Bacon Prices Soaring as Pork Belly Costs Reach Record Highs
Introduction
Bacon prices are on the rise as wholesale pork belly prices approach record highs due to a combination of factors including an animal welfare law in California and peak summer demand.
Pork belly prices have risen over 100% year-to-date, from 131.59 cents per pound in January to 270.89 cents at the end of July. This is 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.
As a result, consumers can expect even higher prices for bacon, which is primarily made from pork bellies.
Impact of Animal Welfare Regulation in California
Analysts predict that bacon, and pork in general, will become very expensive in California due to a recently imposed animal welfare regulation known as Proposition 12.
Proposition 12 bans the sale of pork from farms that confine pregnant sows in small enclosures of less than 24-square-feet. This regulation came into effect on July 1, while other parts of the proposition were implemented earlier.
The National Pork Producers Council (NPPC) claims that pig farmers were not properly consulted during the development of Proposition 12. The NPPC states that the costs incurred due to this regulation will ultimately be passed on to consumers.
New construction of compliant housing for pregnant sows is estimated to cost $3,400 to $4,000 per sow, making it 40% more expensive than traditional gestation stalls. Many small and medium-sized farms may be unable to afford this significant investment.
Higher Demand and Lower Pork Production
The impact of Proposition 12 is further intensified by the higher demand for bacon during the summer, known as “BLT season.” This coincides with lower pork production.
Pork belly prices typically peak during July and August. Last year, prices reached 222.69 cents per pound during August, according to FactSet.
Hog slaughter decreases during this time of the year, tightening the supply of fresh pork bellies on the market. This, combined with the U.S. being the world’s second-largest exporter of pork, contributes to the surge in prices.
Impact on Consumers
The spike in pork belly wholesale prices will translate to higher retail and food service prices for bacon. Sliced bacon prices in major U.S. retailer outlets are already 6% higher than a year ago, according to data from the United States Department of Agriculture.
Consumers can expect bacon to become more expensive due to the combination of factors driving up prices.
