09/02/2014 04:44 EDT | Updated 09/02/2014 05:00 EDT

Meat Prices In Canada Are High And They Will Only Get Higher: Analyst

Justin Sullivan via Getty Images
TOMALES, CA - APRIL 24: Cows graze on grass at the Stemple Creek Ranch on April 24, 2014 in Tomales, California. Extreme weather conditions across the country have reduced the number of cattle coming to market and have sent the wholesale price of U.S. beef to record highs. (Photo by Justin Sullivan/Getty Images)

Meat prices in Canada have been riding high this year, but Scotiabank says the pain at the butcher’s counter has just begun.

Livestock prices are the highest they have been in records going back to 1998, says Scotiabank vice-president of economics and commodity market specialist Patricia Mohr.

Mohr says that despite the hikes in beef and pork prices, sellers have not passed on the entire cost increase to consumers. In a report released last week, Mohr found cattle prices are at a record high, up 32 per cent over the past year, while hog prices are up 23 per cent — considerably more than the run-up in beef and pork prices at the supermarket.

According to Mohr, there was a six-month period where stores were swallowing some of the increased cost of meat, in order not to drive customers away, but prices have stayed high too long for retailers to keep doing that.

The industry has reached the point where higher cattle prices have to be passed along,” she said, as quoted by CBC.

Beef prices in Canada were up nearly 16 per cent in June, compared to a year earlier.

That’s being blamed on a reduction in livestock. A series of droughts in the U.S., coupled with high feed costs, prompted many cattle farmers to cull their herds. But feed prices have now come down, meaning many livestock producers "are making good money," said industry analyst Kevin Grier.

Livestock farmers will start breeding more animals now that prices are so high, but it will take at least a year and a half before that translates into lower prices, Mohr said.

Pork prices in Canada have seen even larger spikes. Bacon was up 27 per cent in June, compared to a year earlier, a jump big enough to get the attention of U.S. business analysts.

The spike in pork prices has to do with the Porcine Epidemic Diarrhea (PED) virus, which has a near 100-per-cent mortality rate in piglets. The disease has killed millions of young pigs in the U.S. and Canada over the past year.

Maple Leaf Foods said last month that those price spikes are having an impact on consumers. Sales of bacon and sausages have fallen by double digits at the meat processing company, something CEO Michael McCain described as “a little bit shocking.”

The exception is chicken, which has seen prices stay relatively stable over the past year, according to BMO economist Aaron Goertzen, and many consumers are switching to the poultry product as a result.

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