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HomeMy WebLinkAboutThe Wingham Advance-Times, 1973-08-23, Page 20entail -04e has vece.ived the esemprehensive are on feed costs thesuels the courtesy ef Beb Carbert,o tile Ontario Ministry of Agriesals tiiral arid Food. ARthcoto the story is a lerigthy one to devote to aseingle subjeet, we end it the Most comprehensive commens tary ea a question which ils of tetense intemst to both cons eureers and agriculturel pre- ducers. veryone wonders why feed prieeS have eeiddenly been reOeh- iog for the sky. Colieninereetend to lay the blame stsceessivelton farmers, middlemen iiii0s*teils ere. The report ef the offieiet study iselowprovides a more intelligent and reasoned ap- proach t the entire subject. Crossroads recommends it os important reading material for everyone who spends money in the marketplace—arid who doesn't? In November, 1970 typical food Priee headlines were: "Dominion Takes Price War to Quebec", "Leblaws Latest to Join Price War". "Price Wart Unsettles In- vestors". Some of the Jim. 1974 headlines read: "UN Agency Fears World Food Shortage", "Food Prices up Two Per Cent in One Month", "le Per Cent Food Price Rise Ferecast for 1973— gace Expected to Slow", 'A Food Prices Review Beard • has been established following the completion Of the House of Commons -Committee on Trends inFoodPrieesreeort,The United States is now on phase IV of price and wage eontrols, in an effort to combat inflation. In November of 1970 *Minion Stores introduced a major price • reduction program. Their steates gy was to lower prices, heavily • advertise their new pricing policy sand, thereby substantially in- ' crease sales, While Miracle rood Market initiated price merchan- dising• earlier in Toronto it was Dominion Stores' eltranCesintessa' , prWe reduction program whim started a :Very', competitive situation in the corporate feed industry in the Toronto area, Other chains started to use price merehandisingand reduced margins. This COinpeettive situa- tion has provided Toronto shop. • pers with prices w ich eorn.: Pare favorably with other shop- ping areas in Canada. An Ontario Food Council indieates prices at the tiVe major TorentoeChannie sebontssiseven 'Pereentfrom October to Mid -No- vember in 1970. BysMay of. the , °Bowing Year prices were above the pee rice merchandising Pe - *ode, s The Ontario Food. Council -de- veloped a food basket comprised Of 147 itemS, which represents the prices result fro Fiseis Prices Bigler tion of proteis, feed Provided a F-com November. • MI feed ileiPia aSsist. " cots liave more then doubled for Poor Weatker °°Fillo arka saYbean meal hes iri'- However at the same tine creased by ahrioet 40Q per cent, Pienet Earth giffered whet ean Feeenere 40,44 in Toronto only be described as weather received 33'4 Cent* per pound for ceteetroplie. In Asia failisreef the sleughter Steencompared to 40 monsoons resulted in, heavy crop cents to 51$ cents in July. Ilegs leeeee in India 4 'China, Korea and sold fer abOUt 27 cents compared Inderiesia. Rice and corn produe- to a high of 65 cents on Jilily la and tioia dropped in Thailand and chicken broilers for 20 cents thheretwas a severe, dro,ught in the ?anti: Pagplite_d., tFo_seisio_u_t_3_21S!...! enta_ts_in w ea produciog areas 0 Aus- 4.04440ern bogsZimny:s0s__!_vVyttei walla. Rot dry weather in the isuseueser„ sei 4 el re evie grain at 27 cents,cents,ThiS iS why the price erSSep4ey.- atielithe s ee'peSGeeere,t4-shift invreese seems reletively large.in the ihanheidt current off the Broiler :profits were close to a ‘-e---Qa-it: ifSouth57iiiin' fa, , §reak even level as wen. There are a Iwo* a cently reduced the Qateh of aus inter -related factors which have cliovies whichere iieocessed into contributed to higher food prices °I11' and high Protein fish meal during the last few months„ used to improve the diets oflive- To - appreciate the causes stock.Parts or Central and South behind recent rises in food prices . Acinuemericreto Hornesuffredmdurcohugohiitsast, it IS helpful to examine the agri- cultural industry for the past few ern Canada and the United States years, During the mid -fifties and suffered excess. rain during the sixties the North Americanharvest which depressed the fanner rapidly increased his quantity and quality of grain production capabilities. Surplus- harvested. Adverse weather eon - es in many commodities de- ditions also reduced fruit and veloped not only in North vegetable crops. All these factors America but in other parts of the Placed heavy -demands on grain world as well. • Governments supPlies in Canada and the . throughout the world wrestled United States. -Heavy export WithratiOnalizing productionnd sales were made to traditional demand for many agricultural . customers and new buyers. 'Corn commodities, . has prices which dropped to a $1 , . e The United States 'perhaps eharvest price in 1971 are had the world's' most' notable currently in the $2.50 per bushel system of price supports con- range. Soybean meal, which in trols, acreage restrictions and 1971 cost about $109 has sold as • • mechanisms for sale of surplus high as $450 a ton. products. Pitielie taw 460 was de- Embargoes ' signed to. . provide surplus age- . . In an effort to control food cultural and, food cornirioclities to Prices the • United . States has friendly fOreign nations free or at placed embargoes on the export .bargain -basement rates. of soybeans and associated pro- - - . • ' i, ' ducts. The U.S. has enoUgh-soY- . Food Surpluses beans to feed its own livestock Less than two years,ego Japan but not enough to fill world was Sinking rice in the bottom of demand. Feed grain exporters large lakes because there was an . are required to file bookings. A enormous surplus: Recently poor crop report or a sudden Tnallanka Major supplier of rice increase in bookings or a further to,slaPan, has Placedan export price increase or a cOnibination . embargo on rite* ' 'of these could see ,some sort of . During the 'sixties there ivas • export, controls on feed grains as also A surplus Of dairy 'Products. . well. . , '. • . Extensive marketing and pro-- Canada has prohibited the e,p, duction programs ' were intro- port of soybeans, associated &iced by governments to reduce . products ,end substitutes. Canada growing sktrPlueees• of dairy faced the ProbleM, Of not having products ‘_ but still. maintain a 'enough protein supplement be - viable' dairy herd to protect'the caiSse:Europeans, when their supply Of future tonal:liners s ' • . USASiquickly increased purchas- miring the mid -fifties there es inour market:, e Se'er, over, ,a,. InUlliflh pe,4, of , ,peoduc'ers.enit,1044nai,x1fac7,- • II . . eMa a rOa , ' ear0 nd (' . turers have aggressively 'sought:. overl° th't4110-•13)roic1497:2 this*' -out alternatives to the soybeans numberhadbeen reduced to. as a protein source. Such things below three quarters of a millionci . as lowering the protein in diets of However modern technology an animals nas -also .been rectatise more productive sdairy 'cattle mended. ThiS extends. the growth ." supplies were restricted in the typete'of, toed purchased by the , average consumer. To measure ' the implication of price increases to the, average shopper the market basket is subdivided into four main categories .1) Meat* poultry and fish; 2) fruits, and • vegetable* 3) cereals, and. 4) miscellaneous (dairy products,- oils, sugar, syrup, jams, jellies,. soups, beverages,snack foods and condiments). Prices are col- lected from each chain store and ,averagedto cost the food basket, Back inJune Of 19/1 the Ontario essss, r LouuMas componne woo basket (Toronto) was priced at By mid:June of 1973,`two years later, the cost of the basket increased to $70.90. Seventy-five per cent of this 18,2 per cent. increase is attributed to the meat and fruit and ,vegetable cote. • gories„*The Meat category itself was responsible for one-half of the increased cost of the Market basket, - • " . combinotion of world-wide conditions eri. its way through the economy yet. Fortner ercesion of Canadian and U.S. curreneiee ould roma in further iiiereases in Ned coses, The priee isle -mese experieticed in meets the result of previous, ly described events and a com- bination of production factors For the first time in airnost two decades tile beef and hog cycles coincided at low points, the poultry producers faced with significant losses from excel** supplies In the early seventies have also tempered prodUction, •Still Buying However the consemer hes been the biggest mystery in the Meat price increase. Tnere has been en absence of consioner resisteece to ever increaSed prices. "TheY inst, keeP °B InOng no matter what tne price," says Max E. Ilrunk, . professor of Marketing at Cornell,University, and a leading authority on meat supply and demand, "and the mere they buy the more the price has gone up." Dr. Brunk and a number of economists, baffled by the rise in meat. prices, believe consumers are beginning to regard meat as less of a luxury and more of a necessity. As incomes rise in North Arrierica consumers are purchasing- more meat. The economy on both sides of the beeder nos beers buoyant in the last few months, thus increasing raZdly fucreasiti# eat pion 414-e ail items which contribuW to the famers' insecurity and lack of confidence in the long tm er viability of the marketplace. The recent announcement that the erce freeee on most food products except beef will be lifted in the United States will tend to improve the farmers' confidence in the market outlook, Farmer* are not rushing out and selling herds 4it.tt they are reviewing any: expansion plaus which they inight have very eautiously. previcuslyi4git"was expected that bog production would be up in the United Mates. This prediction has been revised so that hog pre - duction may in fact be 1 per cent ' below last year in the United States. in tile first three menthe of 1973 pork production was down per cent in canada although federal autkiorities expect the production to he slightly. larger. than last year by the endof 1973, and prices to na0derate-as a re - suit. Hog prices exceeded $6.5.00 (dressed Al carcass) in Toronto on July 18- about 30per cent above June 1973 levels. There are indications farmers have decided either to keep fewer hogs after ,government' surveys or have al- tered rations- to reduce.' feedin0 costs which has slowed move- ment to market. Perhaps both personal disposable income. The happened. number employed is up. North Americans are becoming weight COnseiOUS. 11/lents appear to be substituted for carbohys drates in an effort to keep weights down. , Eating More Consumers in 'North America are.not theonly one's desirous of consuming greater quantities of„, meat. Per capita consumption in Japan is definitely on the • upswing and has contributed, to: . increased world demand. for beef and park. Similar increased demand is being experienced in Euroas well as the USSR; • The banning of DES Vieth*. stilbestrolS,has resulted in losyer efficiencies in the modern- beef feed lot. The additionof DES either in feed. or as an implant results in a feed efficiency gain of approximately 10.per cent., The delay between the banning ' of DES and the licensing and• adoption :of ' an alternative is affectingS-tititPldi':?#ettge) Ms North nee's, marketingi of slaughteattle r enabled Ontario to increase Milk period but reduces , usage and bPrigotlite- production unfdr°mIevetlt0he'19a551m0 . 5:t fetreingst!ihe last two. Years the seven billion pounds in 1905, but united States . and . Canadian since it has declined to below six - currencies have lost 25-39per billion pounds. . cent of their values relative to . - The Hons 'William A. Stewart, Most European and Japanese ° Ontario's Ministerof Agriculture '''vourrencieS, This means that the and Food, has recognized . the Japanese . eeesd pee the same pendulum may have swung toe - .priceintheireurreney for beef on ° far and has instituted a lean s the international market but program which will allow Ontarios- Americans and Canadians would dairy - farmers to modernize have to pay 25-30per cent more to facilities and purchase breeding remain competitive. A number of stock. Last year Canada import- agricultural and food commodi- ed 28 mi_ on pounds 0 butter. ties are 'priced on the interne - The reduction in the dairy herd , Honl market such as corn, which ' not, only took place in wheat. riee, be ef, pork, etc. adint.f,1AL W -U 11PO4,a.4Pare traded widely. /.. . the United States, ' formed a - Even without weather catas- suPPIY source of manufacturing trophies experienced in the last . beef. Thus the reduction of dairy year prices of many products herds in the world helped to keePwould have increased due to Or lid on beef prices during the devaluation' of our currency. sales. sIn - the i early 1970 s , „ , More and more products are governments around the worm being traded internationally. approached a :high degree of We've even imported fresh success in rationalizing 'demand and SuPPIY*. 4 Steady population tomatoes by air from ISollatid. The full ramification of urrendy growth and increased COnSult.1P- devaluation may not have work- - ' in the seventies', have toist increased as rapidly' as the . build-up an the beef .herd„. More. favorable price' levels ihave en- couraged producers to retain fe- males to expend the breeding herd. While thik has not helped. supplies in the shortsrun it will • provide tnore animals to support a growing demand -in the long run. Recently there has been a • tendency for farmers to sell not, only their livestock but also their feedgrains, since both are at record high levels. The extent of such sales has not been estab- iished but there .have been reports of increased pregnant sow slaughtering. By disposing of livestock and grain when prices are at near record levels farmers tend to reduce their risk. Most farmers have seen high prices before and suspect they may be at much lower levels when the livestock must go the the butcher. While livestock prices are at record levels so are feed grain inputs. Such things as consum boycotts, price freezes southo the border, export controls, and heavy consumer criticism of the , Feed Grain It is most difficult to predict the movement of ,feed grain. prices under current •eonditions With government controls, however it would appear that soybean prices may ease slightly follewing the harvest in the United States, al- though wheat and feed, grain prices are not expected to ease appreciably due to to the -heavy international demand and the need to replenish world gran- aries. Feed grain costs will in- fluence farmers' production de- cisions. • High grain prices, uncertainty about pork supplies and etiparent's, heavy consumer demand for red meats make it difficult to project prices. Some of the best and -most sophisticated projections were out by 50 per cent before June, 1973 and 'there have been 'major •price increases since then. A Por - 'tion of these increases have not .been passed on to vensuesers, Average.retail red meat, pricesr eaeeet eweepeetesAtopsiAine ' next -le* months ,ancrpro`bOly, will increase. - If the value of 'Canadian and U.S currencies continues to ee, cline and the demand for red 'meats expands in Europe and Japan, their, prices could con- - ceiva,bly go higher even in the face of substantially increased production which may take place during the late 70s, Poultry meat prices have itt, creased rapidly and Ckirrently supplies are adequate. The de- mand however appear!' soft and at current price levels producers have not beeable to cover increased leed costs which make up about 75 per cent of farmers' productiou costs. Reports of ehicks destroyed in the U.S.A. have been received recently be- cause to raise them would mean losing more money'. • Hellas, Vegetables • White Pea beans. from Ontario's . 1,973 crop, the basic ingredient in eanned beans, reasonably high in, protein and a partial substitute for meat 7 have sold to European buyers before their harvest substantially above 1,072 ergp price levels,; Derriestic pric- ' es will undoubtedly be up as will the Kite of awed beans. Processed fruits and vegeta le prices are expected to be high er due to increased costs, higher costs of imports and adverse weather for peas and toniatotie There is a strong demand for sweet corn in the world and nsisch of Obtains 1973 yet unherveoted •crop`has been preseld to foreign arid domestic buyers, No one expects the price of ateel„ rents, taxes, utility costs or ges to decline significantly. When the cost of a tin ean used to hold peas or tomatoes costs more than what the fanner actually receives for these products then ite the increase in other sectors which will affect retail pries to the greatest extent for these products. The cost of processing, trans- porting and selling products ha.s increased more rapidly than hip proVed productivity. The retail induerixy isa labor intesaive in- dustry and there are limitations on productivity improvement The food industry is no different then any other sector of the eon. only. When costs increase faster titan productivity improvements, then such costs have to be passed on to consumers or ultimately the company will go Out of business,. Coneurner prices on avsrase are expected to increase further although the rate (*tiercese may be slowed in the It part of 1873 and 1974. It all depends on how successful the rest of the ec- ()novo controls inflation. Believe it or net our kW Sjill C95tS less' as a percentage of dis- posable incOlne than most other countries except the United Stat es. •• ° , Up until now many, Canadian. and Americans have become complacent about food supplies. The current .situation would out.. ,gest 'a", review of this, attitude:, at Markdale „ The 4-11 Clubs of eey County will hold a' Fun. Day, Sunday, Aug. 26, at King EdwardL'arkixi '*14HarakpcipaiineessPiPs being*714‘f'aPmil, - and the full day'of activities is not just for leaders or Oils and boys—but the whole. family. A mattock and dibble are CUM' mon tools used in tree planting. s and Livestock 4. Days getovvn Ag. College • The annual Crops and Live- stock, Days will be held at the Ridgetown College of Agricul- tural Technology, Ridgetown, Ontario on Wed. and Thurs. Sept.. 12th and 13th. Guided wagon tours of the crop and livestock research areas will leave. the Livestock Building in the centre of the campus, each day from 1:30 p.m. to 3:30 p.na. Each tont- will take approxi- mately 90 minutes. Visitors will be given an oppor- tunity to see a variety of crops as they near maturity andsjust be- fore harvest. Some of the work to be seen are variety, fertility and weed control trials in corn, soy - betels and white beans. There are variety and weed control tests in 'canning crops such as tomatoes and peppers. There are also a number of varieties of colored beans planted in the test areas. As the tours are being held near the harvest season, it is expected that mechanical harvesting of tomatoes will be shown, as well as the harvesting and storing of August is entry -closing for London's Western Fair August is entry -closing month for the 1973 Western Fair, and re- cent recipients of some 6,500 prize lists are readying a record number \of competitive entries for London% Sept. 7 to 15 exhibition. Prize lists, running the gamut froM,Cattle to Winemaking, have been flowing from Western Fair offices since late spring. They are expected to prompt a torrent of more than 30,000 individual en- tries, competing for about $80,000 in prizes t� be distributed .during the nine days. Critries in the Horse Show, Livestock, Poultry and Pet di- visions have already closed. Re- maining closing dates are: Wed. Aug 22 — Step Dancing, Square Dancing, Old Time Fiddling, and Junior Department. Fri. Aug. 31 — Flowers and Mon. Sept. 3 — Artistic ArrangemenK corn ilage. Various non -protein nitrogen additives will be added to the chopped corn as it is put in the silo.. '• The college staff welcomes ll.e visitors interested in crops teb be • used as feed or food and will •be • prepared to discuss production and harvesting procedures with the farming public. Bruce County corn sweepstakes The Bruce County Soil and Crop Improvement Association is again sponsoring the cornsweep- stakes for silage yield. Rather than take hand harvested sam- ples as in the past, this year the association is able to weigh forage wagons, trucks, etc. In this way the yields recorded will be very close to the actual yield attained. The entry fee for the sweep- stake is $5 and minimum field size is 10 acres. Cheques should be made payable to the Bruce County Soil and Crop Improve- ment Association and sent tO: Ontario Ministry of Agriculture and Food, Sox 1330, Walkerton, Ontario. • Closing date for the sweep- stakes is September 1st. Now Available On :1ST. AND MORTGAGES An ere in Ontario On 10ER 1AL, INDUSTRIAL ARAkPROOERIIES" • .• ball 8 Rao RESIDENTIAL, 0 Interim rn Ing isor New Constroctionek Land beVelOpMent or Representative*In Your Area Phone SAFEWAY INVESTMENTS AND CONSULTANTS LIMITED' (5191 744-6535 Collett • Head Office - 56 Weber St. Kitchener, Ont. —We Buy Existing Mort9ageS for Instant Cash— MIN 1401fte., s ••:"Sd• SORE EXPERTS . 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