Your Bacon Obsession Is Costing 40% More, But Pork Producers Aren't the Ones Cashing In

World food prices are at a 10-year high. Meat prices are expected to climb 20% by the end of the year. But it’s bacon causing the biggest sticker-shock for consumers, as shoppers are paying the highest price on record for their beloved bacon.

If you walk into the grocery store today, the average American will have to fork over $7 per pound for bacon.

“We've certainly seen very strong increases in retail meat prices year over year. One big category is bacon. If you look back at the start of the pandemic compared to now, bacon prices are between 30% and 40% higher today than they were then,” says Jayson Lusk, agricultural economist with Purdue University.

Data from the Bureau of Labor Statistics’ Consumer Price Index for “bacon and related products” goes back to 1947, and it shows current bacon prices are the highest ever. Lusk says the last price peak for bacon was in May of 2014, and when he normalized today’s price as “100,” the 2014 peak is 10% below the price consumers are seeing today.

What’s Causing It?

So why is bacon so pricey? Well, it all goes back to supply and demand, with U.S. shoppers spending more on pork products in both the “at home” and “food away from home” categories.

“Also on the demand side, it has been really strong export demand,” says Lusk. “China and our other trading partners have been buying a lot of pork. They're building back their hog herd, so they're buying a lot of meat. It's been really strong export demand for our meat products, which is pulling up prices.”

In addition to robust demand, Lusk says it costs more to produce bacon right now, which means those costs are also pushing prices to new highs.

“All the cost issues we're talking about that come through to the animals on the feed side, the labor side and the packing plant side, that's been reflected in the meat prices too.”

Lusk says labor challenges are not helping the situation. As employers pay more to keep or find employees, weekly wage rates are on the rise. Lusk says since January 2020, the changes in weekly wage rates show increases in nearly every category, including:

• Food manufacturing up 10.3%
• Food retail (grocery) up 7.1%
• Food service (restaurant) up 13.4%
• Animal slaughtering up 17.6%

Pork Producers Aren't Cashing In.

The category that isn’t seeing a price spike is on the producer side. Lean hog futures have been in a free-fall since peaking at more than $120 in June. Today’s prices are $79, which is the lowest since late February and early March.

Lean hog futures did see a bit of a boost Thursday from export sales. Thanks to strong buys from both Mexico and China, USDA reported U.S. pork export sales were up 55% from a week ago and 72% higher than the previous four weeks.

Brace For Even Higher Bacon Prices?

Food costs are rising across the board, but the biggest price spike is coming in the meats department. USDA’s Economic Research Service (ERS) says beef prices are expected to increase 6.5% to 7.5%, which is two percentage points more than the last report. Pork prices could end up being as much as 7.5% above 2020 levels.

And as USDA doesn’t see a slowdown in rising protein prices in 2021, Lusk says the new record in bacon prices may not be etched in history yet.

“It's possible it can continue. We've certainly seen very strong increases in retail meat prices year over year, and actually, one big category is bacon,” Lusk adds.  But it's hard to say. We've had a meteoric rise. And so I like to be optimistic and think it's going to come down here a bit, but who knows? I don't have any bacon in my freezer yet. So I guess my actions speak louder than words.”

Bacon prices have been on a historic run, and one Michigan State University food economist says current record-high bacon prices could move even higher.

“What we're seeing now with bacon prices in particular, is sort of the reverse of what was happening at the start of the pandemic,” David Ortega with Michigan State University told U.S. Farm Report. “During the pandemic, we saw individuals changing their spending habits, spending more at the grocery store and less going out to eat. Now we're seeing the reverse of that.”

Ortega says the supply chain disruptions are adding to the price spike in bacon, but it’s not one single stop along the price chain that can take all the blame.

“This is not all one big supply chain, but you have the supply chain that gets that bacon to the grocery store, which is different from the supply chain that gets that bacon to the restaurants,” adds Ortega. “And so Americans are now feeling a bit more comfortable going out to eat. And so it's now trying to redirect that product flow from one channel to another that's posing some difficulties.”

Could Consumers Lose Their Appetite For Pricey Pork?

Whether bacon prices continue to climb or are tamed by a changing supply and demand picture, higher prices could be the cure for higher prices. And that means consumers may try to save by cutting back on bacon.

“Consumers are going to buy less whenever prices rise, and I think that could have some impact,” says Lusk. “That’s the way we ration scarce resources is by higher prices. So, I think we'll build back some inventory, and that’ll help. But so far, we haven't created pigs with two bellies yet. And until we do that, there's going to probably be some pressure.”