Hog prices: Up or Down

When evaluating market data, especially to promote a product or industry, it's important to look at data in context. A friend in Idaho had grumbled about the recent rise in menu prices at Five Guys Burgers, where a mere bacon burger and fries costed more than $13, and swore off visiting the restaurant ever again. I thought that maybe it's because of how much gasoline costs. Last time we were above $4.35/gallon for gas, food prices went way up at grocery stores. This is largely because distributors pass along prices to their customers, the grocery stores who then pass on those costs to consumers.

So take a look at this graph, which shows the month-over-month rise in hog prices from March to April of 2.9%. When data is laid out like this, it looks significant to us laypeople since we have no context for it nor do we know what factors are driving this rise.

In the following chart, I've expanded the chart to show hog prices for a year:

Quite a big difference, don't you think? Except, what online and traditional media outlets will report is the rise in pork prices but without the context that these prices are in cents per pound of what is sold in the US wholesale market. It then begs the question, why does pork cost about $7/lb at the grocery store. It's okay to blame marketing and advertising for this. Remember the 5 P's of marketing...it still costs money to bring various pork products (or any product) to market.