Agriculture waiting for year’s events to have an impact

Many of the past year’s newsy events had little clout for agriculture in 2017, says Farm Credit Canada’s chief ag economist. These events will take time to impact Canadian agriculture, says J.P. Gervais of FCC.

Among these events are CETA, the Canada-European Union trade deal that can add $1 billion sales from Canada to our fourth largest market for agricultural products. Renegotiation of NAFTA with the U.S. and Mexico is a “hurry up and wait” thing for Gervais. The U.S. takes 23 per cent of our crop exports and 86 per cent of live- stock exports.

Food inflation of .6 per cent benefits farmers as lower prices perk up demand for food.

Census data revealing a six per cent reduction in the number of farms and a seven per cent increase in farm size with more young farmers since 2011 offers opportunity for farmers to produce more value-added products, says Gervais. A strengthening U.S. economy should bolster crop exports.

An Advisory Council on Agriculture study in 2017 showed food manufacturing growth outpaces manufacturing growth by five per cent to three per cent. In Saskatchewan food manufacturing makes up 26 per cent of the economy, third highest percentage in the country. On the less bright side of the year, higher interest rates will require more attention to risk management and finances. Moderating land price increases are evidence. Saskatchewan farmland values increased by 7.5 per cent in 2016, the lowest annual increase in seven years.

A higher than anticipated loonie in U.S dollar terms did not have great impact on agriculture in 2017 but a low Canadian dollar supports many industries better than a high dollar.

Gervais’ forecast for an average 75 cent loonie in 2017 was two cents low but his $50 oil, 86 cent gas and 88 cent diesel were closer to the mark.

On a less positive note, India’s 50 per cent levy on imports of yellow peas will have significant impact on pulse crops, reducing acres and possibly shifting acres to livestock feed.

Ron Walter can be reached at ronjoy@ sasktel.net