While many industries are cursing the low Canadian dollar, the agriculture sector isn’t one of them.
As the loonie continues to head towards the 60-cent range, Farm Credit Canada’s chief agricultural economist said there are benefits to those selling agricultural goods into other markets.
“I think there is a benefit right now as we speak,” said J.P. Gervais. “When it comes to food and the Canadian dollar there are a few things we see — one, we sell more, and the second thing is what we sell is usually priced in U.S. dollars (USD), whether it’s hogs, whether it’s livestock, or grain and oilseeds, it’s priced in USD, so when our dollar is low, you take that price in USD and you convert it.”
But while the low Canadian dollar increases profitability on a per-unit basis, it doesn’t change the fundamentals of Canadian production.
“People tend to make too much of a case for a low dollar and our ability to export,” he said, noting that producing high-quality products that appeal to export markets is more important — even if a low dollar is a positive.
“We’re also competitive, which is extremely important,” Gervais said.
So while the lower dollar helps, the economist said it can’t explain increases in foreign markets on its own.
“I think it’s mostly a profit issue, and that’s good, it raises the price we get for what we sell,” he said. “But on the flip side, it also raises the cost of what we buy.”