Bacon prices have skyrocketed to record levels, and they might not go

On Sep 29, 2021

And yes, that is accounting for inflation.

That hankering for pork chops is costing you about 7% more than 12 months ago. The average price for that slab of bacon to accompany the Sunday morning spread has jumped nearly 28% during the past 12 months, inflation-adjusted Consumer Price Index data show.

The supply chain issues and inflationary pressures that have become all-too common in these pandemic times certainly have played theirs roles in the pork price hikes, alongside a slew of industry-specific influence. President Joe Biden’s administration, for its part, believes prices are high because a couple of large companies control the majority of market share, and has outlined plans to level the playing field.

By some analysts’ expectations, the higher prices aren’t expected to ease anytime soon.

How we got here

The domestic pork supply chain was one of quickest to get knocked out of whack when the Covid-19 virus started its spread in the US.

Panic-stricken consumers bought up deep freezers and cleared out meat counters. The food service channel effectively shut down overnight, breaking a major arm of the supply chain.

Meatpacking plants — where employees worked long shifts in close proximity to each other — emerged as virus hotbeds. Lives were lost, plants were temporarily shuttered and federal investigations ensued.

When those facilities shut down, the backlog of animals grew, resulting in millions of pigs being euthanized without processing into food. Additionally, producers, wary of getting ahead of demand with too much supply, started thinning their breeding herds — ultimately depressing this year’s pork supply, said Adam Speck, economist with IHS Markit.

Pork production is expected to close out the year 2% lower than 2020 levels, he said.

An employee restocks shelves with pork in the meat section at a Kroger Co. supermarket in Louisville, Kentucky, U.S., on Tuesday, March 5, 2019. Kroger Co. is scheduled to release earnings figures on March 7.

In terms of demand, it’s a different story.

“Demand has been exceptional in the US, moving more volumes at retail than ever before seen,” Speck said in an email to CNN Business. “The combined effect of tighter supplies and stronger demand for proteins overall have contributed to this inflation.”

With a lack of meat in cold storage late last year, the industry relied more on fresh animals, which in turn helped spike raw material prices, he said, adding it’s likely those costs have peaked and that the indications from the futures markets show prices should go back to normal by June 2022.

“But do not expect a rapid price concession the next few months,” Speck said, “as retailers are typically slow to bring bacon prices back down.”

Feed, freight and labor costs have also risen significantly, said Trey Malone, assistant professor and agricultural economist at Michigan State University.

And that’s not to mention the global influences, particularly the re-emergence of African Swine Fever.

The disease, incurable and deadly to pigs, has spread across Asia in recent years and cropped up in the Dominican Republic in July 2021. It’s the first time the virus has been confirmed in the Western Hemisphere in 40 years,…