NEW YORK – Breakfast is now being served with a side of sticker shock.
The price of bacon is surging, and the cost of other morning staples, like coffee and orange juice, is set to rise because of global supply problems, from drought in Brazil to disease on U.S. pig farms.
And it’s not just the first meal of the day that’s being affected. The cost of meats, fish and eggs led the biggest increase in U.S. food prices in nearly 2½ years last month, according to government data. An index that tracks those foods rose 1.2 percent in February and has climbed 4 percent over the last 12 months.
Even though food companies use a range of cost-cutting methods to limit the effect of higher food costs, consumers will likely feel the ripple effects of rising commodity prices, according to the Grocery Manufacturers Association, a trade organization for more than 300 food, beverage and consumer product companies.
Here’s a rundown of why breakfast food costs are rising, and why they could keep going up.
• Bacon: The price of lean pork in the futures market is at record levels and is up 52 percent since the start of the year, to $1.31 a pound. Traders are concerned about a deadly virus in the U.S. hog population.
That could further boost bacon prices, which were already rising after farmers cut pig production because of higher feed costs after a drought in 2012.
The average price of a pound of sliced bacon in U.S. cities was $5.46 in February, up from $4.83 a year earlier and $3.62 five years ago, government data shows.
The retail price of pork is projected to climb by 2.5 percent to 3 percent this year, according to government forecasts.
U.S. pig herds have been hit by a virus that causes vomiting and diarrhea in the animals. While the disease doesn’t affect people and is not a food safety concern, it can lead to mortality rates of between 80 and 100 percent in newborn piglets. That’s raising concerns of thinner herds as the U.S. heads toward the summer grilling season, when demand typically picks up.
• Coffee: You need your morning brew, and you’ll likely pay more for it, at least at the supermarket.
Coffee futures have surged 57 percent this year and this month rose above $2 a pound for the first time in two years. Coffee growing regions of southern Brazil, the world’s largest coffee producer, have been hit by drought. Analysts are forecasting that Brazil’s crop could shrink by about 20 percent this year.
Shoppers should be prepared to pay more at grocery stores, if the current trend continues for more than a month, says Dan Cox, the president of Coffee Analysts, a company that tests coffee quality for retailers.
“Whether it’s by the can or the bag, consumers should probably expect to pay 50 cents per pound more, fairly soon,” Cox says. The average price of coffee for U.S. cities was $5 a pound in February, although that was little changed from a month earlier, according to government data.
Of course, people who need to get their caffeine fix won’t be put off. Plus, coffee prices were at their lowest level in about seven years before they started climbing.
Starbucks customers also shouldn’t worry. They won’t be paying higher prices even if the cost of the beans keeps going up, says CEO Howard Schultz. The company has locked in its coffee bean prices for the next year using futures contracts.
• Orange juice: The price of a 12-ounce can of frozen orange juice edged up in February to $2.43 from $2.41 in January, according to government data.
A series of problems is driving the increases. Florida’s orange crop is forecast to be the worst in almost a quarter-century.
A disease transmitted by tiny insects is damaging the harvest; infected trees start to produce bitter green fruit. The problem was first detected in the U.S. in September 2005, and the Florida orange juice crop is down by almost a quarter since then.
No cure is known, and the only solution is to cut down the tree.
Add weather to the orange juice problem. A dry spell last year stunted the growth of orange trees in Florida and is hurting production this year, says Michael Smith, president of T&K Futures and Options, based in Port St. Lucie.
The orange crop in Florida, one of the world’s biggest orange-growing regions, could fall this year by about 15 percent to 114 million boxes, according to government forecasts. That would be the smallest crop since 1990.