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Rising costs need ministers’ attention now

The federal, provincial and territorial agriculture and food ministers have hardly had a chance to exhale since they created the landmark Guelph Statement last month, a document outlining their joint priorities for the next several years.

But I’m afraid they’ll need to take a deep breath and charge back into the thick of things, to figure out how they’re going to lead the country through escalating food costs, the ones that are naturally going to follow prices farmers have received over the past 12 months for their various commodities.

For example, earlier this week Statistics Canada announced the Farm Product Price Index increased nearly 25 per cent in September 2021, compared with the same month a year earlier. The price index measures the changes in prices that farmers receive for the agriculture commodities they produce and sell.

The department noted the increase is a result of higher prices for both crops and livestock and animal products, and added that this is the 13th consecutive year-over-year increase in the index.

Crop prices have seen the biggest increase, driven by what the department describes as concerns over tightening crop supplies following drought in parts of the country, especially Western Canada.

Prices are also up thanks to a continued strong global demand for most of Canada’s main crop commodities. For example, the wheat index posted the largest increase, up more than 56 per cent. That led to the overall grains index rising by more than 50 per cent, compared to the year earlier.

This was the largest increase in the grains index since July 2008.

Contributing to the gain in the crop index was a 53 per cent increase in specialty crops. Again, it reflected the sustained global demand from Europe and Asia for peas and lentils, along with tightening supplies due to Western Canada’s drought.

Finally, on the crops side, the oilseed index jumped by nearly 40 per cent. Canola, soybean and flaxseed prices have been boosted by tighter supplies and rising global and domestic demand for protein meals and vegetable oils, according to the department.

Fruit prices also jumped, nearly 10 per cent. Normally, that would make economists and food price forecasters wring their hands. But when crops are bringing in quadruple the price they did a year ago, that jump suddenly seems minor…unless, of course, you’re the one buying the fruit.

When it comes to livestock, the picture was also positive for producers. The livestock and animal products index rose a little over 13 per cent, the eighth consecutive year-over-year increase.

Starting with hogs, prices were up more than 30 per cent, thanks to increased export demand fueled by the lower hog inventory in the United States. Canada sent one-third more live hogs there from January to September 2021, compared with the same period a year earlier.

The cattle and calves index jumped more than 10 per cent, while the total number of animals processed at federally inspected plants rose more than eight per cent, driven by higher export demand for beef and veal, up by almost one-quarter.

Supply-managed commodities also posted year-over-year increases in September 2021, led by poultry at 18 per cent, and eggs at nearly 11 per cent. Dairy, however, which seems to be in everyone’s crosshairs, was basically flat.

Prices need to be put in perspective. Farmers are making more money, but at the same time, their costs of doing business are going up too, as we discussed here last week. Fertilizer, fuel, seed – it’s all rising, driven a great deal by labour shortages and supply chain issues.

So, back to you, agriculture and agri-food ministers. The figures are in, and the situation needs your attention now.

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