Pig slaughter shrinks supply to 1975 low in drought

Food Costs

Rising pork prices will boost costs for restaurants and grocery stores. Consumers may pay as much as 3 percent more for pork this year and as much as 3.5 percent more in 2013, the government projects.

CKE, based in Carpinteria, California, has lower pork costs now because of the higher slaughter rate, according to CEO Andrew Puzder. Pork and beef prices probably will rise next year and the chain may offer more chicken instead, he said.

Cracker Barrel Old Country Store Inc.’s meat costs are rising because of feed prices, CEO Sandra Cochran said by phone. The chain, which operates more than 600 restaurants across 42 states, will probably pay about 5 percent to 6 percent more for its food commodities in its fiscal year ending in July, Chief Financial Officer Lawrence Hyatt said on a conference call with analysts Sept. 19. The chain, based in Lebanon, Tennessee, is raising menu prices about 2 percent in fiscal 2013.

Bob Evans Farms Inc., the Columbus, Ohio-based restaurant chain, has seen a drop in sow costs as herds are liquidated, and expects prices to stay low until the culling stops, CFO Paul DeSantis said on a conference call with analysts Aug. 15. Once that is over, “prices tend to increase very rapidly,” he said.

Pork Development

Big Sky Farms, the second-largest hog producer in Canada, went into receivership this month partly because of rising feed costs, said Neil Ketilson, the general manager of the Saskatchewan Pork Development Board. The company produces more than 1 million pigs a year, according to its website. Puratone Corp. sought protection from creditors on Sept. 12. The Niverville, Manitoba-based company markets more than 500,000 hogs per year, according to its website.

Brad Hennen, a hog producer in southwest Minnesota, is reducing the size of his business because costlier feed and declining prices for weaned pigs. While he generally markets as many as 15,000 pigs annually, he expects to sell no more than 6,000 this year.

“It could easily get worse than that,” said Hennen, who has been raising hogs since 1987 and is based about 3.5 miles northeast of Ghent, Minnesota. “What can I do now to minimize my losses and still have a business for when the cash starts flowing again?”

Bloomberg News

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