The Canadian agriculture economy has been through constant turmoil since the Covid-19 pandemic swept around the world in 2022 and the outlook is for continued pressures and surprises, according to Aaron Goertzen, senior economist for the Bank of Montreal.
It will take time for crop inventories to normalize and if yields this year are average crop prices should stabilize and begin to regain some lost ground next year—but as always, producers are at the mercy of Mother Nature, he said.
In the livestock space, cattle producers appear to be taking initial steps toward restocking their herds, as the drought that previously afflicted large parts of cattle country has abated and feed costs are lower.
Hog producers have continued to expand cautiously, suggesting continued balance in that segment.
The weak Canadian dollar is acting as a broad support for Canadian agricultural prices, which would likely be around 10 per cent lower under a more neutral exchange rate, he said.
“The flip side, however, is that imported inputs are also costlier.
Overall farm costs have increased by more than 35 per cent
since the beginning of 2019 and are unlikely to come down.
What is coming down is interest rates.
He praised farmers for increasing productivity.
“It is an admirable feat that farmers can produce nearly three
times as much agricultural output per hour of labour than only
a quarter century ago.
“And even today, producers continue to invest heavily in their operations. A short walk through a farm trade show illustrates the incredible amount of technology being deployed by both crop
and livestock producers, suggesting continued outperformance ahead.”
President-elect Donald Trump represents huge uncertainty for the coming year, and not just on the threat of tariffs on exports to the United States, but also the global economy and wars.
One uncertainty Goerzen did not mention is what will happen if there is an outbreak of a serious disease such as African Swine Fever, foot and mouth disease or a crops-ravaging disease.
