Prices for popular fresh pork items recently hit record levels. The National Pork Board says low inventory, sky-high foodservice demand and labor issues are fueling prices for grill-ready items this summer.
One of the most popular items to throw on the grill - baby back ribs - were recently quoted by USDA Agricultural Marketing Service as being over $5 a pound, which is 61% higher than a year ago and 94% higher than the same time in 2019.
Here are three reasons why prices are soaring this summer:
1. Normal Q1 inventory build did not happen.
The USDA-NASS ‘Cold Storage’ survey shows the inventory build was far less than normal, and by the end of April, freezer stocks were 27% lower than the five-year average. In addition, rising COVID-19 cases in the winter and the uncertain future have contributed to the lower inventory build, the National Pork Board reports. Retailers are now paying the price for the industry decisions made last winter.
2. Foodservice rebound exceeds expectations.
The pandemic put retailers in the driver’s seat as demand shifted away from foodservice to retail. The lack of competition from barbecue places and other foodservice operators helped keep the market in check, a National Pork Board article says. However, now that foodservice is back, and they have little freezer stock, experts say the race is on to outbid each other.
3. Labor, not hog numbers, is the issue.
Hog processing is one of the many industries struggling to find enough labor. So far in 2021, hog slaughter has been higher than the industry expected from the march inventory survey, the National Pork Board says. According to USDA data analyzed by Steiner Consulting, weekly hog slaughter in April averaged 2.456 million head, up 3% compared to April 2019 (comparisons to 2020 are skewed because of COVID-19 disruptions). As well, weekly slaughter in May averaged 2.394 million head, 2% higher than in 2019.
With the limited labor supply, packers are asking more for items that require additional labor, such as boning loins. Given the competition and the limited supply in the freezer, the packer can ask for more money and get it, the article says.
The National Pork Board expects prices for ribs and other fresh pork items to drop from current levels.
“Some of the bull whip effect that we have experienced after lifting COVID restrictions will subside,” the National Pork Board says.
Overall pork inflation will be well above average levels in the short to medium term, however. One of the inflation drivers - high feed costs - continues to impact operating expense.
“Corn prices are currently hovering around $6.50 per bushel, more than double the average of the last three years,” the National Pork Board says. “Supply availability will improve in the fall, with slaughter back to 2.7 million head per week. Unfortunately, the broader inflationary trends in the economy will continue to affect the pork market.”
More from Farm Journal’s PORK:
Economists Forecast Hog Prices Following June USDA Quarterly Report
Pork Industry Seeks Waivers for Plants Impacted by Line Speed Ruling
