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OFA Commentary 4309
 
Comparing Canada’s agriculture
 
By Bette Jean Crews, President, Ontario Federation of Agriculture
 
Farm leaders from North America and the European Union met recently in Niagara Falls to review agriculture’s present state and future prospects.
 
Canada had a full complement of organization leaders and some politicians there to participate in assessments of the industry. It was encouraging to hear David King,  Secretary General of the International Federation of Agricultural Producers, report that ‘agriculture has been more resilient to the global economic crisis than other sectors.’
 
He was basing his assessment on recent calculations from the OECD – the Organization for Economic Cooperation and Development. We know Ontario agriculture still faces a variety of issues.
 
As the world works its way out of the recession, Mr. King said, the OECD expects agricultural commodity prices to remain at or above the levels of 1997 to 2006. Crop prices are expected to increase by 10 to 20 per cent up to 2018.
 
Input costs are a critical consideration for farmers, and Mr. King speculated that oil prices should remain between 70 and 80 dollars per barrel. This translates to relatively stable costs for fuel and fertilizers.
 
Interest rates are a cost farmers must put into their calculations. The meeting was told that money put into the banking system to stimulate the economy has resulted in lower interest rates, and that isn’t likely to change in the medium term – inflation should remain at about one per cent.
 
Low interest rates is only one part of the money equation for farmers, Mr. King said. Credit availability may become an ever-increasing problem for smaller borrowers such as farmers. He had additional bad news for farmers in terms of the money market. He predicted cuts in government programs, and increases in taxes.
 
Mr. King looked back on the ‘food price’ scare of 2007 and found it unlikely governments would do anything that would make it appear they would intentionally neglect their domestic agriculture sector.
 
‘World leaders recognized the need to invest more heavily in agriculture in the developing countries and to maintain productive capacity in the industrialized countries,’ he noted. Words the Ontario Federation of Agriculture can support as it works with its provincial government to maintain healthy investments in agriculture.
 
Mr. King examined policy reform measures that have been undertaken by governments – removal of market regulations and moving farm support to direct payments was not successful to assure stability of farm economies in times of market volatility. He urged governments to consider risk management programs as a tool to achieve greater stability in farm markets.
 
‘With markets becoming more volatile, and expected to become even more so with the effects of climate change, risk management strategies will become even more critical for farmers in the future,’ Mr. King speculated.
 
The Food and Agriculture Organization (FAO) of the United Nations is predicting that world agricultural production needs to grow by 70 per cent to meet food needs in 2050. Mr. King told the farm leaders meeting in Niagara Falls that much of that increased production will need to come from North American and European farms. He said the effects of climate change and predicted water scarcity will make the challenges even greater.
 
While that meeting gave farm leaders some reason for optimism, we were also warned of monumental challenges ahead.
 
 
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