Inflation inched up in January

Inflation inched up from 1.8 per cent in December to 1.9 per cent in January, but restaurant food prices went down.

Prices for food purchased from restaurants declined 5.1 per cent in January from a year earlier, more than three times as much of a decline as registered in December.

A pause in the HST helped.

Prices for food bought from stores were 1.9 per cent higher than a year ago, which was the same as overall inflation and was also up slightly from 1.8 per cent in December.

Energy costs increased by about five per cent.

Canola hits speed bump

The rush to build new canola-crushing capacity in Saskatchewan has taken a hit because Federated Co-operatives and AGT Foods and Ingredients have paused a $2-billion investment in a new plant in Regina .

The project was announced three years ago and as with other big canola-crushing investments was going to serve the U.S. biofuels market.

The project involved two plants, one to crush canola, the other to refine the oil.

But three days before U.S. President Donald Trump’s inauguration, Federated Co-operatives announced the plants were on hold, blaming escalating costs alongside “regulatory and political uncertainty” and “potential shifts in low-carbon public policy.”

After the U.S. announced its biofuels strategy in 2020, there were big investments announced between 2021 and 2023.

Viterra unveiled plans for the largest integrated canola crushing facility in the world, located in Regina. Richardson International said it would double its crush capacity at a Yorkton facility, Cargill announced a new facility with an annual production capacity of one million tonnes and Louis Dreyfus expanded its crush facility, with plans to more than double output.

Saskatchewan Premier Scott Moe celebrated the barrage of investment, saying three years ago that the move into renewable energy from canola was emblematic of an “independent, strong and sustainable Saskatchewan.”

The promise of a canola crushing industry prompted research into what to do with the byproducts. Fish meal was one possibility.

When canola seed is crushed, 40 per cent is turned into oil, which can be used for clean fuel. The other 60 per cent is canola meal.     

U.S. scraps mass culling to curb avian flu

The new people in charge under U.S. President Donald Trump have decided to stop mass culling of poultry flocks infected with highly-pathogenic avian influenza.

They have made the issue political, accusing the administration of former president Joe Biden of causing a shortage of eggs that has spiked retail prices to an all-time high. And they said that approach has been ineffective.

The main change is acceptance of a Zoetis-made vaccine to immunize flocks.

That risks the loss of export markets, the government acknowledges.

“The plan’s success hinges on industry adoption and global trade acceptance. Balancing effective disease control with maintaining poultry exports remains a critical challenge for the administration,” it said.

The virus has resulted in the loss and/or culling of 150 million birds since 2020.

Call for dairy policy reform revisited

An international dairy industry news service, edairynews, has dusted off a four-year-old report calling on Canada to reform is supply management system. 

It comes amidst renewed trade tensions between Canada and the United States and increasing export opportunities.

The report was authored by Sylvain Charlebois and Janet Music of Dalhousie University and Simon Somogyi, Arrell Chair in Business of Food, Arrell Food Institute and Gordon’s Lang School of Business and Economics, University of Guelph.

It argues that supply management needs to adjust to a changing world, including the Canadian market.

It notes that more than 74 per cent of Canada’s dairy farms are in Quebec and Ontario which are home to 61 per cent of the national population and “this concentration exacerbates supply chain inefficiencies and increases price disparities. Consumers in Atlantic Canada, the North and Indigenous communities face disproportionately high dairy costs, raising serious food security concerns. 

“Addressing these imbalances requires policies that promote regional diversification in dairy production,” the authors said.

They said modernization must include gradual reform of quotas and tariffs. The existing quota system restricts farmers’ ability to respond dynamically to market signals. While quota allocation is managed provincially, harmonizing the system at the federal level would create a more cohesive market. A flexible quota model tied to demand would enhance competitiveness and efficiency.

That recommendation speaks to the current priority Canadian politicians have put on eliminating inter-provincial trade barriers.

Tariff policies also warrant reassessment. While tariffs protect domestic producers, they contribute to artificially inflated consumer prices, the report said.

A phased reduction in tariffs, complemented by direct incentives for farmers investing in productivity-enhancing innovations and sustainability initiatives, could strike a balance between maintaining food sovereignty and fostering competition.

Despite calls for reform, entrenched interests within the sector resist change. Industrial milk prices in Canada are now the highest in the Western world, making the sector increasingly uncompetitive globally. 

Abolishing supply management outright is neither desirable nor practical, they said. Sudden removal of protections would expose Canadian dairy farmers to aggressive foreign competition, risking rural economic stability and domestic food security. A balanced approach that preserves the core benefits of supply management while integrating market-driven reforms is essential.

Canada’s supply management system, once a pillar of stability, has become an impediment to progress. As global trade dynamics shift and consumer expectations evolve, policymakers have an opportunity to modernize the system. 

The report’s recommendations emphasize regional diversification, value-chain-based pricing models aligned with market demand, and a stronger focus on research and development. 

Performance-based government compensation, rather than blanket payouts that preserve inefficiencies, would improve long-term sustainability.

“The question is no longer whether reform is necessary, but whether the dairy industry and policymakers are ready to embrace it. A smarter, more flexible supply management framework is crucial to ensuring Canadian dairy remains resilient,” the authors said

Judge keeps chicken price-fixing lawsuit alive

An Illinois federal judge ruled that plaintiffs "plausibly alleged" a bid-rigging conspiracy among major broiler chicken producers, allowing key claims in an antitrust lawsuit filed in 2016 to proceed.

The chicken-processing companies are accused of conspiring to reduce supply and manipulate the Georgia Dock price index. The original lawsuit was later split into two tracks, one focusing on supply reduction and Georgia Dock claims, the other addressing bid-rigging allegations that emerged from a Department of Justice investigation.

The court previously granted summary judgment to some defendants in Track One, while others settled before trial. 

In Track Two, plaintiffs alleged that producers exchanged price information to coordinate pricing and rig bids from 2011 to 2019. The judge found sufficient evidence of price-fixing coordination but dismissed claims against one defendant for lack of specific allegations.

The ruling allows bid-rigging claims, as well as related federal and state antitrust claims, to move forward.

According to court records, Pilgrim’s and Tyson admitted to participating in a criminal bid-rigging and price-fixing conspiracy involving KFC, with the court in the criminal case finding evidence of broader collusion among broiler chicken producers. 

 

The plaintiffs alleged that these defendants, along with others, exchanged pricing information to manipulate market prices, arguing that all plaintiffs were involved.

 

Several companies, including Sanderson, Simmons, Wayne, Raeford and Case, challenged their involvement, but internal emails showed price-sharing communications, supporting plausible claims against them.

Reminds me that a lawyer once said the late Joe Hudson of Burnbrae Farms and Bill Gray of L.H. Gray and Sons Ltd. were foolish to put their communications into e-mails.

Those e-mails are being held by a lawyer in Waterloo, appointed by the court to keep them while an ancient lawsuit crawls its way towards trial. As with the the U.S. lawsuits, these ones outline conspiracies to fleece people.

Versatile tractors now owned by Turkish family

Buhler Industries, best known for making the large Versatile tractors, is being taken off the Toronto Stock Exchange by the Turkish family that has accumulated almost all of the shares.

Buhler Industries was established in 1969 when John Buhler purchased the Standard Gas Engine Works. The company produced the Farm King line of grain augers, snowblowers, mowers and small implements. 

It bought Versatile in 2000 when Case-New Holland needed to divest it to win federal government approval the merger with New Holland.

It operates eight manufacturing plants throughout North America.

The purchaser, ASKO, is wholly-owned by the Konukoğlu family. ASKO owns the firm Basak Traktor, which purchased 80 per cent of Buhler Industries from Russian combine manufacturer Rostselmach.

Rostselmach’s owner was hit by Canadian sanctions after Russia invaded the Ukraine and for a time Buhler was run by its Canadian management team.

Currently ASKO owns 96.7 per cent of the firm’s shares.

Following the completion of the amalgamation, the shares will be de-listed from the Toronto Stock Exchange and the company will apply to cease to be a reporting issuer under applicable Canadian securities laws.

ASKO owns firms worldwide that manufacture construction equipment, energy and technology equipment, and agricultural equipment including tractors. As well as building and marketing its own equipment, it also manufactures tractors for the German firm CLAAS.

                  

U.S. tariffs would hit food processors hard

Economist Al Mussell has issued a new report from Agri-Food Economic Systems detailing pressure food processors will face if and when United States President imposes tariffs of 25 per cent across the board.

The largest grouping of U.S. imports from Canada, and the fastest growing, is bakery, cereal, and pasta manufacturing. 

U.S. import values of beef have grown, along with fresh vegetables and processed vegetables and fruit.

Food preparations are significant and growing; U.S pork imports from Canada are significant and steadier in nature, he wrote,

“Surely many food processors are on edge and reviewing their options. Some may fear for their financial viability,” Mussell said.

“Others are perhaps looking at relocation to the U.S. due to the anticipated impact of U.S. tariffs on their businesses. 

"Still others are looking at doubling down on niche products in which they have few competitors, and could be capable of maintaining most of their sales despite the tariffs, or searching for other markets where they can redeploy their existing U.S. volume.”

When processors suffer, so do their farmer-suppliers.

For example, Mussell said a hit taken by companies in the Canadian bakery sector obviously impacts grain milling and grain

production; but it also impacts the supply chains and companies supplying other ingredients such as eggs, dairy, vegetable oils, sugar; and others. 

Ironically, some of these ingredients may be imported by Canadian companies from U.S. suppliers.

Farmers face a direct hit on exports of grains, livestock, greenhouse vegetables and potatoes, but the tariff effects on exports of manufactured foods effectively magnify the losses to farm products, and could come as a shock if not anticipated, Mussell said.

And the data are telling us that we have a lot to lose in terms of processed food exports to the U.S.

Canada has had considerable success in penetrating the U.S. market in the last few years and the U.S. tariffs could not only halt the growth in exports but sharply reduce or eliminate recent gains.

The decline in the value of the Canadian dollar has helped Canadians to be more competitive in both export and domestic markets.