The Clinton Herald, Clinton, Iowa

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March 21, 2014

Breakfast foods are getting pricier

(Continued)

NEW YORK —

That could further boost bacon prices, which were already rising after farmers cut pig production because of higher feed costs. Those cost climbed after a drought in 2012.

The average price of a pound of sliced bacon in U.S. cities was $5.46 in February, up from $4.83 a year earlier and $3.62 five years ago, government data shows.

The retail price of pork is projected to climb by 2.5 percent to 3 percent this year, according to government forecasts.

"You should expect to see very high prices for your ground beef, your other meat cuts, all the pork cuts will be higher this year," Donnie Smith, CEO of Tyson Foods, said in an interview with CNBC on March 12.

U.S. pig herds have been hit by a virus called porcine epidemic diarrhea, or PED, which causes vomiting and diarrhea in the animals. After the first case in the U.S. was confirmed in May, the virus spread through hog herds during the cold winter. While the disease doesn't affect people and is not a food safety concern, it can lead to mortality rates of between 80 and 100 percent in newborn piglets. That's raising concerns of thinner herds as the U.S. heads toward the summer grilling season, when demand typically picks up.

Traders don't know exactly how badly the virus will impact pork production because it's the first time that PED has been detected in U.S. herds, says Dennis Smith, a commodity broker at Chicago-based Archer Financial Services.

"It's become a hysterical market," Smith says.

Gus Kasimis, 60, manager of the Green Kitchen Restaurant, a New York diner, says that increases in food prices had already become more frequent and that he had been forced to pass on the higher costs to customers.

But he's not worried that people will stop coming. Instead, they will cut down in other areas, perhaps spending less at more expensive restaurants, if they feel the squeeze.

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