StatsCan report shows price slide for grain farmers in March, price improvement for hogs and cattle

Thursday, June 5, 2014

by MATT MCINTOSH

Despite a 19.1 per cent gain in the pork and beef sectors, on Wednesday Statistics Canada reported a three per cent drop in the overall Farm Product Price Index for March, largely attributed to the continued drop in grain prices.

The price index, which Statistics Canada’s website says measures the changes in prices that farmers receive for the commodities they produce, indicated a loss in grains of 20.8 per cent this past March compared to March of 2013. It is the latest decline in a price slide that began in August of last year.

“It’s one of those situations that makes agriculture tough,” says Dave Sparling, chair of Agri-Food Innovation and Regulation at Western University’s Richard Ivey School of Business.

“Better yields mean more grain on the market, which means lower prices,” he says. “Although prices dropped, most grain farmers should still be okay because of the good yields we saw last year.”

As for hog and cattle prices, which rose 51.2 and 24.3 per cent respectively when compared to March of last year, Sparling concurs with Statistics Canada’s conclusions that the price increase is largely the result of a substantial shrink in herd size.

Beef prices, he says, were not very attractive for some time, so Canada’s herd size was reduced; the pork sector was also hit with a herd reduction due to persistently low commodity prices then reduced even further, both in Canada and the United States, because of disease issues such as specifically porcine epidemic diarrhea virus.

Now that grain prices have dropped, Sparling says that it is not only more profitable to sell beef and pork, but it is cheaper to produce as well.

According to Statistics Canada’s website, the overall impact of higher beef and pork prices was moderated by single-digit declines in supply-managed poultry and eggs. BF