Bacon
frying
in
a
pan.
Zachary
Zirlin
/
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|
Eyeem
|
Getty
Images
Bacon
is
about
to
get
even
more
expensive
as
wholesale
pork
belly
prices
approach
record
highs
on
the
back
of
an
animal
welfare
law
in
California,
as
well
as
peak
summer
demand.
Pork
belly
prices
rose
over
100%
year-to-date
from
131.59
cents
per
pound
in
January,
to
270.89
cents
at
the
end
of
July
—
just
shy
of
the
all-time
high
of
279.97
cents
per
pound
in
August
2021,
according
to
data
from
FactSet.
That’s
a
jump
of
106%.
Wholesale
pork
belly
prices
are
currently
trading
at
270.89
cents
per
pound.
And
consumers
are
about
to
see
even
higher
prices
of
bacon,
which
is
primarily
cut
from
pork
bellies.
More
space
for
pregnant
sows
“Overall,
I
expect
bacon
specifically,
but
pork
generally,
in
California
is
going
to
become
very
expensive,”
said
Cobank’s
lead
protein
industry
analyst,
Brian
Earnest.
Analysts
who
spoke
to
CNBC
attributed
the
surge
in
pork
prices
partly
to
a
recently
imposed
animal
welfare
regulation
in
California,
which
came
into
effect
July
1.
California’s
Proposition
12
bans
the
sale
of
pork
from
farms
that
confine
pregnant
sows
in
tiny
enclosures,
and
spaces
that
are
less
than
24-square-feet.
This
part
of
the
law
came
into
effect
on
July
1,
even
though
other
parts
of
the
proposition
—
which
stipulated
minimum
usable
floorspace
requirement
for
breeding
pigs
and
egg-laying
hens
—
were
implemented
earlier.
According
to
the
National
Pork
Producers
Council
(NPPC),
pig
farmers
were
not
properly
consulted.
“Proposition
12
was
developed
without
input
from
hog
farmers,
veterinarians
or
others
with
expertise
in
animal
care
and
food
safety,”
the
statement
said.
Piglets
gathering
around
a
sow
for
feeding
at
Centennial
Farm
in
California.
Proposition
12
is
a
law
prohibiting
the
confinement
of
pregnant
sows
in
tiny
enclosures.
Medianews
Group/orange
County
Register
Via
Getty
Images
|
Medianews
Group
|
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Images
New
construction
of
the
compliant
housing
is
estimated
to
cost
$3,400
to
$4,000
per
sow,
the
association
projected,
adding
that
it’s
about
40%
more
expensive
than
a
gestation
stall
keeping
the
same
number
of
hogs.
Those
costs
are
set
to
deter
many
pork
producers.
“Many
small
and
medium-sized
farms
will
be
unable
to
bear
the
significant
capital
investment.
Any
costs
incurred
because
of
Proposition
12
will
also
fall
on
consumers,”
the
NPPC
stated.
The
sentiment
is
echoed
by
Cobank’s
Earnest.
“Given
the
economic
environment,
hog
producers
will
be
reluctant
to
build
Prop
12
compliant
housing,”
said
Earnest,
who
added
that
buyers
clamoring
for
pork
products
ahead
of
the
July
1
deadline
“stoked
the
flames”
for
higher
belly
prices.
Proposition
12
played
a
“major
role”
in
the
surge
in
prices,
said
Urner
Barry
pork
market
analyst,
Ryan
Hojnowski.
Consequently,
sellers
of
bacon
will
want
to
keep
their
profit
margins
up
—
thus,
the
spike
in
pork
belly
wholesale
prices
is
going
to
translate
to
higher
retail
and
food
services
prices,
he
said.
“This
of
course
ends
up
making
the
bacon
more
expensive
for
the
consumer,”
Hojnowski
told
CNBC
in
an
email.
According
to
data
provided
by
commodity
firm
Urner
Barry,
skinless
bellies
weighing
11-13
pounds
—
one
of
the
categories
of
pork
sold
—
surged
157%
from
the
week
of
June
5
through
the
week
of
July
31.
Prices
jumped
from
99
cents
per
pound
to
255.2
cents
per
pound
on
a
wholesale
basis
during
that
period.
BLT
season
Underscoring
the
impact
of
the
law
is
higher
demand
for
bacon
during
this
time
of
the
year,
coincided
with
lower
pork
production.
August
is
typically
referred
to
as
“BLT
season,”
said
Earnest,
referring
to
the
popular
bacon,
lettuce
and
tomato
sandwich
often
consumed
in
summer
when
the tomato
harvest
is
in
full
swing.
BLT
with
fries
at
a
restaurant
in
Colorado.
Glenn
Asakawa
|
Denver
Post
|
Getty
Images
“Seasonally,
pork
belly
prices
typically
peak
during
July
and
August.
This
year
is
following
a
similar
pattern,”
said
Lee
Schulz,
associate
professor
at
Iowa
State
University’s
department
of
economics.
Pork
belly
prices
in
August
last
year
traded
at
a
relatively
higher
figure
of
222.69
cents
per
pound
compared
to
the
rest
of
the
year,
according
to
FactSet.
Lee
added
that
“hog
slaughter
has
been
steadily
moving
lower,”
which
is
in
line
with
this
time
of
the
year.
However,
he
expects
that
prices
would
typically
start
to
move
lower
toward
the
second
half
of
the
year.
Urner
Barry’s
Hojnowski
similarly
echoed
that
summer
is
the
period
where
pork
production
dips
to
the
lowest
point
in
the
year,
which
tightens
the
supply
of
fresh
pork
bellies
on
the
open
market.
The
U.S.
is
the
world’s
second
largest
exporter
of
pork,
behind
Spain.
Prices
of
sliced
bacon
in
major
U.S.
retailer
outlets
for
the
week
ending
Aug.
24
are
6%
higher
than
a
year
ago,
according
to
data
from
the
United
States
Department
of
Agriculture.
