Farm Product Price Index

Prices farmers received for their commodities fell 4.2% in December compared with the same month in 2003 in the wake of a sharp decline in crop prices, which offset a gain in prices for livestock.

Overall, producers received prices for crops that were 17.4% below levels in December 2003, continuing a downward trend in year-over-year price changes that began in July 2003, according to the Farm Product Price Index (FPPI). Farmers received lower prices for grains, oilseeds and specialty crops.

On the other hand, prices for livestock and animal products were 7.7% higher in December 2004 than they were a year earlier. This was the seventh consecutive year-over-year increase in the overall livestock and animal products index. Prior to this series of gains, prices for livestock and animal products had been falling for 12 consecutive months.

Prices rose in December for all livestock and animal product indexes. Gains ranged from 2.3% for cattle and calves to 28.8% for hogs.

On a monthly basis, prices farmers received for their commodities edged up 0.9% in December from November, the first overall increase since May. Again, this gain occurred on the strength of rising prices for livestock and animal products.

The FPPI (1997=100) stood at 93.0 in December, up from a revised November index of 92.2. It was the first increase since May when the index stood at 104.8.

Prices farmers received for crops fell 4.0% from November, as all crop indexes except potatoes and fruit declined.

The grains index continued its monthly slide which began last June, dropping 7.5% from November. Poor growing and harvest conditions played havoc on the quality of this crop, with estimates that less than half will grade number 1 and 2. Combined with a record US corn crop and a rising Canadian dollar, this has put pressure on grain prices.

Prices for oilseeds fell 1.9% in December to the lowest index level since October 2001. Oilseed prices have been plagued by a record US soybean crop, expectations of a bumper South American soybean crop and a rising Canadian dollar. It was the seventh consecutive monthly decrease, as Canadian farmers harvested the second largest canola crop on record and a record soybean crop.

Prices for livestock and animal products were up 3.4% in December from the revised November index, as cattle and calf prices rose 6.8%. The price index for cattle and calves has rebounded since September 2003 when the border with the United States re-opened to exports of select cuts of beef. However, prolonged closure to live cattle exports, a record number of cattle on Canadian farms and a backlog of slaughter animals continue to depress cattle prices from their pre-BSE levels.

Hog prices fell for the seventh consecutive month, the downward pressure coming from large North American supplies and a stronger Canadian dollar. Also in October, the US Department of Commerce issued a temporary duty on imports of live Canadian hogs.

Available on CANSIM: tables 002-0021 and 002-0022.

Definitions, data sources and methods: survey number 5040.

The December 2004 issue of Farm Product Price Index, Vol. 4, no. 12 (21-007-XIB, free) is now available online. From the Our products and services page, under Browse our Internet publications, choose Free, then Agriculture.

For general information or to order data, call 1-800-465-1991. To enquire about the concepts, methods or data quality of this release, contact Gail-Ann Breese (204-983-3445; fax: 204-983-7543; gail-ann.breese@statcan.gc.ca), Agriculture Division.