept in a safe to highlight how expensive the spread has become amid an overall rise in living costs.
“The current government is trying to intervene in advance (of elections),” Rafał Benecki, chief economist at ING Bank Śląski in Poland, said of the butter sales.
Year-on-year inflation in Poland came in at 3.9% in November, considerably above the equivalent rate across the European Union, official statistics showed Wednesday. On the national measure of inflation, prices rose even more last month, by 4.7%.
That’s still well below the 18.4% peak reached in February last year but is an issue that surveys show is weighing on household spending, Benecki told CNN. And while retail butter prices are up around 20% compared with last year, wholesale prices have climbed 50%, signaling even higher prices for consumers ahead, he added.
According to the European Commission, butter prices in the EU have jumped some 44% this year as dairy prices have surged around the world.
Last month, the Dairy Price Index published by the United Nations’ Food and Agriculture Organization stood 20% above its level a year ago. Worldwide butter prices increased for the 14th consecutive month to a record high, due to strong demand and “tight inventories,” the UN body said in a statement.
Also in November, its broader Food Price Index, which tracks international prices of a range of food, reached its highest level since April 2023. However, the index still remains more than 20% below the peak recorded in March 2022.
The-CNN-Wire
™ & © 2024 Cable News Network, Inc., a Warner Bros. Discovery Company. All rights reserved.
