Bacon’s popularity is back and its value is sizzling
Consumers’ appetite for inventive dishes helps push up prices, demand and exports
Canada’s inflation rate for June was a paltry one per cent, but at least one element of the country’s consumer price index is sizzling: bacon.
Consumer prices tracked by Statistics Canada show that bacon cost $6.95 per 500 grams in June. That’s up nine per cent since the start of the year.
Bacon is about 2.5 per cent more costly than it was a year ago — more than double the annual national inflation rate. Bacon’s climb is more remarkable given that across the board, food prices are up only 0.6 per cent this year, making it one of the slowest moving components in the consumer price index.
So what’s going on in the world of baconomics?
The main thing is consumer demand. People seem to be cooking up a lot of new ways to eat bacon that might excite taste buds and shock cardiologists, such as bacon-wrapped Brussels sprouts, bacon-topped doughnuts or bacon-flavoured ice cream.
“It’s being integrated into a number of other dishes that you would not normally expect,” said Gary Stordy, a spokesman for the Canadian Pork Council. “It’s being used from white linen restaurants right down to country picnics.”
This is a big shift in the market. Once upon a time, supply and demand for pork bellies — the cut of meat that supplies bacon — followed some predictable, seasonal trends. Consumers would gobble up pork during summer BBQ season, then excess supply would go into cold storage over the winter.
The consumer embrace of all things bacon has upset that pattern. Due to voracious demand last year, by the end of 2016 the volume of frozen pork bellies held in cold storage was the lowest since 1957.
The low inventory has continued into this year. Even though the number of pigs at U.S. farms was at a seasonal record high of 70 million in June, the amount of frozen pork bellies in cold storage for May was still down 59 per cent from the prior year.
Prices for pork bellies are up more than 50 per cent on the year, while lean hog futures on the Chicago Mercantile Exchange are up 12 per cent in the same period.
“There may be even more sticker shock at markets this summer, as bacon’s retail price spike trails the price of wholesale bellies,” observes commodities strategist Shelley Goldberg in a column for Bloomberg.
“In the meantime, long lean hog futures holders should be cautious as the price-supply situation is expected to ease in the fall due to more expansion in the hog sector.”
Canadian pork exports have been soaring. The U.S. is the biggest destination for Canadian pork exports, ahead of China and Japan. Canadian pork exports hit a record 1.25 million tonnes worth $3.83 billion in 2016. As of the end of May, exports have risen another 4.7 per cent year to date by weight and 9.1 per cent by dollar value.
We’ve seen bacon prices spike before.
In the decade leading into 2014, the Canadian price of bacon would fluctuate between $4.50 and $5.50 per 500 grams. That was upset in 2013 and 2014 when suddenly, the porcine epidemic diarrhea virus struck North American herd, killing piglets and reducing supplies.
The virus doesn’t transfer to humans or contaminate the food supply, but the reduction in supply led to a steep jump in the price of bacon.
Processors and grocers have adopted to the change. According to a May 2015 article in Canadian Grocer, bacon prices got so high that some processors started selling 375 gram packages, as opposed to the usual 454gram or one-pound package.
Since mid-2014, the Statistics Canada bacon price has consistently topped $6. It hit a high of $7.06 in May before falling back to $6.95 in June.