Why it's costing more to bring home the bacon

6:42 AM, Aug 23, 2010   |    comments
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HUTCHINSON, Minn. -- At the McLeod County Fair they held a birthday party Thursday night for a 1200 pound pig. But that's not all they are celebrating in the swine barn.

Pork prices, depressed for two years, have been ramping up this summer, returning Minnesota's hog producers to profitability.

"Glad we hung on, glad we stuck with it," said hog farmer Rustin Kurth from his family's display at the fair. "A lot of people went through, where they had to liquidate, sell out, we lost a lot of hog farmers."

An oversupply of pigs followed by last year's swine flu panic drove down prices for Kurth's market-size hogs to $100 a piece. Today the same size pigs are fetching $160.

"We're averaging maybe 25 to 30 bucks a pig profit now, versus losing 25 to 30 a year ago," he said.

Across the fairgrounds, Chris DeKoster is feeling the other side of the equation. The operator of the Hog-in-The Road mobile barbecue stand has seen the impact of higher hog prices in the price-per-pound he pays for his ribs. "It's been probably a 25 cent increase the past week."

So far DeKoster has held the line on the prices he charges at his stand, noting the fair's livestock exhibitors are some of his best customers.

David Preisler, executive director of the Minnesota Pork Board, said it's simple supply and demand.  "We finally turned the corner this spring."

Preisler said pork production nationwide is off about 4% compared to this time last year. At the same time foreign markets closed to the U.S. during the swine flu outbreak, have reopened with a flourish of purchases.

Statistics kept by the U.S Department of Agriculture show cold storage supplies of all pork products are down 29% compared to this time last year. While pork belly supplies -- the source of all things bacon -- are down 54%. "There's a tremendous demand for bacon," said Preisler.

Nationwide, average retail prices for bacon have already seen a dollar-a-pound increase.

Gloria O'Neill noticed the increase at the Hutchinson grocery store where she shops, but she brought home the bacon anyway. "You've got to have it for your BLT sandwiches, right?"

Despite higher prices, pork producers are a long way from living high on the hog. Preisler points out many farmers took out loans to keep their operations afloat the past two years. "We're at the point we can start to pay some of the debt back."




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