Shoppers may soon see the effects of a nationwide butter shortage as they start their holiday cooking and baking despite efforts by the Canadian dairy industry to ramp up production.

Brian Cameron, the general manager of Dairy Farmers of Nova Scotia, said in the last two years consumer demand has increased two to three per cent year over year. Fluid cream has increased by three-and-a-half per cent.

"For butter and a dairy product, that's a large increase," Cameron told CBC's Maritime Noon.

Brian Cameron says dairy boards across Canada are trying to avoid a serious shortage over the holiday season. (CBC)

"There's a move in the health sector — and I'm not a nutritionist — away from trans fats and more towards sources of fat."

The holiday season is one of the biggest draws on butter, the supply of which will be strained by large-scale needs of businesses that order single 25-kilogram blocks in bulk.

"That's where the supply has really tightened up," he said.

"We understand that the processors, the companies that take our members's cows milk and make butter out of it, that they're holding substantial stocks of butter in anticipation in the run up to the Christmas season."

'It's a catchup game'

Cameron said a shortage can be both a good and bad thing. While work for dairy farmers won't slow down, meeting quotas is a serious challenge.

"It's a catchup game," he said. "Our boards and other boards in Canada are sending strong signals to producers to have their cows produce more milk."

In the process of removing the butter or cream, the byproduct is skim milk — of which there may be an excess due to increased production.

"Well we had a tight supply situation on skim in the summer where we actually got to the point nationally of exceeding the skim milk drying capacity," Cameron explained.

"We're trying to put in place other things to find a home, if you will, for all the skim milk that's left over when making butter and cream."

If it comes to dumping excess skim milk or skim powder, which almost happened this past summer in Nova Scotia, Cameron said it will be done in an environmentally friendly way.

But increased demand is at the end of the day "a good news story," he said.