Farm Product Price Index, December 2017
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Released: 2018-03-06
The Farm Product Price Index (FPPI) edged down 0.1% in December compared with the same month a year earlier, primarily due to lower specialty crop prices. This was the first year-over-year decrease since June 2017.
Chart 1
The 12-month change in the Farm Product Price Index
The crops index declined 1.2% in December, largely attributable to lower specialty crop prices (-20.2%). Lentil and dry pea prices fell sharply along with exports as world production began to return to normal and import duties were imposed by India, Canada's largest market for these crops.
The decline in specialty crop prices was partially offset by higher prices for grains and oilseeds. The grains index (+5.1%) began its ascent in July 2017 and despite ample world supplies of wheat, the demand for higher protein wheat, which Canada produces, has supported prices.
The oilseeds index was up 0.6% compared with December 2016, even with a record Canadian harvest of both canola and soybeans in the fall of 2017. Demand remained strong from the domestic crush industry and exports set a record pace for the first half of the 2017 crop year (August to December 2017).
The decline in the crops index was moderated by a 1.3% increase in the livestock and animal products index. This year-over-year growth began in May 2017. Higher prices for hogs and cattle were the main contributors to the increase.
The December 2017 hog index rose 9.9% while the cattle and calf index increased 3.9%. Robust export markets for beef and pork have propped up prices in the face of growing North American inventories.
Moderating the increase in the livestock and animal products index were lower prices for dairy (-4.9%) and poultry (-0.2%).
The December FPPI was down 1.2% from a month earlier, following two monthly increases. Both the livestock and animal products index and the crops index contributed to the decline.
Note to readers
The growth rate of the total Farm Product Price Index (FPPI) is derived from a weighted average of the component indices using a different set of weights in consecutive months; it is not a weighted average of the growth rates of its crop and livestock components. Given this, the growth rate of the composite FPPI can lie outside the growth rate of these components.
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