Tuesday, February 7, 2017

About that bacon shortage

Yeah, not happening. Sure, the initial reports sounded very official, based on government estimates and whatnot, and things were looking grim:
U.S. bacon reserves have hit a 50 year low. The non-profit Ohio Pork Council said that demand for frozen pork belly, often made into bacon, has far outpaced supply, USA Today reports. “Today’s pig farmers are setting historic records by producing more pigs than ever. Yet our reserves are still depleting,” said Rich Deaton, the group's president.
With low reserve levels, prices have increased; the cost of pork belly rose by 20% in January, according to the council. Officials said that increased foreign demand might also be responsible, however, as hog farmers export around 26% of their total product according to the group.
Many local news sources dutifully reported the 20% rise in pork belly, implying it was a rise in the cost of bacon:
In December, the inventory was at 17.8 million pounds. That sounds like a lot, but it’s the lowest it’s been since 1957, according to the U.S. Department of Agriculture.
It doesn’t take a business degree to deduct that when demand outweighs supply, prices surge. Those prices increased 20 percent in January.
 As someone who buys a lot of bacon, I knew that prices are quite low right now and have shown no upward trend. Sure enough, my sense of the bacon market was correct. It pains me that the New York Times confirmed my believe, but even a blind squirrel finds an acorn now and then:
But the truth is this: The frozen reserves are just that — reserves. There will be no rationing at breakfast, or for your burgers (or B.L.T.s, or quiche, or roasted bacon-wrapped rabbit, or apples and ice cream. Not even for your bacon footballs this weekend.)
. . .
. . . . bacon lovers have nothing to fear. According to Mr. Meyer, the United States produces almost 75 million pounds of pork belly every week. “We’re going to slaughter about 3 percent more pigs this year than we did last year — a record number,” he said. “Bacon production will be higher than it’s ever been."
Of course, I am glad to hear that bacon will be plentiful. On the other hand, as a buyer of bacon and observer of prices (I do the grocery shopping in this family) I already knew that there were no price signals of a coming shortage.  If only government would pay more attention to market price signals and ignore the urge to intervene. Sigh. A post for another day.

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