Norwegian Butter Crisis: Excess Demand and Lack of Supply

Name: Paul Maillis

Commentary Number: 1

Due Date: April 20th, 2012

Source: WallStreetJournal, “Norway: Embarrassed By Butter Shortage”,
(December 19th, 2011), http://blogs.wsj.com/source/2011/12/19/norway-embarrassed-by-butter-shortage/. Accessed on 20th March, 2012

Word Count: 743

Section: 1, Microeconomics

The Norwegian Butter Crisis was caused by excess demand and a lack of supply in the Norwegian butter market.
Figure 1: Demand & Supply Curves for Butter
Figure 1: Demand & Supply Curves for Butter

Because of trend for more butter in cooking, and Christmas season
Because of trend for more butter in cooking, and Christmas season

Supply curve during shortage
Supply curve during shortage

Because of bad season for dairy and overconsumption
Because of bad season for dairy and overconsumption

Supply curve before shortage
Supply curve before shortage

Price of Butter (€)
Price of Butter (€)

Demand curve during shortage
Demand curve during shortage

Demand before shortage
Demand before shortage

Quantity of Butter (Tons)
Quantity of Butter (Tons)

Figure 1 indicates there was a sudden demand increase for butter due to the Christmas season, which universally signifies an increase in butter consumption. In Norway, butter is a staple food which is used heavily in native cuisine. To add to the demand boom during the Christmas month (December), a popular Norwegian Chef had been emphasizing the movement to make proper food with real butter. Norway’s largest dairy co-operative Tine, blames a combination of bad weather and higher demand arising from the popularity of the low-carbohydrate diet craze. This “low carb” diet fad caused people to eat fewer carbohydrates and more trans-fat foods, which include butter. This changed people’s preferences, which leads to an upward shift in the demand curve, as indicated by Figure 1. Demand for butter rose by 30% that year and prices of over $100 per pound of butter.

Bibliography: Miller, Nathan. "Black Markets (my thoughts on the Norwegian Butter Crisis)." L’histoire de sa vie (blog), December 21, 2011. http://www.nathan-miller.com/black-markets-my-thoughts-on-the-norwegian-butter-crisis/ (accessed April 18, 2012). Unknown, . "The Norwegian Butter Crisis." Econlife (blog), March 25, 2012. http://www.econlife.com/2012/03/25/the-norwegian-butter-crisis/ (accessed April 15, 2012). -------------------------------------------- [ 1 ]. Miller, Nathan. "Black Markets (my thoughts on the Norwegian Butter Crisis)." L’histoire de sa vie (blog), December 21, 2011. http://www.nathan-miller.com/black-markets-my-thoughts-on-the-norwegian-butter-crisis/ (accessed April 18, 2012). [ 2 ]. unknown, . "The Norwegian Butter Crisis." Econlife (blog), March 25, 2012. http://www.econlife.com/2012/03/25/the-norwegian-butter-crisis/ (accessed April 15, 2012).