Bacon prices soar to record highs and may not drop anytime soon

(CNN Business) – Bacon is more expensive for Americans than it has been in the last 40 years.

And yes, that is accounting for inflation.

That craving for pork chops is costing you about 7% more than 12 months ago. The average price of that piece of bacon that will accompany your Sunday morning breakfast has risen nearly 28% over the past 12 months, data from the Consumer Price Index (CPI) adjusted by inflation.

Supply chain problems and inflationary pressures that have become all too common in these times of pandemic have certainly played a role in pork price increases, along with a number of industry-specific characteristics. The administration of President Joe Biden, for its part, believes that prices are high because a couple of large companies control most of the market and have outlined plans to level the sector.

According to the expectations of some analysts, the high prices may not decrease in the short term.

How did you get here?

The national pork supply chain was one of the fastest to spiral out of control when the COVID-19 virus began to spread in the US.

Panicked consumers bought freezers and emptied meat counters. The foodservice channel was effectively shut down overnight, breaking a major arm in the supply chain.

Meat packing plants – where employees worked long shifts in close proximity to each other – were hotbeds of virus infection. Lives were lost, plants were temporarily closed, and federal investigations were carried out.

When those facilities closed, the backlog of animals increased, resulting in lthe slaughter of millions of pigs that were not processed as food. Additionally, producers, wary of anticipating demand with too much supply, began thinning out their breeding herds, ultimately diminishing the supply of pork this year, said Adam Speck, an economist at IHS Markit.

Pork production is expected to end the year 2% below 2020 levels, it said.

In terms of demand, it is a different story.

“Demand has been exceptional in the US, moving more retail volumes than ever,” Speck said in an email to CNN Business. “The combined effect of tighter supply and stronger demand for protein in general has contributed to this inflation.”

With the lack of meat in cold storage at the end of last year, the sector relied more on fresh animals, which in turn helped drive up raw material prices, he noted, adding that those costs are likely to have increased. peaked and market indications show that prices should return to normal in June 2022.

“But don’t expect a quick price concession in the coming months,” Speck said, “as retailers are often slow to bring bacon prices back down.”

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

And that’s without taking into account global influences, particularly the resurgence of African swine fever.

The disease, incurable and deadly for pigs, has spread across Asia in recent years and appeared in the Dominican Republic in July 2021. It is the first time the virus has been confirmed in the Western Hemisphere in 40 years, according to the Council. National Pig Farmers.

This represents a double-edged sword for the US pork industry: valuable export business could increase in markets such as Vietnam; however, the continued spread of the virus and its closer proximity to the US have increased biosecurity concerns.

If a foreign animal disease entered the United States, it would devastate the domestic pig industry, lose billions of dollars, and shut down export markets. according to NPPC.

Earlier this month, the Joe Biden administration unveiled a multi-tiered plan to combat consolidation and anti-competitive practices in the meat industry, which the administration says are creating inflation. Four companies control between 55% and 85% of the markets for pork, beef and poultry, the economists of the National Economic Council wrote in a briefing on September 8.

The top four hog processing companies now control 66% of the market, double the market share since 1976, according to the NEC.

“This consolidation gives these intermediaries the power to squeeze both consumers and farmers and ranchers,” they wrote.

Pork, beef and poultry suffered some of the highest price increases, among other food products, since December 2020, rising 12.1%, 14% and 6.6%, respectively, they wrote. .

In response, the action plans declared by the Biden Administration and the US Department of Agriculture include enforcement of antitrust laws; pricing investigations; the offer of US $ 1.4 billion in pandemic assistance to small producers, farmers and workers; and the investment of US $ 500 million to support new competitors.

Amid high costs and ongoing volatility, some farmers, consumers and business owners who depend on pork are having to sit back and eat it.

“I’ve been in the restaurant business since the early 1980s and I’ve never seen anything like it,” said chef Miguel Escobedo, who runs the Al Pastor Papi food truck in San Francisco.

Escobedo’s traveling restaurant specializes in pastor: sliced ​​pork marinated for 24 to 48 hours that is hand-stacked into a cone shape and placed on a vertical rotisserie for grilling. The dish, typical of Mexico City, was inspired by Lebanese shawarma.

The 30 pounds of pork needed for the dish have doubled in price in recent months, he said.

“Sometimes I would see the market fluctuate a bit. I planned budgets for the year and knew that some [precios] they would be taller, “he stated.” But nothing like this. “

Escobedo has chosen to be flexible, offering different dishes such as marinated shrimp al pastor, if prices or supplies are out of reach.

“At this point, you just have to adjust,” he said.

Dria White, 51, of Emeryville, California, has cut her grocery purchases from twice a month to once a month in order to save enough money. She buys less bacon than before and often reaches for the protein on Fridays for $ 5.

“It’s pretty good luck with anything you can find in [el supermercado] that you can shop and walk out the door reasonably priced, “White told CNN Business after a recent trip to the grocery store in the Bay Area.” Let’s be honest, if I want to eat, I will. Let’s keep that real. If I am going to eat, I will most likely pay for what I want to eat. “