Why haven’t pork prices fallen in the grocery store?
Some farmers are lashing out at middlemen who are getting the same money from consumers for pork, even though they are paying producers less than half of what they paid months ago.
“Do they get to keep all their profits?” asked Saskatoon farmer Gary Schreiner at a recent farm meeting. “We need protection.”
Schreiner said packers are making huge profits and need to be controlled.
But John Germs, a hog farmer and member of a packer’s board of directors, stood up to defend the packers, and turned his outrage on grocery stores.
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“The consumer is being gouged,” he said. “The real gouger is the retailer.”
Martin Rice, of the Canadian Pork Council, said his organization doesn’t feel there is enough evidence to prove there is any price gouging going on.
Producers in general wonder why they’re receiving low pig prices while consumers are still paying the same pork prices, but they won’t denounce anyone yet.
Chris Mitchler, of the Consumers Association of Canada, said she isn’t worried by the pork situation.
“I don’t think consumers are being gouged now,” said Mitchler. “We have seen it as a pricing issue between producers and processors.”
Mitchler thinks much of the price of pork is based on processing and distribution costs, which probably haven’t changed much.
Germs, who sits on the board of Mitchell’s Gourmet Foods, said the company is making money now, but packers need to make their profits during the low part of the price cycle. They lose money when hog prices are high, but recover when prices drop.
He said grocery stores and wholesalers should be passing along cost savings to consumers. Packing plants are selling their meat for less, so the other parts of the chain should too, Germs said.
But Bryan Walton, of the Canadian Council of Grocery Distributors, said retailers are trying to find ways to help sell pork to clear the oversupply that is driving down prices.
He said grocery stores will probably soon be cutting some pork prices.
“If (the price of hogs) remains at this point, you can expect to see some pretty aggressive pricing and featuring of product,” said Walton.
Cheaper commodity prices don’t automatically appear as lower grocery prices.
“Some of that will take a little while to work through the supply chain,” said Walton.
Many grocery chains contract supplies ahead, so they are sometimes tied to prices they agreed to up to a year before.
Walton said the way grocery stores can best help hog farmers is to sell more pork. That’s what they’re concentrating on now.
“As prices slide, the question is how can I use that to promote product and promote pork,” said Walton.
Longtime producer and industry critic John Keen said trying to find a price gouger is a waste of time.
“There’s no great conspiracy here,” said Keen.
Slaughter, processing and distribution costs make up most of the price of the pork on store shelves, he said.
A big drop in the price packers pay for pigs works out to a small share of the final price, so consumers and hog producers shouldn’t turn their anger against the processors and sellers.
“They’re an easy target.”
The real problem with pork prices is massive oversupply and stable demand. That inevitably causes commodity prices to fall. The people farmers should blame are hog industry promoters, Keen said.
Governments across North America oversold the hog industry, which led to a massive increase in hog production, which led to a price crash, he said.
