TD Predicts Higher Prices, Lower Incomes

Canadian farmers should get slightly better prices for their crops and livestock next year, but rising input costs could mean they earn less net income, the Toronto Dominion Bank said Nov. 5.

A firming of global supply-demand conditions and an easing in the value of the Canadian dollar in next year’s third and fourth quarters should boost prices, according to a report by the bank.

“By mid-2010, prices should be ripe for a moderate recovery, led by the livestock sector,” said Dina Cover, an economist for the bank.

Cattle prices should climb to 99 cents per pound by the fourth quarter of 2010 from 87 cents in this year’s fourth quarter, while the bank sees hog prices reaching 63 cents per pound by next year’s fourth quarter from 50 cents.

Even so, input costs, such as fuel and fertilizer, will likely increase and could leave farmers with lower average incomes, the bank said.

This year, excess global supply of major farm commodities and a high Canadian dollar are pressuring the prices Canadian farmers receive, Cover said. Those price drops are offset somewhat by cheaper input costs compared with last year.

U. S. country-of-origin food-labelling rules have hurt livestock farmers by squeezing Canada’s access to its biggest hog and cattle market.

In the long term, the upward trend in farm prices that began earlier this decade is likely to persist due to growing incomes and populations in some countries, the bank’s report said.

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