No holding the bacon

Demand and prices are soaring. Even the pork-belly futures market is at risk.

No holding the bacon

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Maybe it was the Wendy’s Baconator, an alarmingly thick hamburger packed with six strips of bacon, with sales of over 25 million in the first two months after its debut in 2007. Or it could have been Baconnaise: yes, that’s bacon-infused mayonnaise. Whatever the cause, by the time the recipe for “bacon explosion”—a barbequed brick of meat wrapped in two pounds of the crispy treat—appeared on the Internet in 2009, North America’s love affair with bacon was in full swing. The artery-clogging side dish had already inspired everything from new desserts, doughnuts and liquors to alarm clocks that wake you with the smell and sizzle of the real thing. Fast-food restaurants, of course, offer it atop a range of calorie-, fat- and sodium-soaked burgers, wraps and breakfast sandwiches. Even high-end restaurants have made it a big part of the menu, while bacon-wrapped asparagus and dates are popular cocktail treats.

All this demand has sent prices soaring. In fact, bacon currently retails for more than pork chops and ground beef, according to the U.S. Bureau of Labor and Statistics. And the wholesale price of pork bellies, the stuff used to make bacon, rose 72 per cent last year. Traditionally, demand for bacon drops off during the winter months, and producers store and freeze pork bellies. “Bacon tends to be a seasonal food—BLT sandwiches are a popular summer meal,” says Tom Cawthorne, director of hog marketing at R.J. O’Brien & Associates, a Chicago-based brokerage firm. But these days, pork bellies are being produced and sold immediately, leaving the pork-belly futures market, which bets on future frozen supplies, in jeopardy.

The weak U.S. dollar is also adding to demand, says Cawthorne. “American producers are shipping a lot,” he says, “mostly to China and Russia.” And key overseas exporters are facing supply problems of their own. An outbreak of foot-and-mouth disease in South Korea has forced a 15 per cent cull of its hog population. Meanwhile, a dioxin contamination in Germany has resulted in a temporary ban on both hog and poultry exports.

But if you thought all this spelled good news for Canada’s pork producers, think again, says Manitoba Pork Council chair Karl Kynoch. The animals eat like, well, pigs, he explains, and feed costs are through the roof, with corn at $6 per bushel, up from $3.50 last June. “That’s really eating into profits,” says Kynoch, adding that producers are “losing on every hog they produce.” And grain prices, he fears, could jump another 15 per cent, fuelled by high demand for everything from ethanol to sweeteners.

So consumers should expect retail prices to remain high, says Cawthorne, especially as more and more choose to “make it bacon.”

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