Rising Deli Meat Prices Pressure Back-to-School Budgets

Now that the universal federal free lunch program of the pandemic era has ended, more parents may be packing their kids’ back-to-school lunches — and facing sticker shock in the deli aisle.

Packaged ham is $8.55/lb., a whopping 57% above a year ago, according to the latest national retail reports from USDA’s Agricultural Marketing Service. Packaged deli turkey has risen by “only” 19% to $5.88/lb., which seems like a relative bargain. Retail cheese prices are also up 19% to $4.64/lb. And, per the Bureau of Labor Statistics, bread prices are up 10%-15% in July versus a year ago.

For a standard serving size of two slices of bread, 2 ounces of meat, and 1 ounce of cheese, the cost of a homemade ham and cheese sandwich has risen 39% to $1.65 over the past year. For a family with two kids, the cost of packing sandwiches for school lunches alone would be roughly $600/year.

Per BLS’s July report, the cost of all food at home has risen 13.1% versus a year ago. For consumers this increase is bad enough, but what is driving lunch meat prices so much higher?

Whole Ham Prices Have Recently Surged to Record Highs

Last week, the USDA’s quoted price for wholesale hams used for deli meat surged to an all-time high of $1.20/lb. At the most basic level, 2022 pork supplies are forecast to fall by 4% from 2020’s record high levels, driven primarily by pandemic after-effects and high feed costs. Labor shortages and rising wages are affecting boneless hams in particular, which are relatively labor intensive to produce.

Turkey prices are also hitting record levels after the Highly Pathogenic Avian Influenza (HPAI) outbreak resulted in the loss of 2.5% of the annual commercial turkey population. It’s not only that total turkey production has declined 3% YTD, the presence of HPAI has disproportionately decreased large bird production (birds typically destined for deli meat) by 5% YoY YTD. In an effort to reduce the time during which flocks could be exposed to HPAI, producers are sending turkeys to market earlier — hence at lower weights than is typical. Fresh tom breast meat has reached over $6.50 per pound this year. Just three years ago, prices were struggling to reach $2.00 per pound.

All of this puts parents in a pickle. Ham and turkey lunch meat are the traditional fillings for easy and economical packed lunches. The other protein options are rather limited: roast beef is more expensive, and due to peanut allergies, many schools have banned peanut butter. Already prepared non-animal proteins like hummus are also usually more expensive. Egg and tuna salad are arguably less expensive, but more labor-intensive and not to every kid’s preference. And even then, HPAI has also affected egg supply which pushed consumer prices up 38% YoY in the most recently released CPI data.