Bacon Prices Rising Decreased Hog Production

Whether it's a country breakfast or bacon burger, consumers are paying more these days as pork prices rise.

Area grocers and restaurants say prices for bacon, sausage, ham, ribs and other swine products have jumped as farmers cut down on production and production costs increase.


The price of sliced bacon has fattened up by 16 percent since January, according to the Consumer Price Index. Ham, pork chops, baby back ribs and pork sausage also have been rising in price this year.

Industry officials cite the nation's shrinking pork supply.

"Pork producers across the country have recently come out of a stretch where they lost money for 28 consecutive months," said Roy Lee Lindsey, executive director of the Oklahoma Pork Council, an industry trade group. "Simple economics tells us that if you need to increase the price you receive for a product, you either need to increase demand or reduce supply. In this case our producers have reduced supply."

Producers started cutting back on hog numbers in 2008 when they were losing money because of high feed prices. That cutback is manifesting itself this year, and consumers are taking the hit.

Breakfast restaurant chain Jimmy's Egg is paying significantly higher prices for bacon, sausage and ham, owner Ken Burke said.

"I'm paying about $6 more for a box of bacon," he said.

At a breakfast place like Jimmy's Egg, bacon is cooking on the grill at all hours, and chefs go through several boxes of bacon a day, Burke said.

His company has had to absorb the rising costs, just as it did when milk prices increased two years ago.

"We just had new menus printed, and I don't want to print new ones just because a few items cost more," Burke said.

Perry's Food Store, a meat market at 1005 S. Lewis Ave., also has had to absorb the higher costs, said manager and buyer Sally Hendrix.

"You really see it in the bacon and the ribs," she said.

However, Hendrix said the store has not increased its prices yet, in hope that the higher pork costs are temporary.

Lindsey, of the Pork Council, said it could be months or longer before prices drop because the amount of pork in storage is low and demand for pork worldwide is high.

"It's likely pork prices will increase over time, and I don't expect them to return to the levels they were in 2008 simply due to the increased costs of inputs," Lindsey said.

Now that producers are starting to see some profits, they are increasing herd sizes. But demand, which also is strong in the fast-food market, should continue to keep bacon prices sizzling.

One factor boosting demand, according to some industry observers, is late-summer tomato harvests. They say the combination of peak-period tomatoes with bacon and lettuce creates a seasonal boom in BLT sandwich-making.

Source:http://www.tulsaworld.com/business/article.aspx?subjectid=47&articleid=20100828_46_E1_ULNSao906546