Japan is running out of butter. And now they blame it on the weather! Particularly the record heat that suffocated the country during the summer of 2010.

Dairy cows are inseminated in the summer and calve in the spring, at which time they start producing milk. The calf is removed from the cow within a day (and fed some cheap artificial slop) so that the milk can be sold.

But the summer 2010 broke all records, and the heat lasted so long that cows became less fertile. Hence, fewer cows calved in the spring, and milk production dropped. Another contributor was the March 11 earthquake and tsunami. A lot of raw milk had to be thrown away because it couldn’t be shipped. As a result, nationwide milk production in April was 5% below that of April 2010.

Fresh milk is given highest priority because it sells for the highest price. Next in line is fresh cream. Then butter. If raw milk runs low, butter production gets hit first. And it’s down 22% so far this year. Now cake shops are deeply worried. They like to use top ingredients like real butter (instead of palm oil or whatever), but now they’re starting to run out of it, and prices are going up.

This is what happens in a country that uses insurmountable administrative barriers to keep foreign products out in order to coddle its own industries and constituencies. It creates the most uncompetitive players and price distortions. And the people are paying for it.

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