KUALA LUMPUR, Nov 28 — With Christmas on the horizon and the delicious anticipation of all the baked treats that come with the season, news of a butter shortage strikes at the heart — and wallets — of a particular group: bakers.

Luckily, in Malaysia, there is no shortage. Just more expensive butter.

The 50 per cent price increase of butter over the past two years has seen local bakers adapt instead of replacing this essential ingredient with a cheaper alternative like margarine.

Some have taken to downsizing their cakes, while others already revised their prices upwards with one, in the spirit of Christmas, deciding to absorb the cost until the festive season is over.

Tray Cafe co-founder Dinesh Rao told Malay Mail Online that the price in the past two years has gone from RM13 for a block of 500g butter in 2015 to RM20 recently.

"Everything else, year-on-year, there’s been an increase too but what everyone is shocked by is the increase in the price of butter because that's generally the most expensive ingredient.

"As a result, every baker is feeling the pinch right now. But for us, we don't really buy our butter at retail prices... we have our suppliers. But from 2015 up to now, there's been basically an increase of 50 per cent,” said Dinesh who uses up to 100kg of butter a month.

When asked if there were other ingredients he could use, Dinesh said there simply is no replacement for butter, citing that he may cut down on sugar and other ingredients but he cannot skimp on butter.

The good news for Tray Cafe's regulars is that they will not be paying more because of the increase in butter prices as Dinesh wisely revised the prices last year at the onset of the price hike.

For those curious about why the price of butter has gone up so much, it is a trend that can be traced back to a worldwide dairy glut in 2014 which forced farmers to cull their herds last year. Many even went out of business entirely.

A Financial Times report said the "adverse health effects of some vegetable oil-based spreads has also prompted a switch back to butter. In the US, for example, butter consumption per person has grown 16 per cent since 2010, according to USDA data.”

So, a cutback in dairy production coupled with increase in demand for butter saw a butter shortage in some countries and increase in prices in all.

Tray Cafe's co-owner said there simply is no replacement for butter and fans of the cafe's cakes totally agree. — Picture courtesy of Tray Cafe

Until production matches demand in the next few years, bakers — and eaters — will just have to adjust to higher prices.

SayaBAKE founder Nora Ismail saw the result of the price peaking in September first hand, citing that the price for butter went up three times this year.

"There was a gradual increase at the beginning of the year from RM6.50 to RM7 and then to RM7.70. Suddenly in October or September the price went up to RM9.20,” said the home baker who also complained that the cost of other ingredients has also gone up.

"I've been forced to raise my prices but my customers understand. Before the price hike and GST, for a cake I price at RM100, my material cost would be around RM45 and I charge RM15 for labour. Now, my ingredients would cost me around RM55 to RM60.”

Unlike more established businesses like Tray Cafe which use a supplier for their ingredients, home baker Nur Syerrylina Abu Latifei, founder of Syerry Kitchen, suffers shortages of certain brands whenever there is a price hike.

"I only use Golden Churn and SCS. Every time they raise the price, these two brands will be missing. Lucky thing there's a lot of alternative baking product stores in Bangi. I usually stockpile these two when I get the chance,” said Nur Syerrylina who has been in the business since 2013.

Another home baker Roszana Anuar, founder of Rosa@Merryhearted, had to "scale down” her cakes due to the price increase. For instance, she used to charge RM100 for a three-layer cake but now for the same price you get a two-layer cake.

"I inform my customers that if they still want a three-layer cake, the price will be more. If they can only afford RM100, I can bake a two-layer cake and all of them understand the situation.

"I will speak to my customers and customise the cakes according to their budget,” said Roszana who decided on a different strategy instead of a simple price revision.

Then there is Angelina Skelchy from Angelina's Signature Cakes who decided to absorb the price increase as she does not want to burden her customers during the festive season.

"I'm holding back the price increase to enable my loyal customers to enjoy their Christmas delights this year without having to worry about the extra cost,” Skelchy said.

However, come the new year the butter cake specialist will be revising her price by another 10 to 15 per cent to avoid incurring losses but she has her customers' support and understanding.