Six Bucks A Pound? Bacon Prices Set To Skyrocket
LOS ANGELES (CBS) — It's costing families a lot more these days to bring home the bacon.
The price of pork is giving many consumers sticker shock at the supermarket, where bacon prices alone have jumped at least 30 percent in recent weeks.
Commodity analyst Altin Kalo of Steiner Consulting told KNX 1070 that it's not just bacon — it's the whole hog.
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"The main reason is that the price of hogs themselves has increased," Kalo said.
He points to a sharp rise in the demand of corn as a primary factor behind the jump, driven largely by the diversion of excess corn from the food supply to the refinery to make ethanol as a gasoline additive.
But while before an ample corn supply served as an economic buffer against price volatility, that protection is no longer in place.
"All these buffer acres that we used to have, now they're going into ethanol production, and so whenever you have a shock...prices now have to get to a price point that's high enough it rations out the demand from all these other [sources]," said Kalo.
Consumers may complain about taking a bigger hit to their wallet, but the producers — pig farmers — are far from living high off the hog either.
"They had a decent year in 2010, so far they're still in the black, but barely," said Kalo.
Many farmers have been forced to scale back their operations, with some transitioning to less volatile products altogether — a trend that will further put upward pressure on prices as supplies dwindle.
Analysts expect the price of pork bellies could eventually shatter last August's level of $150 per every 100 pounds, which could in turn price bacon at about $6 per pound at your local grocer.
