'Meat prices are often more volatile than some other food price categories'
Will you be putting bacon and hamburgers on the grill this weekend? Or will you be reaching for the veggie burgers ?
Barbecues will be heating up this Memorial Day weekend -- not just from coal or propane -- but from the record prices Americans will pay at the grocery store. Beef, pork and corn are must-haves for many Americans this weekend, but this year that demand is coupled with high prices, a bad combination for consumers.
Meat prices rose by 1% in April compared to March, and have jumped 4% over the past year, according to the most recent government figures. "Meat prices are often more volatile than some other food price categories," said Jayson Lusk, head of the agricultural economics department at Purdue University.
Case in point: a pound of sliced bacon cost $6.21 in April compared to $5.35 for the same period last year, according to data from the U.S. Department of Agriculture. A pound of boneless chicken breast costs $3.41 a pound last month versus $3.16 a pound in April last year.
The rise in price of chunks of meat in American grocery bags, particularly before Memorial Day Weekend, comes at a time when millions of people are tightening their belts, trying to stay afloat after losing their jobs during the coronavirus pandemic, or simply just hold onto the jobs they have.
Depending on their baskets, hungry shoppers this weekend will get "sticker shock," said Isaac Olvera, lead food and agricultural economist at ArrowStream, a food-service supply chain technology company. Many consumers, he said, will look at their receipt and wonder, 'What's going on here?'
For people who have not embraced their inner vegan, it's hard to avoid buying meat, especially during Memorial Day Weekend, and other U.S. holidays. "Meat price changes often drive changes in the food consumer price index," Lusk added, "in part because they also represent a large share of food expenditures."
To be fair, it's not just meat that's seen higher prices this weekend. Americans have been spending more money on food over the last year. Food prices at grocery stores, which increased 5.7% on average in April of this year , a market research business.
But what's behind the rise in the cost of meat?
Supply, to some extent, has yet to catch up with demand. Meat-packing plants across the country were hit badly during the COVID-19 pandemic with many workers becoming ill and plants being forced to shut down production. It was not just a U.S. problem. Many European plants had similar issues .
"The meat and poultry price increases were driven by high feed costs and strong domestic and international demand," according to the Department of Agriculture's Food Price Outlook 2021 . "In addition, winter storms and drought disrupted the beef supply, and high prices for sows dampened pork production."
Another reason: near-record prices , a cooperative bank that's also a member of the Farm Credit System.
"The 50,000-foot view is that all meat will be more expensive when calculated through 2021," Kevin Good, vice president of industry Relations for CattleFax , an independent research firm, told RestaurantBusiness.com . "Grain prices are higher, exports are stronger and there's a tighter supply of all proteins."
A combination of all the above has also led some farmers to shrink their herds due to falling profit margins. In addition to the increased cost of animal feed, some farmers are struggling to rehire truck drivers after the pandemi has made the transportation of meat more expensive.
Employers have complained that it's hard to find workers; indeed, many Republican governors said people are not enthused about returning to work if they're earning more with enhanced unemployment benefits. But others say people want to work, and it's difficult to find quality, well-paid jobs -- in agriculture or elsewhere.
Meat prices, meanwhile, will continue to rise. Looking ahead, beef and veal prices are predicted to increase 1% to 2% in 2021, the USDA's Food Price Outlook added. Pork prices are seen rising between 2% and 3%, while other meat prices are expected to increase 1% to 2%. Labor Day Weekend may look this weekend cheap.