Pork prices still high at the grocery store despite decline of viral outbreak

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The virus swept through John de Bruyn's hog barn in just five days last year, killing more than 1,000 piglets and turning a month's worth of hog sales into piles of lifeless pink carcasses.

Porcine epidemic diarrhea, or PED, had already wiped out millions of pigs in the United States and was taking root in Southwestern Ontario's hog heartland, spreading to dozens of farms and sending pork prices soaring by 60 per cent in 2014 as meat packers bid ever-higher prices for a smaller number of animals.

"It scared the heck out of me," said Mr. de Bruyn, who has 750 sows on a farm near Woodstock, Ont.

This year, Mr. de Bruyn's pigs are free of the disease, after more than a year of obsessive cleanliness in his barns, and acquired immunity in his herd.

U.S. hog production has also recovered – even though PED remains – and prices on the Chicago Mercantile Exchange have fallen by 30 per cent. But at the grocery store, Canadian consumers are not getting a break. The price of a pork chop rose by 15 per cent in the past year and bacon prices are up by 21 per cent, Statistics Canada says.

And Canadian farmers are getting just $150 for a pig that weighs 100 kilograms, down from $220 last year.

So who's making money on pork?

"Retailers are, but last year they were losing their shirts," said Kevin Grier, an independent food analyst.

Butchers and supermarkets need to see their costs of meat stabilize before they start discounting pork, said Mr. Grier, adding competition will eventually bring down pork prices.

But until then, retailers and meat processors are enjoying the added margins and not discounting pork, betting consumers are still willing to pay more for pork as beef prices set records amid low inventories. Also keeping pork prices high are the bacon and charcuterie crazes fuelled by TV chefs, food bloggers and trendy restaurants.

"What's happening at the farm gate is completely decoupled from what's happening at retail," said Sylvain Charlebois, a professor at the University of Guelph's Food Institute.

"On the retailing side, there is much more discipline, so price wars are less likely," he said by phone. "Right now there is a bit of a tug-of-war going on between pork and beef. Beef is going up, so pork is going up."

Last year's inflated prices offered relief to pig farmers after years of low prices, high feed costs and poor export sales due to a high Canadian currency and country-of-origin labelling rules in the United States. PED, the virus that drove up prices, is carried in manure and spread by dirty trucks, boots and some feed. It kills most young pigs by dehydration.

Mr. de Bruyn said watching his piglets die was difficult, and took an emotional toll on his family and staff.

"If your pigs are sick, it's everything to you," he said. "I've been a pig farmer for 25 years and that was the most challenging thing I've had to deal with."

For Mr. de Bruyn and other pig farmers, soaring prices helped take away some of the sting of managing the outbreak. "I think on average, those who contracted the disease still had a good year, we just missed a little piece of the pie," he said.

Rick Bergmann, chairman of the Canadian Pork Council, is not surprised retail prices are slow to fall. But he said pig farms are profitable this year, just not as much as last year.

"It's great to see that there's still profitability, but it's different than last year," said Mr. Bergmann, who raises 1,700 sows near Steinbach, Man. "Last year was one for the books. Last year was a big blessing for the industry because it helped a lot of guys live another day."

Looking ahead, Mr. Bergmann sees uncertainty on the farms amid expectations the U.S. pig herd will peak in size and prices will fall even more.

Cheap hog feed coupled with a strong U.S. currency and labour disputes on the U.S. West Coast that are dampening exports have helped the U.S. pig herd increase in size by about 8 per cent this year and limited any price increase.

But another animal disease is roiling meat markets and giving pork prices a lift. This time it's avian influenza, which has been found in 16 states and two Ontario farms, leading to the cull of millions of chickens and turkeys, driving up U.S. poultry prices.

Meat eaters in the U.S. and abroad are turning to pork instead of chicken, fearful of the unfounded health implications of eating poultry, said Dan Norcini, a commodities trader in Idaho.

The avian flu is concentrated in the egg-laying region of the U.S. Midwest. But Mr. Norcini said if the autumn migration of wild birds spreads south to the broiler-meat chicken farms in the southern states of Texas and Alabama, markets will face another shortage of poultry. Consumers will then drive up the price of chicken's closest substitute: pork.

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Porcine Epidemic Diarrhea

A viral disease found in pigs that first appeared in Britain in the early 1970s. It spread across Europe and, in 2013, arrived in North America. PED is associated with diarrhea and can be fatal in younger pigs. However, it does not pose a risk to human health or food safety.