Drought effects may increase pork prices

10/2/2012

ST. LOUIS — Bacon lovers can relax. They’ll find all they want on supermarket shelves in the coming months, though their pocketbooks may take a hit.

The economics of the drought are likely to lift prices for bacon and other pork products next year, by as much as 10 percent. But U.S. agricultural economists are dismissing reports of a global bacon shortage that lent sizzle to headlines and Twitter feeds last week. Simply put, the talk of scarcity is hogwash.

“Use of the word ‘shortage’ caused visions of [1970s-style] gasoline lines in a lot of people’s heads, and that’s not the case,” said Steve Meyer, president of Paragon Economics in Iowa and a consultant to the National Pork Producers Council and National Pork Board.

“If the definition of shortage is that you can’t find it on the shelves, then no, the concern is not valid. If the concern is higher cost for it, then yes.”

Fears about a scarcity of bacon swept across social and mainstream media in recent weeks after Britain’s National Pig Association said a bacon shortage was “unavoidable,” citing a sharp decline in the continent’s pig herd and drought-inflated feed costs.

The report caused a great deal of consternation over a product that used to be merely a breakfast staple, but nowadays flavors everything from brownies to vodka.

The alarm was quickly dismissed by the American Farm Bureau Federation as "baloney."

"Pork supplies will decrease slightly as we go into 2013," Farm Bureau economist John Anderson said. "But the idea that there'll be widespread shortages, that we'll run out of pork, that's really overblown."

The stubborn drought in the United States, the world's biggest supplier of feed grains, undeniably will affect pig production. The government now expects U.S. production of corn to amount to 10.8 billion bushels, the least since 2006.

Those lowered expectations sent prices of corn to record highs through much of the summer. Feed generally makes up about 60 percent of the expense of raising a pig.

Rather than absorb the higher costs, swine and beef producers often have culled their animals by sending them to slaughter.

As of Sept. 1, the nation's inventory of hogs numbered 67.5 million head, up slightly from a year earlier, the USDA reported Friday. But the USDA suggested that pork supplies will tighten next year as the nation's breeding stock and intended farrowings — birthings of litters of pigs — likely will drop due to high feed costs.

Such liquidations could mean a temporary glut of pork on the U.S. market, depressing pork prices before the oversupply eases and the volume of pork drops again next year, causing hog prices to rebound, said Ron Plain, an agricultural economics professor at the University of Missouri in Columbia.

Consequently, he estimates, the higher costs will be passed along to consumers, who could end up paying 10 percent more for their bacon.

The USDA said a pound of sliced bacon cost an average of $4.05 last week in U.S. supermarkets, down 22 cents from the previous week.