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Supply Chain

Bacon Prices Fall 25 Per Cent In The US

By Steve Wynne-Jones
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Bacon Prices Fall 25 Per Cent In The US

Bacon has slumped 25 per cent in the past year, to $4.12 a pound this week, according to US Department of Agriculture data. Wholesale pork bellies, the cut of meat used to make bacon slices, touched a five-year low in April and now cost 45 per cent less than a year ago.

Such discounts have brought out buyers in droves. Pre-cooked and raw bacon is flying off the slicers at Sugar Creek Packing, the Washington Court House, Ohio-based company that processes more than 2 billion rashers a year for grocery stores, restaurants and institutions like hospitals and schools.

“We don’t have any extra inventory,” said chief operating officer Michael Richardson.

Sugar Creek’s sales will jump 15 per cent in 2015 as its five packaging plants around the Midwest operate seven days some weeks to keep up with demand, Richardson said.

Even though retail prices are down, consumers paid more than seven times the wholesale price for bacon last month, a record spread. Milwaukee-based supermarket chain Roundy’s expects prices to continue to tumble throughout 2015 as costs such as feed decline, Jim Hyland, a spokesman, said in an e- mail.

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Part of the reason for the retail-wholesale mismatch is some higher-priced pork bellies from last year’s slaughter were frozen, and those inventories take time to work through, said Russell Barton, a market reporter for commodity researcher Urner Barry in Bayville, New Jersey. By now, cheaper bellies have worked their way to slicers, yet the higher store prices persist.

“It’s highway robbery,” said Dennis Smith, senior account executive at Archer Financial Services in Chicago. “Talk about a huge markup. They don’t lower prices because bacon demand is just that good.”

It’s about to get even better with warmer weather. Grillers top their burgers with bacon, and when fresh tomatoes come to market in summer, Americans gobble up bacon, lettuce and tomato sandwiches.

Bloomberg News, edited by ESM

 

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