Taken from Healing With Whole Foods:

Made by heating butter and skimming the foam off the top, clarified butter is actually the best way to use better for sauteing, stir frying, and similar cooking needs. Covered and stored in a cool place, it will keep without going rancid for a few weeks. Because pesticide residues from modern cattle feed concentrate in butter fat, it is best to obtain butter derived from organically raised cows.

Clarified Butter Preparation

Heat two pounds of sweet (unsalted) butter in a saucepan until boiling, then adjust heat to maintain a slight rolling boil. The foam that collects on top will condense and thicken, and should now be skimmed off. After 12 – 15 minutes, when boiling stops and a fry-oil sound begins, quickly remove from heat and allow to cool for a minute or two; then pour the clarified butter into a non-plastic container such as glass or pottery. The sediment in the bottom of the pan and the skimmings from the top are milk solids and can be used creatively in or on any food. Makes approximately one pound of clarified butter.

Josh's note: If you would like more information about Clarified Butter, see my article on Oils

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