Bacon Prices Continue To Rise

Today pork belly futures surged again to a record $1.185/lbs. The plunging U.S. inventories of the meat used to make bacon have been contributing to the week-long jump in wholesale prices.

While wholesale bacon buyers are still gasping at the daily sticker shock, some are predicting an end to the increase might be coming sooner; packers shipped less pork last week than they had since June- a sign that the market is starting to reject the higher prices.

Chad Henderson, a market analyst at Prime Agricultural Consultants Inc., told reporters:

I don’t see anyone wanting to push too much more in retail. Pork is starting to look expensive.

However at least one economist disagrees: (via Bloomberg)

“What you have with bacon is what economists call inelastic demand, meaning it doesn’t vary much,” said Chris Hurt, a livestock economist at Purdue University in West Lafayette, Indiana. “If a person wants a BLT sandwich and likes that in summer when their patio tomatoes come on, then it doesn’t make a difference if bacon is $2 a pound or $6 a pound. They’re going to go out and buy it. When it’s in short supply and a lot of people want it, they’ll pay a higher price.”

Customers will probably be seeing this increase at least one place: Wendy's announced today that they will be phasing out cheap bacon, and thus increasing prices on their sandwiches.

Further Reading:
Bloomberg on the continued market conditions
The Toronto Sun on Canada's issues with pork
The SF Gate crunches the numbers

What's With the High Price of Bacon?

You might have noticed that bacon prices are on the rise. Today prices on fresh pork bellies spiked to $1.35 a lb.- this is up over 50% from last year's pricing. What is causing this sudden increase?

MeatPoultry.com offers some insight:

In 2008 and 2009, North American hog producers decided to cut their losses by trimming their herds; this move is now impacting cost pressures faced by supermarkets. Hog farmers were losing money due to high feed prices, a decrease in global demand in the wake of the recession, as well as panic surrounding the H1N1 influenza virus, which initially had been erroneously called "swine flu."

Pair this with the summer demand for bacon (in those great BLT sandwiches), and you have a perfect storm for high prices.

Is there an end in sight? Not for the next few weeks according to Paul Beere, a market adviser at Prime Agricultural Services in Brookfield, Wisconsin. Via Bloomberg: "The bacon market will probably lead pork products higher for the next several weeks."

FDA to Meat Producers: Limit Antibiotics in Animals

With so many high profile food recalls in recent history, it was somewhat uprising to read that the FDA has just issued some new guidelines to the food industry actually asking them to scale down on giving antibiotics to animals.

The reason? After 50 years of continued usage, the FDA believes that the overuse of antibiotics is making the bacteria resistant, thus creating multi-drug resistant pathogens. The FDA does not have an issue with routine doses of antibiotics, but believes that frequently administering them to cause animals to eat more and gain more weight (a side effect of the medicine) is creating a problem.

How is the food industry reacting to the "suggestions" this morning? Not well. The National Pork Council issued a strong statement:

The guidance, which does not have the force of law but may be treated as such by FDA, is a move to address an increase in antibiotic-resistant illnesses in humans, which opponents of modern animal agriculture blame on the use of antibiotics in livestock and poultry production. But top scientists with the Centers for Disease Control and Prevention and the National Institutes of Health recently told a U.S. House committee that there is no scientific study linking antibiotic use in food animal production with antibiotic resistance.

Some scientists, however, are angry at the FDA for not going far enough. The LA times has more:

Margaret Mellon of the Union of Concerned Scientists called that assertion "patently untrue. There is a mountain of studies linking the use of antibiotics in animals to the evolution of resistant pathogens that cause human disease."

Mellon chided the FDA for moving tentatively, with recommendations rather than with actions to cut down on the use of antibiotics.

"I was expecting an action plan. I was disappointed that all we have here are principles," Mellon said. "They're apparently expecting voluntary action. It's my belief that the industry's not going to act until it has to."

You can read the entire FDA statement here.

Further Reading:

WebMD's article on the new guidelines.
CNN coverage

Pork: 'The Other White Meat' for Not Much Longer

The pork industry says that the public has grown so accustomed to pork as "the other white meat" that the slogan and branding no longer help sell pork.

From Pork.org:

"We have just finished the early stages of our consumer research, and one insight I can share is that pork lovers see the world as full of possibilities," Snyder said. "One not surprising finding is that The Other White Meat is certainly well-known. But we have also found that it is so familiar that it blends into the background. It’s not motivating our customers to buy more pork.

While the National Pork Board promises to, "Protect the Other White Meat’s important heritage both in marketing and legally," consumers can expect the new brand position to debut in March 2011.

Further Reading:
Pork.org's article on the new branding plan.
Madison Daily Leader: Pork Industry tiring of the 'Other White Meat'

The Food Industry Response to the CBS Antibiotic Story

Watch CBS News Videos Online

Last night was the conclusion of the CBS series calling into question the use of antibiotics on farm animals in the food supply chain. The story has the food industry answering a lot of questions to concerned consumers.

The National Cattleman's Beef Association preempted the two-part airing by holding a press conference the day before the first segment aired. They are also working to kill the H.R. 1549/S. 619 bills being introduced to Congress, which would require the FDA to deny any new animal antibiotic drugs unless there was evidence the drugs will not contribute to antimicrobial resistance. You can read more about the press conference here via FoodSafetyNews.com.

FarmFutures.com has the response from the Pork Industry:

Among other things, the report suggests antibiotic use in livestock is leading to more resistance in humans, a trend Dr. Jen Greiner says isn't supported by the science.

"We're just not seeing those trends," Greiner said. "Our producers are working on using antibiotics responsibly on farms each and everyday."

Greiner is Director of Science and Technology for the National Pork Producers Council. She notes Denmark placed a ban on antibiotic growth promoters in the late 1990s, and while CBS called it a great success story, Greiner says that's just not the case.

"When you go to Denmark and talk to producers in that country they will tell you that banning antibiotic growth promoters not only created more pig deaths and caused their pigs to suffer, but also it didn't have a positive public health outcome," Greiner said.

The National Pork Council has released a statement about the use of antibiotics on pig farms that you can read here (pdf file).

You can read more responses disputing the reporting in the special here, via FarmandDairy.com.