BMO senior economist says low loonie is saving grace for Canadian farmers

Sept. 25: This Your Saskatchewan photo was taken by Cheryl Hare of harvesting a field of spring wheat on a farm northwest of Rosetown.
With this year’s upturn in wheat prices, Canadian producers should see an increase in crop revenue despite the struggles seen globally in the agriculture industry. Cheryl Hare / Submitted Photo

According to a BMO Capital Markets’ special report published on Oct.31, the drop of the Canadian dollar has “spared farmers the type of distress seen south of the border.”

Canada has seen an increase of 16 per cent in crop revenue since 2012, while the United States has seen a 14 per cent decline.

According to Aaron Goertzen, vice-president of BMO Capital Markets and the senior economist who wrote the report, it’s a reflection of a 23 per cent drop in the loonie over the same period.

“As far as the Canadian dollar goes with commodity prices facing some challenges and the Bank of Canada running behind the fed, we do expect a continued weakness in the Canadian dollar. That is good news for Canadian agriculture,” Goertzen said.

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Goertzen wrote that thanks to this year’s upturn in wheat prices, crop revenues should edge even higher for 2018.

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“The Canadian agriculture industry is in pretty good shape. We are seeing much better conditions when compared to producers south of the border, where things can be very challenging right now,” Goertzen said.

“The demand [in Canada] is slowing a little bit, but still pretty robust and will probably [see] continued improvement with technology, which will benefit harvest in the upcoming seasons.”

Goertzen said global conditions for agriculture are weak, but Canadian producers are still doing relatively well and will continue to do so thanks to the weak Canadian dollar.

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