March crop prices up 35 per cent: StatsCan

Prices farmers received for their commodities rose 9.8 per cent in March 2008 from the same month a year earlier, as significant gains in crop prices offset declines in livestock prices, Statistics Canada reported Tuesday.

Prices that producers received for crops continued their double-digit increases, up 35.4 per cent in March 2008 compared with March 2007. According to the federal statistical agency’s Farm Product Price Index (FPPI), farmers received higher prices for all crops except fruit and vegetables.

However, prices for livestock and animal products were 9.6 per cent below their March 2007 level, the seventh consecutive year-to-year decline as cattle and hog prices continued to fall. Hog, cattle and calf prices have posted 10 months of year-to-year decreases. For the last seven months, those declines have been double-digit for hog prices.

On a monthly basis, prices farmers received for their commodities were up 0.6 per cent in March from February 2008, as the increase in the crops index outpaced the decrease in the livestock and animal products index.

The FPPI stood at 116.3 (1997=100) in March 2008, up from the revised February 2008 index of 115.6.

The total crops index was up 0.3 per cent in March compared with the revised February index, as all prices except fruit, vegetables and potatoes recorded increases. Continued demand and tightening supplies pushed grain and oilseed prices to record levels.

The overall livestock and animal products index was down 0.2 per cent in March compared with the revised February index, as prices for hogs and dairy were lower.

After increasing in February 2008, hog prices fell 3.2 per cent in March. High feed grain prices and a strong Canadian dollar continue to put downward pressure on hog prices. Producers exported a record number of hogs in the first quarter of 2008, an increase of 26.4 per cent compared with the same period a year earlier. A larger number of the exports were weaners destined for finishing in the U.S.

The cattle and calf index increased 2.8 per cent in March 2008, only the second month-to-month increase since early 2007. The difficulties facing hog producers have also confronted cattle producers.

Note: The month-to-month growth rate of the total FPPI is not a weighted average of the monthly growth rates of its crop and livestock components. This is due to monthly basket shifts from one month to the next. Also, the annual basket update influences the 12-month (e.g., March 2007 to March 2008) growth rates as well as December to January comparisons. Therefore, the total index growth rate may occasionally lie outside the range of its components, depending on the variation of the price movements, the difference between the monthly baskets, and the correlation between price changes and basket changes. These factors may also affect the indexes themselves. In contrast, if the FPPI was a simple fixed-weight basket index, then period-to-period movements in the index would measure pure price change effects only and the apparent paradox described above would not occur.