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But the major price driver is unappetizing: a pig diarrhea epidemic that has killed more than four million piglets since last spring, threatening to reduce supply and push bacon prices up further, Steve Meyer, president of Paragon Economics, told CNBC.
“On the retail level, we expect that increased cost is going to be passed through to consumers,” Brett Elliott, vice president of Monogram Prepared Meats in Harlan, IA, told Omaha.com. “It will take a while to show up.”
Bad news from Brazil has taken a similar toll on other popular breakfast items, notably coffee and orange juice.
The price of high-grade Arabica coffee beans from Brazil, which supplies 46 percent of the commodity, has risen by 71.5 percent since the end of 2013 because of a drought that could wipe out 10 percent of the country’s coffee crop by 2020. After a seven-year-low last year, coffee prices hit a two-year high of $2.05 per pound on March 13.
Then there’s the orange juice problem.
In February, the Food and Drug Administration blocked imports of frozen concentrated orange juice from Brazil because of tests showing traces of a fungicide that can’t legally be used on oranges in the U.S. even though the EPA said the trace amounts would not harm consumers, and residues of the chemical are allowed on other foods, NPR reported. The ban could last up to 18 months.
Brazil supplied roughly 11 percent of orange juice consumed in the U.S. in 2010, according to the U.S. Department of Agriculture. That doesn’t seem like a lot, but economist Thomas Prusa of Rutgers told NPR that cutting it out could boost wholesale prices of concentrated orange juice by 20 to 45 percent.
This worries U.S. citrus growers who were already seeing a drop in sales due to competition from exotic fruit and energy drinks, and doubts about the health benefits of the high-sugar beverage.
Prices of other breakfast staples such as wheat, butter and milk are also on the rise, the Financial Times reported.
Meanwhile fast food chains are competing harder for the morning market share following a 3 percent jump in restaurant breakfast traffic last year, Business Insider reported, citing an NPD Group study. Lunch and dinner traffic fell by 1 percent during the same period.
Taco Bell is set to debut its breakfast menu later this month. Starbucks and Dunkin’ Donuts are both expanding their breakfast offerings. And McDonald’s is reportedly thinking of extending its breakfast hours past 10:30.
Passing higher wholesale prices on to consumers is the last thing businesses want to do when competing for market share.
“During previous inflationary periods, food makers switched to less-expensive ingredients or reduced package sizes to maintain their profit margins,” the Wall Street Journal said. But in the era of bacon-flavored lip balm, a fake-on substitute will be a hard sell.