ST. LOUIS Bacon lovers can relax. Theyll find all they want on supermarket shelves in the coming months, though their pocketbooks may take a hit.
The economics of the current drought are likely to nose up 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 peoples heads, and thats not the case, said Steve Meyer, president of Iowa-based Paragon Economics and a consultant to the National Pork Producers Council and National Pork Board.
If the definition of shortage is that you cant 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 Britains National Pig Association said a bacon shortage was unavoidable, citing a sharp decline in the continents pig herd and drought-inflated feed costs. The report caused much 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 therell be widespread shortages, that well run out of pork, thats really overblown.
On Monday, a spokesman for the British pork trade group maintained its position that there will be a significant tightening in the global pigmeat supply in the second half of next year, because the vast majority of pig producers around the world are losing money on every pig they sell.
Given the huge amount of interest in the United States created by our earlier press release, maybe more producers will now hang on in production, in the hope of recovering their losses next year and in 2014, Digby Scott told The Associated Press in an email. We agree with the view of some economists in the (United) States that supplies will tighten and prices will rise BUT maybe you wont see standing-in-line shortages in supermarkets. Time will tell.
The stubborn drought in the U.S., the worlds biggest supplier of feed grains, undeniably will affect pig production. The Corn Belts lack of moisture twice has prompted the U.S. Agriculture Department to slash its forecast for this years corn output. The government now expects U.S. production of the grain to amount to 10.8 billion bushels, the least since 2006.
Those lowered expectations sent prices of corn also used in ethanol, further squeezing supply 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 nations 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 nations breeding stock and intended farrowings birthings of litters of pigs likely will drop due to high feed costs.
I think were going to (still) see pretty substantial liquidations of livestock, Meyer said, guessing that 3 percent of the nations breeding pigs could be sent to slaughter by next March. And by my estimation, thats a big move.
The USDA said the breeding inventory of sows and boars stands at 5.79 million head, down slightly from last year and off 1 percent from the previous quarter.
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.
As of Friday, the USDA said, a pound of sliced bacon cost an average of $4.05 at the nations supermarkets, down 22 cents from a week earlier.
Pig producer Phil Borgic is banking on high prices. With 3,400 sows near Nokomis in central Illinois, Borgic figures hes had to spend $2 million more this year for the 600,000 bushels of corn he feeds his pigs.
Rather than sell off animals on the spot market, the 56-year-old farmer is hedging his bets by contracting them out for slaughter over a staggered period what he sees only as a break-even proposition.
The previous couple of years have been good to us, he said. Then the drought changed the ballgame on a worldwide level.
He waves off the concerns about consumers facing shortages.
The U.S. has plenty of pork, and we wont run out here, he said. Well have some price inflation, but we have plenty of supply.