Bellies Up

For those of you who haven’t been tracking the price of pork bellies on the commodities exchange, here’s a word of advice: buy. Pork prices--futures, wholesale and retail--are heading up in a hurry.

At the commodity level, pork bellies that were selling from 40 to 50 cents a pound six months ago are now more like 90 cents a pound.

And while there is a long and involved economic chain from commodity to the grocery store, the composite retail price for pork (the average of all the parts) hit $2.09 per pound in March, the highest price in more than five years.

“This is unbelievable,” says Joe Leathers, vice president for trade and distribution for the National Pork Producers Council. “When we had a big belly surplus several years ago, we had pork bellies at 18 to 19 cents a pound. The government ended up subsidizing a bunch of them and sending them to Poland.”

A combination of factors has caused the increase. Most important is that Americans are consuming pork in far greater amounts than ever before. One reason for this is fast-food restaurants’ infatuation with cheeseburgers loaded with bacon (that’s what we consumers call pork bellies).

“There is such a demand for bacon,” Leathers says. “Americans love bacon; we found that out in research.”

But our love for pork is more than belly-deep. “There is a huge demand for pork,” Leathers says. “People’s perceptions have changed. They’re finally realizing what an important role pork plays at retail. For example, we have created a tremendous demand for ground pork, something that just a few years ago wasn’t even part of the mainstream.”

Also influencing prices is the price of corn (the most important hog feed), which has skyrocketed on fears that another tough growing season lies ahead.

On top of that, there’s been a fundamental shift in pork economics. “We have become a net exporter of pork, rather than net importer of pork,” says Leland Southerd, an agricultural economist at the U.S. Department of Agriculture. “This is a long-term shift in trade.”

In 1990, according to USDA statistics, the United States imported 898 million pounds of pork while exporting 238 million. Last year--only six years later--exports had zoomed to 771 million pounds while imports had dropped to 665 million pounds.

The net result is that between bacon cheeseburgers and European exports, we’re moving through pork at a record pace. Slaughterhouses are running at near capacity and freezer stocks are 33% below last year’s levels. One agricultural analyst has forecast commodities prices of above $1 a pound, the highest since 1982.