Crops price index continues to rise while its livestock sector counterpart declines, StatsCan report says

Wednesday, March 6, 2013

by SUSAN MANN

The 1.8 per cent increase in Statistics Canada’s farm product price index this past December compared to a year ago meshes with what Canadian Federation of Agriculture president Ron Bonnett has heard from the country’s farmers.

The “grains and oilseeds sector has been fairly robust,” he notes. And “we’re seeing projections of fairly solid prices going forward too.”

Statistics Canada says in its report the increase in the crops index, which rose 4.4 per cent in December 2012 compared to the same month the year before, more than offset the decrease in the overall livestock and animal products index, which fell 0.9 per cent during the same time period. The crops index increase was mainly due to the strong oilseed index, which was up 13.9 per cent. “Oilseed prices have been supported by growing demand and concerns over tight supplies,” the agency says.

The grains index was up 1.5 per cent in December 2012 compared to the previous December, while vegetables were up 2.5 per cent for the same time period. These increases tempered the sectors with declines, including specialty crops, fruits and potatoes.

Bonnett attributes the increases in grain and oilseed prices to some shortages “because of drought in the (U.S.) Midwest and the strong demand for grain.”

On the livestock side, the hogs index was down 10.4 per cent in December 2012 compared to a year ago while the cattle and calves index dropped 0.6 per cent. These two sectors were responsible for the decrease in the livestock and animal products index, Statistics Canada says. Gains in the supply-managed commodities moderated the decrease including poultry, up 9.7 per cent; eggs, up 6.7 per cent; and dairy, up 1.2 per cent.

Bonnett says margins in hogs and cattle haven’t recovered from the increases in feed grain prices. “It’s going to take awhile for that to get through the system.” But in the long term “there are likely still solid markets for hogs and cattle.”

Statistics Canada says the farm product price increase in December 2012 was the second consecutive increase following declines in September and October. The December 2012 decline in the livestock and animal products index was the fifth consecutive year-over-year decline. BF