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High Prices Aren't Scaring Consumers Away From The Meat Counter

Aug 26, 2014
Originally published on August 26, 2014 6:41 pm

You may have noticed when grilling steaks or hot dogs this summer that they cost more than they did last year. According to the U.S. Department of Agriculture, pork and beef prices are up more than 11 percent since last summer.

Supply and demand determine price, and the pork supply comes from places like Riley Lewis' hog farm near Forest City, Iowa.

Here 1,000 acres of corn surround the barns, and a grain silo from 1948 is dwarfed by modern storage bins. When Lewis enters the barn, pigs trot over to greet him. Last December, a nasty, new pig virus sickened animals here. Even worse, porcine epidemic diarrhea virus, or PEDv, swept through nursery barns on farms where Lewis buys his piglets.

"We do buy our pigs from Illinois, and they come in at 12 to 13 pounds," says Lewis. "They did have a little shot of it that went through, and our numbers right now are down."

Across the country, the virus killed several million piglets, adding up to a lot fewer hogs at market. So tighter supply means Lewis gets paid more per pound, per hog.

"It's been remarkable what the price has done," says Lewis. "The last couple of years, hog farmers dug a real deep equity hole. And so it's really nice to have that hole start to get filled up."

He's referring partly to the cost of feed — a major expense here on the farm. After record high corn prices in 2012, feed has now gotten cheaper, and Lewis can raise bigger hogs.

It's a different story with cattle, which take much longer to bring to market. When feed prices skyrocketed two years ago, many ranchers sold off more cattle than they might have otherwise.

That extra beef is long gone, and ongoing drought in the Plains states means herds aren't growing fast enough to meet demand.

But what about shoppers?

John Green, the National Pork Board's director of strategic marketing, says stores are actually trying to protect consumers from even steeper prices.
"Produce and meat are the two big things that pull people into a store," says Green. "And so, changing those prices, especially raising those prices, is one of the last things that a retailer really wants to do."

So even as grocers watch the price of cattle and hogs climb, they need to keep you coming in.

"Some retailers just took that on the chin and had to be competitive in their marketplace," he notes. "Others tried to make some money where they could, to recoup that back. But by and large, they try to keep those prices stable."

They try lots of things to keep down retail prices, even buying some cuts frozen. Still, there's a limit. And when it's reached, prices rise.

But Iowa State University livestock economist Lee Schulz says climbing prices don't always scare away customers. "We've really seen higher and higher prices being pushed on to consumers," says Schulz. "But overall, we've seen very robust demand for beef."

And so far, it's the same with pork: We keep buying it even though it costs more. Shoppers who can may spend more to eat the same amount of meat. Others will spend just the same, but get less.

And that can mean being more selective about which meat products we buy. Green says bacon remains a strong seller.

"A little bit of bacon provides a tremendous amount of flavor and satisfaction. So you don't have to eat 8 ounces of bacon," he says. "A strip or two at breakfast, on a breakfast sandwich, on a salad, all the different ways that bacon is now being used on — a topping for a burger — is really what's kind of driving it."

And Green doesn't see any end in sight for Americans' fascination with bacon. With a record corn crop projected this fall, feed prices are likely to continue falling. And that could bring down meat prices.

Mayer reports for Iowa Public Radio and Harvest Public Media, a reporting collaboration that focuses on agriculture and food production.

Copyright 2018 Iowa Public Radio News. To see more, visit Iowa Public Radio News.

MELISSA BLOCK, HOST:

From NPR News, this is ALL THINGS CONSIDERED. I'm Melissa Block.

ROBERT SIEGEL, HOST:

And I'm Robert Siegel. If you've bought any steaks or hot dogs to throw on the grill lately, you may have noticed a higher price tag. The Department of Agriculture says pork and beef prices are up more than 11 percent since last summer. Iowa Public Radio's Amy Mayer looks at what's going on with the price of meat from the farm to table.

AMY MAYER, BYLINE: You probably learned this basic concept in school - supply and demand determine price. Supply comes from places like this - Riley Lewis's hog farm near Forest City, Iowa. 1,000 acres of corn surround the barns here. A grain silo from 1948 is dwarfed by modern storage bins. When Lewis enters the barn, pigs trot over to greet him. Last December, a nasty new pig virus sickened animals here. Even worse, Porcine epidemic diarrhea virus swept through nursery barns on farms where Lewis buys piglets.

RILEY LEWIS: We do by our pigs from Illinois and they come in at 12 to 13 pounds. And they did have a little shot of it that went through, and our numbers right now are down.

MAYER: Across the country, the virus killed several million piglets, adding up to a lot fewer hogs at market. So tighter supply means Lewis gets paid more per pound, per hog.

LEWIS: It's been remarkable what the price has done. The last couple of years, hog farmers dug a real deep equity hole and so it's really nice to have that hole start to get filled up.

MAYER: He's referring partly to the cost of feed - a major expense here on the farm. After record high corn prices in 2012, feed has now gotten cheaper. Lewis can raise bigger hogs. It's a different story with cattle, which take much longer to bring to market. When feed prices skyrocketed, many ranches sold off more cattle than they might have otherwise. That extra beef's long gone, and ongoing drought in the Plains States means herds aren't growing fast enough to meet demand. But what about shoppers? At this Fareway grocery store in Ames, the meat counter is doing a brisk business, especially in chops, brats and ham loaf.

UNIDENTIFIED MAN: I'll two of the America's cut pork chops.

MAYER: John Green, the National Pork Board's Director of Strategic Marketing says stores are actually trying to protect consumers from even steeper prices.

JOHN GREEN: Produce and meat are the two big things that pull people into a store. And so changing those prices, especially raising those prices, is - is one of the last things that a retailer really wants to do.

MAYER: So even as grocers watch the price of cattle and hogs climb, they need to keep you coming in.

GREEN: Some retailers just took that on the chin and had to be competitive in their marketplace. Others tried to make some money where they could, to recoup that back, but by and large - they try to keep those prices stable.

MAYER: They try lots of things to do that, even buying some cuts frozen. Still, there's a limit, and when it's reached prices rise. But Iowa State University livestock economist Lee Schulz says climbing prices don't always scare away customers.

LEE SCHULZ: We've really seen higher and higher prices being pushed onto consumers, but overall we've seen very robust demand for beef.

MAYER: And so far it's the same with pork - we keep buying it even though it costs more. Shoppers who can may spend more to seem the same amount of meat. Others will spend just the same but get less. And that can mean being more selective about which meat products we buy. The Pork Board's John Greene says bacon remains a strong seller.

GREEN: A little bit of bacon provides a tremendous amount of flavor you know, and satisfaction. So you don't have to eat eight ounces of bacon. A strip of two at breakfast, on a breakfast sandwich, on a salad - you know, all the different ways that bacon is now being used - on you know, a topping for a burger - is really what's kind of driving I think.

MAYER: And Green doesn't see any end in sight for America's fascination with bacon. With a record corn crop projected this fall, it's likely feeds will continue falling - something that eventually could bring down meat prices. For NPR News, I'm Amy Mayer in Ames, Iowa.

SIEGEL: That story comes to us from Harvest Public Media - a reporting collaboration that focuses on agriculture and food production. Transcript provided by NPR, Copyright NPR.