Farm Product Price Index, December 2021

Released: 2022-03-03

The Farm Product Price Index (FPPI) rose 25.9% in December 2021 compared with the same month in 2020, as a result of higher prices for major crop and livestock commodities. This was the highest increase in the FPPI in over 40 years.

Chart 1 
12-month change in the Farm Product Price Index

The crops index continues its upward trend on strong demand and tight supplies

The crops index led the growth in the FPPI, recording a 37.0% increase in December 2021 compared with the same month in 2020. Significantly lower yields and supply in some parts of western Canada as a result of the 2021 drought as well as the continued strong global demand for grains, specialty crops, and oilseeds supported prices in December 2021.

The grains index was the main contributor to the increase in the crops index, up 52.3% in December 2021 compared with December 2020, due to high prices for wheat and barley. The stronger wheat prices, in part the result of a very good quality crop and tight domestic supply in the 2021/2022 crop year, led the wheat index to grow 65.7% in December 2021. The major grain prices also continued to benefit from the increased global demand.

Another contributor to the crop index growth was the oilseed index, which recorded its 20th consecutive year-over-year increase in December 2021. The oilseed index grew by 46.1% at the end of 2021, based on stronger prices for major oilseed commodities, such as flaxseed (+69.2%), canola (+55.3%) and soybeans (+16.7%). However, strong global oilseed demand coupled with tight domestic supplies strengthened oilseed prices, resulting in higher oil seed index.

Also contributing to the year-over-year gain in the crops index were higher prices for specialty crops (+40.2%), based on tighter supplies and a continued strong demand from Europe and Asia.

Higher production costs and demand drive increase in the livestock and animal products index

The livestock and animal products index increased 9.4% in December 2021, as a result of higher prices for cattle and calves, hogs and some supply-managed commodities, which grew based on increasing production costs and high demand. This was the 11th consecutive year-over-year increase in the livestock and animal products index.

The cattle and calves index was the main driver of the 13.7% increase in the livestock and animal products index in December 2021. Higher export demand for beef and veal offered strong support to the cattle and calves prices. By the end of 2021, total exports of beef and veal were 19.6% higher, and the total slaughter number for cattle and calves was 5.0% more than the same period in 2020.

The hog index increased at a slower pace in the last three months of 2021 than in the first seven months of the year, finishing 2021 with a 10.5% increase above the December 2020 level. Strong demand for live hogs from the United States, where inventories were low, continued to offer support for the Canadian hog prices. From January 1 to December 31, 2021, Canada exported 25.9% more hogs to the US than in the same period a year earlier.

In December 2021, supply-managed commodity indices also reported increases when compared with the same period a year earlier, with increases in poultry (+14.6%), eggs (+10.7%) and dairy (+2.0%). Higher production and transportation costs as well as increased demand buoyed poultry, eggs, and dairy prices which ultimately led to the increase in these indices.

Contact information

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