Volatility to keep producers on edge: speaker

On the 200th birthday of Charles Dickens, a prominent business journalist deferred to the famed English novelist when summing up the current state of Canadian agriculture.

On the 200th birthday of Charles Dickens, a prominent business journalist deferred to the famed English novelist when summing up the current state of Canadian agriculture.

“These are in some ways the best of times for producers, because we have grain prices going up, we have livestock prices going up,” said Brett Harris, western bureau chief for CTV’s Business News Network.

“They are of course the worst of times, in that the global economy really is sitting on a precipice and we don’t know which way it’s going to go.”

Speaking at the AgChoices 2012 conference in Red Deer on Tuesday, Harris devoted much of his time to an assessment of the economic conditions in Europe, the United States and China.

Although the domestic ag sector is coming off a strong year and has a promising outlook for 2012, he suggested that things could be volatile as long as the U.S. and Europe battle their economic demons.

“It’s going to be quite a roller-coaster ride.”

The biggest threat exists in Europe, said Harris, despite concerted efforts led by Germany and France to shore up teetering economies like Greece’s.

“It still looks like the European economy is inexorably sliding into recession.”

In the case of Greece, a default on government debt obligations could be manageable, he said.

But if bigger countries like Italy follow, the entire Eurozone could tumble and the global economy return to a recession that would be worse than the 2008 downturn.

“If Europe can’t fix what’s going on right now, we could all be in trouble.”

Harris didn’t sound optimistic, pointing to a Eurozone unemployment rate of 10.4 per cent — ranging from 5.5 per cent in Germany to 23 per cent in Spain.

These numbers illustrate the disparity between strong economies and weak ones among the 17 Eurozone members, he said.

“Countries that consistently overspend and under-produce are going to have to turn things around.”

As Canada’s largest trading partner and its biggest market for agricultural products, the United States is a critical to the fortunes of producers here, said Harris.

It’s staggering under a combined debt load of $56.5 trillion — including the financial obligations of government, corporations and individuals — which equates to about $683,000 for every American family, he noted.

“The U.S. really is facing its worst financial situation, probably since the Great Depression of the ‘30s.”

Our neighbours to the south did manage to extricate themselves from that recession, observed Harris, and recent encouraging signs have included a 2.8 per cent growth in U.S. GDP in the final quarter of 2011 and a declining unemployment rate. Corporate profits have been rising and manufacturing is on an upward path.

The U.S. does continue to suffer from “political paralysis,” said Harris, which could result in deep legislated spending cuts if the Democrats and Republicans can’t agree on how to tackle the debt.

“If they’re not strategically aimed, that’s going to hit the economy like an ax instead of a scalpel.”

China is also important to Canada and its agricultural exports, said Harris. But it’s being hurt by the European debt crisis, with export growth slowing to 14 from 21 per cent in the second half of 2011.

With China’s manufacturing output contracting and its housing sector cooling, the communist country’s economy could suffer a “hard landing” that would jar the rest of the world, he said.

For now, things look pretty rosy for most Canadian farmers, said Harris. The livestock sector in particular has been profitable, thanks to demand from emerging markets like China and Korea, and herd numbers that are the lowest in years.

“You don’t have to be an economic expert to know that when you have strong demand and you have very tight supply, you get good pricing.”

This year should be another good one for producers, although threats like rising input costs, the high loonie and competition from countries like Russia, Ukraine, Kazakhstan, Argentina and Brazil exist. Plus, said Harris, agricultural products are commodities, and as such their prices are subject to cyclical swings.

Harris recommended to his audience that they pursue diversified markets, ensure they have access to credit and try to lock in their costs and prices.

Despite the uncertainties in Europe, the United States and China, he added, Canadian farmers can take some comfort in one reality.

“People have to eat.”

Ag Choices is an annual opne-day agricultural conference. It’s sponsored by Growing Forward, a federal-provincial-territorial initiative.

hrichards@bprda.wpengine.com

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

test tube with the blood test is on the table next to the documents. Positive test for coronavirus covid-19. The concept of fighting a dangerous Chinese disease.
COVID-19 death toll verges on 10,000 as second wave continues to surge

Nearly 10,000 Canadians have died due to COVID-19, a mark of the… Continue reading

The Red Deer RCMP has filed another set of charges after an alleged assault at an anti-racism rally on Sept. 20. (File photo by Advocate Staff)
More assault charges filed after Sept. 20 anti-racism rally in Red Deer

Trevor Lyle Roy faces a second set of charges stemming from the event

Your weather forecast for Thursday, August 1st, 2019. (Pixabay)
Expect a slightly windy day in Red Deer Tuesday

Expect a slightly windy day in Red Deer. Although as of noon… Continue reading

“We need to keep our hospitalization rate low. We need to keep our ICU beds open, and we need to keep people healthy and our case numbers low," says Karen Mann, Red Deer’s emergency management co-ordinator. (File photo by Advocate staff).
City says it is monitoring COVID around the clock

Following guidance from Alberta’s medical officer of health

Alberta Union of Provincial Employees were back on the job Tuesday after a provincewide wildcat strike on Monday. (File photo by Advocate staff)
Red Deer hospital workers back on the job

Red Deer hospital was one of 45 sites with picket lines

Alice Kolisnyk, deputy director of the Red Deer Food Bank, says the agency expects an increase in demand as the COVID-19 pandemic continues. Every new subscription to the Red Deer Advocate includes a $50 donation to the food bank. (Photo by BYRON HACKETT/Advocate Staff)
Support the food bank with a subscription to the Red Deer Advocate

The community’s most vulnerable members are always in need of a hand,… Continue reading

Cases in Ponoka (East Ponoka County) as of Oct. 27. (alberta.ca)
Diagnosed cases of COVID-19 at three Ponoka businesses

Town ‘strongly encouraging’ residents to wear non-medical masks in public

Red Deer Rebels forward Jayden Grubbe is one of three Rebels on the NHL Central Scouting players to watch list for the 2021 NHL Draft. (Photo by BYRON HACKETT/Advocate Staff)
Three Rebels on 2021 NHL Central Scouting Players to Watch list

A trio of Red Deer Rebels has caught scouts’ eyes ahead of… Continue reading

Kathleen Finnigan, who was named superintendent of the Red Deer Regional Catholic School Board on Tuesday, has more than 30 years of experience as an educator. (Courtesy of Red Deer Regional Catholic Schools)
Kathleen Finnigan named Red Deer Regional Catholic Schools superintendent

The Red Deer Regional Catholic School Board will continue to be led… Continue reading

(Emily Jaycox/Bashaw Star)
Wreath laying ceremony held in Manfred, Alta.

Ceremony marks 64th anniversary of Hungarian revolution, honours settlers

The Red Deer Regional Hospital Centre could be affected by cuts to Alberta Health Services announced by the government Tuesday. (Photo by BYRON HACKETT/Advocate Staff)
David Marsden: Yes, we know how to do laundry

Union leaders would have us believe there’s something special about their members:… Continue reading

Most Read