US Agricultural Economists Say Bacon Shortage Is Hogwash

PolygamousRanchKid writes "The economics of the current drought are likely to nose up prices for bacon and other pork products next year, by as much as 10 percent. But U.S. agricultural economists are dismissing reports of a global bacon shortage that lent sizzle to headlines and Twitter feeds last week. Simply put, the talk of scarcity is hogwash. 'Use of the word 'shortage' caused visions of (1970s-style) gasoline lines in a lot of people's heads, and that's not the case,' said Steve Meyer, president of Iowa-based Paragon Economics and a consultant to the National Pork Producers Council and National Pork Board. 'If the definition of shortage is that you can't find it on the shelves, then no, the concern is not valid. If the concern is higher cost for it, then yes.'"

Comments

As a Software Developer I Too Have Very Scary News

[eldavojohn]

Yea verily, we may have escaped the terrifying "bacon shortage" foretold by our farmer-sages but as a ones-and-zeros smith, I will reveal a much scarier future that is imminent and knocking at our door: a ones and zeros shortage. Yes, that's right, you heard me, Earth has reached its quota of ones and zeros. As our localized reserves of information go up, elsewhere in the universe entropy must be accounted for in order to preserve the Second Law of Thermodynamics. We have all but destroyed Alpha Centuri with viscous randomness as we greedily ate up our own terrestrial order and logic. Physics has heard of our blasphemy and she is vengeful!

What can you do? Well, as a developer who can write in many languages including C, I will be able to squeeze much more usage out of your precious ones and zeros than, say, my Indian counterparts. Oh, sure, now software is cheap but the demand is imminent and workers like myself will be harder to find than a two on your hard drive. Knowing that violent unrest will break out when people can no longer access their Farmvilles and pornography, I offer my services at a meager rate so nigh our hour of darkness. Friends, readers, Romneys, rich and potential employers -- I am not asking for much to protect your software as a ones and zeros guardian ... a hair below the capital gains rate will feed me peanuts and allow me to upgrade my housing from pizza boxes to refrigerator boxes.

Thou hath wrought the wrath of thine swine overlords and thou hath felt its mighty cloven hoof. Now I am simply asking you that, in your cellars where you have squirreled pound upon pound of bacon inside deep freeze upon deep freeze inside freight container upon freight container, you employ me and house me to ensure all your computing needs are safe and secure among thine horded cured brine meats.

I urge you, take this offer now before the coming very real and very well explained (see above) shortage renders my colleagues and I safe inside massive corporations and extremely financially secured without need for employ.

Nothing to see here

[drinkypoo]

The concern is increased prices, it has never been that you won't be able to get bacon but that you will have to pay twice as much for it.

Re:Nothing to see here

[Anonymous Coward]

Well with the hype about this, politicians are sure to step in and "solve" this problem. Price controls and agricultural policy meddling will bring about shortages.

Re:Nothing to see here

[Anonymous Coward]

speaking as a card-carrying Republican, I would suggest that perhaps not everyone DESERVES bacon. I see no reason we should provide bacon to people that don't work for it. I'm sick and tired of going to the store to buy bacon, and on the way home I see people carrying bacon down the street that they were given for free. It makes my bacon that much less valuable. If the price of bacon doubles tomorrow, that just means the freeloaders are getting a more valuable handout.

Re:Nothing to see here

[CommieLib]

It does get tiring explaining basic economics every few months. Look...

Farmer Brown (or, more likely, subsector 12 of Hive 11 of the Archer Daniels Midland Collective) raised x pigs over the past couple of years. The value of x was determined by figuring out how much money they could make versus raising, say, chickens. The price of pork has risen now, so now the value of x has risen. There's a lag, as we have to wait for the piglets to mature, but farmers are in it to make money - the price has spoke, the market wants more pork.

So if we do engage a price control, that is, we limit the amount that Farmer Brown can charge for the pork, he won't trim his sails, he'll just keep raising chickens, despite that what people really want is more pork. A price control is a statement that "yes, people want this more, but you cannot profit from it." And thus people will not take the extra measures to provide it that people would prefer.

Re:Nothing to see here

[MightyYar]

People don't realize but for the first time in decades demand for gasoline in the US is actually down

A lot of this has to do with the price of natural gas. We have also improved fleet efficiency, increased the ethanol percentage in fuel, oh... and we decimated our economy. :)

But seriously, the natural gas phenomenon is so strong that US carbon emissions are even down 20% off of their peak.

Re:Nothing to see here

[FreeFire]

Are Americans so obese that they can't live without cutting their bacon intake in half?

I just came back from the store where I purchased the largest chest freezer that they have. I intend to stockpile a month's worth of bacon for myself until the crisis recedes. My wife indicated that perhaps I should have also purchased a freezer for her.

Is she planning to freeze herself until the crisis is over?

Government Economists

[tmosley]

Don't know the difference between shortage and rationing as a result of price controls.

No wonder we are so totally fucked in all things economic.

Re:Government Economists

[dkleinsc]

A shortage is a situation where the demand for a product at a particular price is higher than the supply of that product. Basic capitalism responds to that by raising the price of the product until demand matches supply (this goes back to at least Adam Smith, possibly earlier). Hence the price of the product reflects, in part, the scarcity of that product.

And in the case of bacon (or other forms of pig meat), there are plenty of substitute goods, so what will happen is that people who are willing and able to pay the higher price for it will get it, and those that aren't won't get it. It's that simple. And longer term, because the prices are higher some people who would have done other businesses will focus on producing hogs because that's where the money is, which means the problem will solve itself.

Isn't amazing when capitalism does what it's supposed to?

Re:Government Economists

[Ichijo]

imposing a use tax on roads is highly regressive.

Not imposing a use tax on roads is even more regressive! As a group low-income residents, on average, pay more out-of-pocket with sales taxes for freeways than with tolls.

So if you are truly concerned about regressive taxes, then you must be in favor of tolls.

Economic impact

[Anonymous Coward]

- Laid-off guys can stop fretting about not being the one to "bring home the bacon", because nobody is

- Wall Street bankers will have to learn to eat low on the hog

- In Washington, we'll start to see more "pork pail" projects

- Schoolkids will grumble about opening their lunchbags and getting "LT sandwiches"

Re:This is real

[vlm]

This isn't made up at all, there is a pork shortage, as in much less pork available now then at the same time last year.

The point is that in the USA we'll just pay more, but in China I would expect a complete absence of Pork Fried Rice or whatever. Also no Pork Carnitas being served south of the border.

Kind of like a rice shortage means people will starve, its just starvation won't be in the USDA's territory...

I'll just eat sausage instead

[crazyjj]

Guess I'll just just have to forgo bacon in the morning. I'll just have sausage or ham instead.

Re:As a Software Developer I Too Have Very Scary N

[somersault]

Well, at least his post lived up to his sig this time

Bacon Prices On The Rise

[cfulton]

NOOO. Bacon is the central pillar of my diet. BLTs, Bacon Omelets, Bacon wrapped meat of all kinds, Bacon wrapped bacon. How will I live without my lovely bacon?

Re:So We're Modding Up Hate Posts Now?

[somersault]

If you pay attention, mine is more of a backhanded compliment ;)

Re:Price increase == Shortage.

[couchslug]

"Now, we have the opposite problem -- an administration who issues oil leases but no permission to actually drill and fights all efforts to build any additional oil refineries"

Nice troll, but the US _exports_ gasoline of which it has a surplus.
There is also no refinery capacity problem.

The global market is willing to spend MONEY to buy US gasoline and diesel. They even pay to refine crude in _US_ refineries for export elsewhere.

http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=mgfexus1&f=m

http://zfacts.com/node/426

"U.S. oil and natural gas production in July was the highest since 1999, according to the Energy Department. That increase has allowed the U.S. to "meet 81 percent of its energy needs last year, the most since 1992." And, the U.S. took on the role of a net exporter of refined products for the first time since World War II.

Countries such as Venezuela and Brazil, petro dynamos in South America, both increased imports of U.S. refined products from last year.

Loder reported that gasoline has become more expensive because of rising world oil prices. The fact that U.S. refiners can turn a bigger profit by sending refined products out of the country should give us pause to think what would happen if we adopted policies to promote greater domestic crude production.

As long as markets for refined oil products overseas continue to grow, it only makes sense for U.S. refiners to tap these profitable opportunities.

"Drill Baby Drill!" won't necessarily lower gas prices as long as customers in China, India and other developing markets are willing to outbid U.S. motorists in the global gasoline price wars."

Incidentally, building pipeline for Canada to export their tar sands oil through US refineries in Foreign Trade Zones isn't going to help US consumers either, because it "un-landlocks" oil which was going to US customers in the first place.

http://247wallst.com/2012/03/07/valero-looks-forward-to-export-opportunities-vlo-trp-tso-mpc-hfc/

"The Keystone XL pipeline, with its projected delivery of 800,000 barrels/day of heavy, sour crude from Canada, figures prominently in Valeroâ(TM)s plans to boost its profits. The higher volume of Canadian crude will widen the differential between Brent and other imported heavy, sour crudes by pushing prices down on imports.

For US drivers, this scenario does not mean that gasoline will be cheaper. It does mean that Valero will be able to capture bigger profits even as US demand for gasoline falls. The only thing that will push down pump prices is for Brent crude to fall significantly with respect to WTI. That is not part of either TransCanadaâ(TM)s or Valeroâ(TM)s plan."

Sorry to derail another anti-Obama attack (I don't like Omney OR Robama!) but the White House does not run the oil industry!