Farmscape for May 10, 2011   (Episode 3575)

A senior market economist with the George Morris Centre expects consumers to alter their food purchasing patterns as prices rise in the grocery store.

Tighter supplies of pork due to reduced production in response to losses within the North American pork industry combined with improved export demand have resulted in dramatic improvement in North American live hog prices but higher feed costs have offset any significant improvements in profitability.

Kevin Grier, a senior market economist with the Guelph based George Morris centre, suggests the consumer has not yet felt these the effect of higher commodity values.

Clip-Kevin Grier-George Morris Centre:
Cattle and hog prices are up dramatically year over year.

In the grocery store though beef and pork prices are up but nowhere near the extent that the cattle and hog prices are which simply tells us that the margins of packers as well as retailers have been squeezed.

They've absorbed the increase as opposed to passing it along to consumers but that's notgoing to last.

The consumer is going to have to start to see those price increases  probably more and more through the summer time anyway and then it will be interesting to see what happens.

Again, we've seen prices up at the grocery store but nowhere near what they could go up.

So how we react as consumers, in the U.S. their economy is still much much weaker than ours.

They will be trading down to lower priced items.

They will be purchasing less and so will we.

Again, there's only so much money to go around and again, with high gas prices, we're all going to be more cautious so instead of having strip loins we will be having hamburger and instead of having boneless breasts we'll be having leg quarters and so on.

Grier expects live hog prices to stay high but he suggests the ability of Canadian and U.S. consumers to absorb higher pork prices is limited and in turn that will result in a limitation in the upward pressure on live hog prices.

For Farmscape.Ca, I'm Bruce Cochrane.

       *Farmscape is a presentation of Sask Pork and Manitoba Pork Council