|
|
Canada Agribusiness Report Q4 2009Published by: Business Monitor International Published: Sep. 24, 2009 - 57 Pages Table of Contents
AbstractCanada is the latest major agricultural producer to be hit by serious drought. The prairies of Alberta andSaskatchewan saw some of the driest weather in decades in the first half of 2009 with rainfall less thanhalf of the average level. This will see large falls in the 2010 harvests for wheat and barley following thelarge crops in 2009. Increasing development in the prairies fuelled by the energy boom that has broughtinvestment flows into the area over the past few years has seen demands on the water supply rise, stokingfears that shortages could become more frequent in the future. On the other side of the country, Ontarioand Quebec have seen especially damp and cool weather. This will see yields for corn and soybean fall in2010.The livestock sector also continued to suffer through the middle of the year. Pig farmers were particularlyhard hit. The lingering impact of the H1N1 Swine Flu outbreak exacerbated the already poor outlook forthe sector. Before the outbreak, pig farmers had been hoping that the sharp fall in hog inventories inNorth America over the past two years would finally put a stop to the falling prices. Following the fluoutbreak, however, hog prices fell every month through Q209 as demand dropped in response to the fearsof H1N1 'Swine Flu'. In June 2009, Ontario hog prices were down 16.3% on the 2008 level. In mid-August, the Canadian government stepped in with a package to help struggling pig farmers. Thegovernment is offering CND75mn to help farmers exit the sector to try and reduce supply thereby shoringup prices. Farmers who commit to not producing for three years will also be eligible for the funds. Thegovernment will also back loans to pig farmers and invest CND17mn in developing export markets forCanadian pork. The package is a long way from the CND800mn injection industry bodies had called for,but should help the sector return to profitability in the not-too-distant future. Unlike the export-reliant pork and beef industries, poultry and dairy producers are insulated form thecurrent economic turmoil by a tightly regulated supply chain management system and a high level ofprotection from imports. Output of both milk and poultry is governed by quotas set at a national andprovincial level. Prices are determined based on cost of production, all but guaranteeing profits for themajority of producers. While in the current climate poultry and dairy farmers will no doubt be happy to be spared the difficultiesbeing faced by beef and pork producers, in the longer term we believe the regulations are holding backthe development of the sectors as well as placing an unfair burden on consumers. The production quotaslimit the opportunities for efficient producers to expand, holding back productivity growth. Consumersare also left paying more for dairy products than would be the case if prices were fixed by the market anddomestic producers were subject to competition from imports. Despite this, the supply chain managementsystem has broad political support and we do not see any major changes over our forecast period.Pressure for change is most likely to come from the outside - Canada's protection of its dairy and poultryindustries has been a constant stumbling block in trade negotiations. Get Full Details About This Report >> |
|
|||
|
About MarketResearch.com
|
||||