SCOTLAND is famous for its shortbread and baked delights but a butter shortage is threatening production of these lip-smacking treats.

The Scottish Government yesterday (Fri) announced urgent action for these producers in the wake of the butter shortage, with collective buying and storing considered as an option to reduce costs.

The move comes in the wake of warnings by the chief executive of Arla, the company behind Anchor and Lurpak, that here would not be enough butter at Christmas.

Rising demand and a decline in milk production has led to a doubling in the price of butter this year.

The growing butter crisis and shortage has been gathering pace across the UK and Europe over the last 12 months thanks to a perfect storm of market conditions.

READ MORE: Why is there a butter shortage?

Many dairy farmers were forced out of business or scaled back on production when EU dairy quotas were lifted, a Russian ban on EU food imports and a slowdown of China’s dairy market sent prices plunging in 2015 into 2016. Supermarket price wars also forced many farmers out of the sector.

Growing export demand has squeezed UK butter supplies because the devaluation of sterling in the wake of the Brexit vote has made British butter more competitive.

And consumer tastes have changed in recent years, with more people getting the ‘butter is better’ message and abandoning margarine.

Rural Economy Secretary Fergus Ewing has now asked the Scottish Agricultural Organisation Society (SOAS) to carry out a feasibility study into ways to tackle volatility in the butter industry

One of Scotland’s major dairy companies, Graham’s The Family Dairy, welcomed the government intervention but said the it should be investing in the Scottish dairy industry as a whole.

Managing Director Robert Graham, said: “There is a huge demand for butter, with consumers swapping margarine for butter following the news that scientists had got it wrong about the health dangers posed by butter.

“The demand for butter isn’t going away. The UK is the second largest importer of dairy products after China. Around 90 per cent of butter in Scotland comes from outside the country but we have the ideal climate for milk production and should be making more of our own.

“This homegrown demand provides the best opportunity in a generation to invest more in the dairy industry, from milk production to processing capacity, to support for retailers to get Scottish dairy products on the shelves, to marketing to persuade the consumer to buy Scottish.”

READ MORE: Why is there a butter shortage?

Speaking at the RBS Food and Drink conference, Mr Ewing said that the food and drink sector was a “significant and growing part of our economy” and ministers wanted to support manufacturers “particularly during times of economic pressure”.

He said: “The price of wholesale butter has doubled since the start of the year, with wholesale prices at a record high.

“This is a concern for many of our smaller food and drink manufacturers who use butter as a primary ingredient, such as our shortbread and confectionery producers and bakeries, and who are finding trading tough.

“We have listened to the concerns of our manufacturers and this urgent feasibility study will explore opportunities to exploit buying and efficiency savings made available through collaboration, boosting productivity and competitiveness within domestic and global markets.

“We expect to see the outcome of the study within the next month or so and we look forward to supporting the industry in whatever way we can.”

The feasibility study is being funded from the £1 million Market Driven Supply Chain (MDSC) project, which the Scottish Government established in March.