CHICAGO (Reuters) - The cost to produce a BLT, America’s favorite summer sandwich, hit a record high of $1.65 in May and will continue to take a bigger bite out of wallets in the coming months, given a pig virus that has ramped up bacon prices and drought-stricken salad crops in California.
But price increases may be limited as farmers breed bigger pigs and processors tap stocks built up in expectation of tight supplies as the Porcine Epidemic Diarrhea virus (PEDv) killed millions of piglets in the past year.
PEDv deaths helped push bacon to a record $6.05 per pound in May when the price to make bacon, lettuce and tomato (BLT) sandwiches also peaked.
Bunny Leyva, owner of Bunny’s Cafe in Stockton, California, stocked up by doubling her order of pre-cooked bacon as prices recently jumped to $14.49 per pack from $12.99 within a two-week period.
“I know it’s going to start climbing, so I buy two of whatever I usually get,” she said.
However, prices for pork bellies, used to make bacon, are now down 15 percent from an April peak of $2.06 per pound, as pigs are coming to market heavier to counter lower numbers. Pork output has slipped under 1 percent this year despite a 4.4 percent drop in pigs killed.
“They (bellies) are going to be as high as last year, but not by a lot because of the stocks we carried into the spring,” said Steve Meyer, president of Iowa-based Paragon Economics.
There are no major signs yet that prices of lettuce and tomatoes have been affected by drought in California, which grows 90 percent of domestic output, said Annemarie Kuhns, an agricultural economist at the USDA.
Lettuce prices edged up 1.1 percent in May from a year ago, according to the USDA, but consumers actually paid slightly less for tomatoes. Farmers are also likely to prioritize water for the top quality tomatoes used in BLTs - about 10 percent of the state’s output.
“Fresh market tomatoes are a high-value crop per unit of water. When water is really valuable, like in a drought, farmers try to move it to the crop where you get the biggest revenue per drop,” said Daniel Sumner, economist and director of the University of California Agriculture Issues Center.
But Timothy Richards, an Arizona State University business school professor, warns prices could still rise. He studied California’s drought impact on fruit and vegetable prices using retail scanner data and projected as much as a 62 cents price jump for lettuce to near $2.44 a head, with tomatoes possibly up as much 45 cents to around $2.84 a pound.
Leyva has avoided raising prices so far by cutting the number of bacon strips in her 40-seat restaurant’s $5 BLT from five to four.
“If prices go up much higher than they have, I’ll probably add another quarter to it. I‘m not trying to get rich, I‘m just trying to keep the business open,” she said.
Reporting by Theopolis Waters, editing by G Crosse