Prices for pork, beef and other farm commodities climbed over the past year as the economy improved and top U.S. export customers such as Canada and South Korea purchased more. Increasing demand comes with U.S. livestock inventories near historic lows, after the 2008-09 recession forced beef and pork producers to trim herds.
The retail cost of meats will increase 4.5 percent to 5.5 percent this year, including a gain of as much a 7 percent for pork, the most of any major food group, the U.S. Department of Agriculture said in a report.
Demand just appears to be the driving force. Domestic and export demand are both improving rather dramatically. U.S. exporters shipped 17 percent more pork to overseas buyers in January compared with a year earlier, and beef sales were up 24 percent, according to the most-recent USDA data. As demand increases, hog producers have been reluctant to expand herds because the cost of corn, the primary livestock feed, has jumped 94 percent in the past year.
Over the past year, prices for food at home rose 2.8 percent, the largest increase in almost two years. Compared to February 2010, average retail meat prices jumped 9.2 percent last month, the biggest year-over-year gain since August 2004.
Pork retail prices averaged $3.28 a pound last month, up 1.2 percent from January and up 12 percent from February 2010, according to the USDA. The pork average hit $3.36 in October, a record not adjusted for inflation.
Meat prices are rising faster than overall food costs at supermarkets and restaurants, which the USDA said today will increase 3 percent to 4 percent, the fastest since a 5.8 percent jump in 2008 that was the most in 28 years.
The farm value of agricultural products accounts for only about 15 percent to 20 percent of the prices for finished consumer food products in the U.S., with energy, labor and packaging also factoring in.
Most U.S. households spend a relatively small share of their disposable income on food. Still, these higher costs will be very difficult for households already struggling due to the current high unemployment rate and other negative economic factors affecting the U.S.
Global food prices rallied 25 percent in 2010 and set a record in February, according to the United Nations. The higher prices contributed to riots in North Africa and the Middle East that toppled leaders in Egypt and Tunisia.