There Will Be No Bacon Shortage

Commentary about business and finance.
Sept. 26 2012 3:08 PM

There Will Be No Bacon Shortage

How a British trade association press release sent the Internet into a senseless panic.

Don't panic! There will be bacon!
Don't panic! There will be bacon!

Photo by iStockphoto.

It all began, strangely enough, with a press release from an obscure foreign trade association. The National Pig Association of the United Kingdom, you see, wants British customers to feel OK about the idea of paying a higher retail price for pork products. They’d particularly like it if British customers went out of their way to buy locally produced pork. And why wouldn’t they?

“Vendors want you to buy more of their product at higher prices” is more or less the ultimate dog bites man (or, as the case may be, pork chop) story. But the press release’s provocative lede—“A world shortage of pork and bacon next year is now unavoidable”—captured the imagination of the Internet. Not right away, mind you. The release is dated Sept. 20, but the looming bacon shortage didn’t start making global headlines until Tuesday, Sept. 25.

“Bacon Shortage Worldwide ‘Unavoidable’ UK Pig Group Says” was CNBC’s headline, while CBS went with “Global Bacon Shortage ‘Unavoidable,’ Group Says.” Up in Canada, the CBC offered the pithier “Global Bacon Shortage ‘Unavoidable.’” The news made the Huffington Post and even the Washington Post's weather blog (“Weather a factor in looming global bacon shortage”).

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Given the rise of bacon worship in recent years, perhaps it’s no surprise that people are upset at the thought of a bacon shortage. But is the shortage real? And does it even have anything to do with bacon in particular? Are we headed for a dystopian future of food lines and bacon rationing?

Not really. But you probably will have to pay more.

For starters, all bacon isn’t equal. The thing British people call “bacon” isn’t the same as what Americans call “bacon.” Their bacon is from the back cut of the pig and corresponds to what we call “Canadian bacon.” Our beloved bacon, made from pork belly, is known in the United Kingdom as “streaky bacon.” In Canada, interestingly, “bacon” means the exact same thing as in the United States, and they use the term “back bacon” to refer to what we call “Canadian bacon” and English people just call “bacon.” Which is simply a long-winded way of saying that the pork supply issue has nothing in particular to do with bacon.

The issue is corn. Drought this year has destroyed a lot of the world’s corn crop. Over the summer when all the dead corn was in the news, the devastation was portrayed in the press primarily as a sob story about farmers. But as Slate warned you at the time, the economic consequences extend far beyond corn growers and their immediate community.

That’s because corn, for better or for worse, is one of the key commodity inputs of the modern economy. The corn you eat on the cob or in the occasional tortilla or slice of corn bread is just the tip of the corn iceberg. Corn is (unwisely) used to fuel vehicles, and it’s an element in a large share of the food we eat in the form of corn syrup and corn-based oils. What’s more, the meat that we eat is substantially made of corn—a key ingredient in the recipe for modern industrial-scale animal feed. So when drought hits and corn dies, it gets more expensive to feed animals.

This affects the price of meat in different ways, depending on timing. The feedlot operators who supply the vast majority of American beef buy year-old cattle and then fatten them for the slaughter. As fattening gets more expensive, the price they’re willing to pay for the yearlings declines, so the price of cattle in the futures market goes down, reducing breeders’ profits. In the short-term, drought and expensive feed lead to pre-emptive slaughter and an abundance of cheap meat. In the medium-term, however, this process leaves you with fewer animals to bring to the table.

Hence, the “bacon shortage”—actually a global increase in meat prices as a slightly delayed downstream consequence of the increase in corn prices.

Such an increase will, of course, be unpleasant for households used to buying as much cheap bacon as their hearts desire, but there shouldn’t be any actual shortages precisely because prices will rise. Shortages arise when price controls lead to a situation in which consumers want to buy more of something than actually exists, which can lead to government rationing. In our economy there will still be plenty of bacon on the shelves, just priced high enough to deter some people from eating as much of it as usual.

And we should keep these price hikes in context. According to the U.S. Department of Agriculture, bacon reached an average price per pound of $4.61 in August, which was a huge leap from earlier in the summer but actually lower than the price 12 months ago. And here in the United States at least, bacon happens to be more expensive than ham, pork chops, or the USDA’s “all other pork, excluding canned and sliced” catch-all category. It’s more expensive than chicken, and it’s more expensive than ground beef. So American consumers will be able to adjust to higher prices by shifting to burgers, poultry, and other kinds of pork products—possibly even including the stuff the Brits call “bacon”—rather than breaking into mass panic and bacon riots.

The important thing is to keep the situation in perspective. Bad weather happens. Back in the spring of 2008 the world was also panicking about rising pork prices (though at that time the popular media narrative was that meat prices would lead to a surge in Spam sales rather than a bacon shortage). In part as a result of worrying too much about something totally beyond their control—the weather—central banks all around the world took their eyes off the growing collapse in global demand that summer with disastrous consequences we’re still seeing today. Let’s not allow inflated fears of a bacon shortage to distract us from more important issues. In the short term, there’s really nothing to be done but learn to cook more chicken.

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Slate’s coverage of food systems is made possible in part by the W.K. Kellogg Foundation.

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