Bacon lovers listen up: Cheaper bacon in U.S. could spread north

Americans are bringing home their beloved bacon from the grocery store for less money now than they were a year ago.

And oh, how Americans love their bacon. This Saturday the "America Loves Bacon" touring festival will land in Washington, D.C. Vendors will be offering all kinds of bacon fare: bacon cotton candy, bacon popcorn, bacon peanut brittle, chocolate bacon, bacon funnel cake, the list goes on.

Those up for the challenge will have a chance to square off in a bacon eating contest at the event.

It's a good thing for these creative culinary inventors and for bacon consumers that they can get the sizzling strips of meat cheaper than they could a few months ago.

The U.S. Department of Agriculture's national retail report from last week shows that the price for a pound of bacon had dipped to $4.13 US. Last year around this time, bacon lovers in the U.S. were paying $5.54.

Retail prices are down about 25 per cent but wholesale pork bellies, the cut of meat used to make bacon slices, reached a five-year low in April and cost 46 per cent less than a year ago, Bloomberg recently reported.

That's a big spread between wholesale and retail prices but why drop prices for consumers even more when demand for bacon is so high?

"Bacon has been wildly popular for a couple of years and there doesn't seem to be any end to consumers' desire for bacon, on more things, in more things, more bacon. Bacon, bacon, bacon," said Mary Chapman, a senior director at Technomic Inc., a market research firm.

Deadly virus spread last year

"Pork suppliers see that there is more demand, they grow more pigs, they make more bacon, and then the prices go down," she explained.

There are a few factors contributing to the recent drop in bacon prices in the U.S. In early 2014, prices went higher because of a deadly virus that infected pork herds on thousands of farms across the country. More than seven million piglets died as a result of porcine epidemic diarrhea virus, or PEDv.

Fewer pigs available for slaughter drove up prices and farmers were spending more money on biosecurity measures to protect their animals.

The price of bacon is now rebounding as the industry recovers from last year's devastation. The sizes of herds are also growing, so there is more availability of the raw product on the American market.

There are also more pigs going to market in the U.S. because demand abroad has slowed down, in part because of the strong U.S. dollar. It's making exports more expensive, so not as much meat is getting shipped out.

China had been a big market for U.S. pork, but last year it started to look elsewhere when prices jumped. That business hasn't all come back.

Michael Richardson, chief operations officer of a major bacon producer in the U.S. called Sugar Creek, said companies are making their way through their freezer stocks and processing raw animals in high volume leading to a glut of pork in recent months, helping to depress prices.

About 13 per cent of Sugar Creek's sales are typically in Canada, said Richardson, but that could change.

Prices in U.S. influence Canada

"A stronger U.S. dollar makes us less competitive to a Canadian processor, so we'll have pricing pressure when we're competing against a Canadian counterpart," he said in an interview.

Will Canadian bacon lovers enjoy the same savings that their American counterparts are currently getting?

Ron Davidson, director of government and media relations at the Canadian Meat Council, suspects that will be the case.

"Fundamentally we have a North American market and when the price of something that trades freely across the border goes up in one place, or down, and particularly with the U.S., we will be following along very quickly," he said.

"I would presume if it's happening down there it's probably already happening here too. The retailers will pick it up wherever they can find the best price," said Davidson.

The latest numbers from Statistics Canada indicate the average retail price for 500 grams of bacon in April was $6.63 Cdn.

Gary Stordy, a spokesman for the Canadian Pork Council, said pork prices in Canada are closely tied to the U.S.

"I've noticed bacon on sale quite regularly," he said. Canadian producers didn't get hit as hard as U.S. ones by that deadly virus but they are worried about it and are investing in biosecurity, which comes at a cost. They are trying to balance those costs with market fluctuations when they set their prices, he noted.

Those interviewed said bacon, whether desired by consumers adding it to their backyard BBQ burgers, or by restaurants that are getting inventive with the ingredient, remains popular.

Little Caesar's, for example, is now offering a deep dish pizza with a bacon-wrapped crust. More than one fast food chain in the U.S. has experimented with bacon milkshakes, and doughnut chains are using it as a topping. There's even bacon-flavoured vodka.

Some industry analysts suggest that the Paleo diet trend, which is heavy on meat, could be boosting the sales of all meat products, bacon included.

Richardson said Sugar Creek's plants have been running "flat out" to meet the demand for bacon.

"It's hot," he said. Bacon is a versatile product, and, "It just tastes so damn good. People are finding ways to use it."

He suspects though that cheap bacon won't last and that prices will even out again as pork product supplies diminish throughout the summer.

He offers this advice: "Fill your freezer now."