Recognizing the new normal

Farm & Countryside Commentary by Elbert van Donkersgoed

Editor's NOTE

Elbert van Donkersgoed is the Strategic Policy Advisor of the Christian Farmers Federation of Ontario, Canada. CFFO is supported by 4,500 family farmers across the province of Ontario.

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April 8, 2004: In the shadow of the crisis in beef production, the result of discovering one case of mad cow disease, all of Canadian agriculture is coping with a much bigger problem: the rising value of our loonie. Less than two years ago, the Canadian dollar troughed at 62 cents U.S. There has been a 20 percent change and every indication that our loonie’s value could continue to climb to 80 cents U.S. and beyond. Assuming that the rule-making procedure in the U.S. and at the World Organization for Animal Health proceeds in good faith, we can look forward to borders opening to Canadian cattle, sheep and other ruminants. That day cannot come soon enough. Even so, open borders will not bring back the good cattle prices we left behind on May 20, 2003. A new normal has emerged for Canadian agriculture.

Last month, at the Canadian International Farm Equipment Show, the Christian Farmers Federation surveyed those visiting our display: “What impact does the rising value of the Canadian dollar have on your farming operation?” Participants said the bulking up of the loonie would lower the price of what they will receive for just about every commodity: apples, beans, beef, cabbage, carrots, cauliflower, celery, corn, goat cheese, flowers, grapes, hay, horses, pigs, onions, soybeans, tomatoes and wheat. A number noted that calves, cattle, sheep and dairy heifers would also take a hit once the borders reopen. The only commodities not identified were chicken, dairy and eggs – once again Canada’s unique approach to managing the supply of these products is providing stability for farmers without the need for subsidies and other ad hoc interventions.

Survey participants also noted that they expect to pay lower prices for some purchases: imports such as baler twine, breeding stock, cars, consumer goods, farm machinery, fertilizer, fuel, horse trailers, magazine subscriptions, machinery parts, material handling equipment, minerals, pesticides, pharmaceuticals, tractors, and U.S. seed. A number pointed to other possible savings: college tuition in the U.S., interest rates, travel and U.S. holidays.

Will the lower cost of imports make up for the 20 percent lower return of our exports? Participants were skeptical: “It will just increase margins for middlemen.” “Not much! Companies are not in the habit of passing on savings.” “It does not seem to lower my costs.”

The new normal is already evident. In 2003, for the first time in a decade and a half, Ontario’s growth in agri-food exports stalled. Since May, exports have been in decline. Remember 1991? Cross-border shopping soared exponentially. The Canadian dollar had rocketed to 86 cents U.S.

It’s time to redirect farming resources to produce for Ontario’s increasingly diverse cultural interests and replace some of the $12 billion in agri-food imports.

For information about Ontario’s agri-food imports and exports.



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