Cashing in on the farm

High prices and record demand has sparked a boom for food producers


Cashing in on the farm

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.”


Cashing in on the farm

  1. What we really need is food prices that remain high consistently. It would allow the West to wind-down the subsidy regime that is currently in place, while giving developing countries’ farmers some breathing room from cheap western agricultural imports.

  2. Chicken and egg, Andrew nPoC. Chicken and egg…

    It is the absolutely stupid western countries’ farm subsidies that have kept prices artificially low, making it impossible for farmers in developing nations to compete. Or, as in Canada’s case, it is the absolutely stupid marketing boards that have shut out imports while maintaining an artificially high price for domestic milk & eggs, so that struggling families can struggle further at Jack’s proverbial kitchen table. And everyone b!tches about gas price collusion.

    Kill off the subsidies FIRST. Farmers charge more and-or find another line of work because they risk pricing themselves out of the market. Market prices rise, or agricultural practices become more efficient to keep prices from rising too far. Kill off the marketing boards, and who cares what happens to prices, although they would almost certainly fall. At least the cartel is broken.

  3. I agree, MYL. Just that it would be more politically doable if food prices were high.

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