Canadian Cost-Price Squeeze Tightens

OTTAWA - Jun 2/05 - SNS -- The cost price squeeze facing Canadian farmers continued to worsen in 2004 even though the cost of farming decreased along with annual average prices received.

Statistics Canada's Farm Input Cost Index fell 2.3% last year to 130 points, while the annual average index of price received declined 4.7% to 97.7 points. Since 2002, the cost of farming has risen 1.5 points; while the average annual index of prices received has fallen 8.3 points.

Commenting on its cost of farming index, Statistics Canada said, "The decrease in prices for animal production (-10.6%) was the major factor contributing to this decline. Smaller price decreases were also observed for crop production (-2.3%) and machinery and motor vehicles (-1.1%). Higher prices for building and fencing (+12.6%) and hired farm labor (+4.9%) partly offset this annual decline.

"The decrease in farm input prices in Western Canada (-4.2%) was much stronger than in Eastern Canada (-1.1%). The effects resulting from the various animal diseases were felt more strongly in the West than in the East. Prices for animal production plunged 14.9% in the West compared to a 6.1% decline in the East. Western farmers also saw prices for crop production fall 5.2% while those in the East saw prices increase 2.1%."

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