Finally, amid the grim headlines comes a rare bit of economic good news: Canada’s crop producers are having a banner year, with market receipts up by 29 per cent for the first nine months of this year over last, according to a new report by Statistics Canada. The gains were fuelled by skyrocketing prices in food commodities and record demand. Earlier this year, global demand for crops like wheat, barley and corn hit an all-time high as food consumption in rapidly developing countries such as China and India shot up, while demand for corn and soy-based biofuels increased in the U.S. Durum wheat prices, for example, increased by almost 200 per cent.
Unfortunately, it looks like the boom may be short-lived, says Nicolas Schmitt, associate chair of the department of economics at Simon Fraser University. He says that since the summer, crop prices have fallen by almost as much as oil prices, as the global economic meltdown has cut demand for both fuel and food. Corn has lost half its value since hitting a record-high in June, and wheat is down 60 per cent from its high this spring. Canola and barley have seen similar declines.
“Everyone thought rising prices were going to be a long-term phenomena,” says James Vercammen, a specialist in food and resource economics at the University of British Columbia. “Now, we see that, geez, grain is just like any other commodity, whether it’s oil, copper or whatever else.”
Still, those farmers who were fortunate enough to have locked in prices in the spring at the peak of the market won’t have much to complain about for a while. “They’ve had two years of strong prices,” says Vercammen. “And because their wealth is mostly in the farm, they’re not getting routed in the stock market like many of us. It’s going to be a while before farmers get really desperate again.”