Following a difficult year, the outlook for 2017 for agriculture is looking positive in spite of some uncertainty.
That is according to J.P. Gervais, chief agricultural economist for Farm Credit Canada (FCC), who feels that farm cash receipts will remain at a high level for the coming year.
“While farm cash receipts aren’t increasing year over year or setting records, they will likely maintain the high levels they have seen over the last 10 years,” Gervais said.
“Especially with the low quality crops and some poor yields, 2016 will see lower than average numbers. However, you can’t downplay the impact this and the low dollar will place on the challenges farmers are going to be facing in 2017. Although, if you look at the big picture, demand is up and it looks like agriculture will be the big bright star for the coming year.”
And it’s that low dollar that will be the biggest benefit for Canadian farmers, stated Gervais, who added that other influences — such as the global economy, investment landscape plus commodity and energy prices — could drive agriculture up or down.
“There are certainly other factors that could influence Canadian agriculture and, while the low dollar won’t help when it comes to inputs, the overall net impact will be fairly positive for the industry in 2017,” he said.
“Given a choice, producers are better off with a low dollar than one that is relatively strong when compared to U.S. currency.”
Gervais added the dollar, which he expects to continue to stay around the 75-cent U.S. mark, will maintain a healthy demand for Canadian commodities and livestock. What this means is potential growth of farm revenues, especially considering Gervais believes livestock prices are likely to rebound early in the new year.
That positive outlook also goes for Canadian processors and agri-business, he explained.
“The low dollar and better exchange rate means a good investment climate in Canada and supports foreign commodity sales,” Gervais stated.
“While no one knows exactly what the pattern (of the dollar) will be, it is one thing that needs to be monitored in the push toward globalization. I think the next year will be very positive for Canada-U.S. trade even though the uncertainty down south had a lot of people on edge.”
With president-elect Donald Trump set to take office on Jan. 20, Gervais’ big picture look has him confident Canada won’t take a direct hit.
“A big indicator will be to see what the new U.S. president does in his first 100 days. Changes in U.S. policy and regulations tend to move slowly, so it won’t happen overnight.” he said.
“I’m confident that Canada won’t be caught in the crossfire, but we are going to need to monitor things closely as the U.S. will certainly look at other trading partners like China and Mexico first.”