As food prices continue to rise, beef and pork have surged out front.
Overall food prices rose 0.4% from March, and are up 1% from a year ago, according to data released by the Bureau of Economic Analysis on Friday. The price of pork soared 2.6% in April and 4.8% from a year ago, adjusting for seasonality. And while beef and veal prices stayed fairly flat for the month, they are up 3.3% from a year ago.
In a season that routinely sees increased demand for beef and pork, this goes far beyond people excited to get back outside to barbecue.
Michael Nepveux, an economist for the American Farm Bureau Federation, says some of the factors contributing to skyrocketing prices include: labor shortages in the meatpacking industry on the heels of months of slowdowns and shutdowns because of covid-19; a surge in restocking food service as restaurants reopen; high grain and transportation costs; and strong exports and domestic demand.
"Consumers may have become more comfortable cooking some of this stuff at home during the pandemic," Nepveux said. "And while recessions tend to not treat beef consumption well, the government stimulus offset that somewhat."
Meat processing plant shutdowns in April last year caused the largest drop in feedlot populations since records began in 1996, according to Gro Intelligence, an agriculture data platform. And with declines in pork production last year and diminished stockpiles in cold storage (some of this because of the federal Farmers to Families Food Box program, which distributed excess commodity foods to food banks), Nepveux said things might get worse before they get better.
The Bureau of Economic Analysis reported Friday that overall prices were up in April by 3.6% compared with a year earlier, even as disposable personal income fell 14.6%, as a stimulus-check-fueled spending spike subsided.
And the grocery price inflation trend is happening worldwide, according to the United Nations food agency. Globally, the U.N.'s Food and Agriculture Organization has recorded seven consecutive months of rising meat prices, putting April 5.1% higher than a year ago, a month that at the time saw the sharpest increases in meats, poultry, fish and egg prices in the United States in nearly 50 years.
In April 2020, meat hoarding and panic-buying hit its peak, leaving many grocery shelves bare and prompting Tyson Foods, the country's second-largest processor of chicken, beef and pork, to warn that the U.S. "food supply chain is breaking."
Bottlenecks because of coronavirus outbreaks at meat-processing plants caused dramatic supply-chain gaps last spring. This is responsible for some of the current high prices, but only a little. The reasons now are more complicated, a function of supply and demand, weather, transportation costs, labor shortages, export markets and, in some cases, opportunism.
Demand for meat went up last year by 2% and is up another 5.7% so far this year, says Steve Meyer, an economist with Partners for Production Agriculture.
"A part of it is government stimulus payments," he said. "There's been cash in people's pockets, even though some of them weren't working. And so that has been a positive for meat demand in general."
He says employed people stuck at home and away from restaurants during the pandemic had substantially more disposable income. Even unemployed people saw a sizable boost in benefits, and more expensive proteins are something people throw money at when their finances are good.
Restaurant reopenings are another contributor to price spikes, says Grady Ferguson, senior analyst at Gro Intelligence. As restaurants reopen, a lot of meat has already been sold to grocers or is packaged in cuts specifically for grocers. This causes newly reopened restaurants to initiate bidding wars for the remaining meat.
Domestic retail prices are also affected by surges in meat exports, says Don Close, senior animal protein analyst for Rabobank. Because China's own pig herd was decimated by African swine fever starting in 2018, that country has supplemented with large purchases of American pork. American pork exports to Vietnam are up 400% in the past year for the same reason. In March 2020, restrictions on selling American beef in China were lifted.
Information for this article was contributed by Andrew Van Dam of The Washington Post.