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Canadian Agricultural Sector Remains Globally Competitive in 2013-BMO Economics


Canadian Agricultural Sector Remains Globally Competitive in 2013-BMO Economics

- Agricultural sector's net worth increased by 78 per cent since 2003

- Led by innovation in technology, gross agricultural output more than quadrupled over the past half-century

- 2012 marked the second largest harvest on record

TORONTO, ONTARIO -- (Marketwired) -- 04/19/13 -- The Canadian agriculture industry is expected to show steady production growth following a good harvest last year, with exports to emerging markets providing a growing source of revenue in 2013, according to BMO Economics.

"Rapid economic expansion in emerging markets and lagging demand growth from south of the border has resulted in increasing export market diversification," said Aaron Goertzen, Economist, BMO Capital Markets. "Although global competition is stiff, Canadian producers' productivity edge has contributed to a large and growing trade surplus."

Mr. Goertzen noted the potential impact of a stronger U.S. crop this year. "As drought conditions in the U.S. subside, increased production there could lead to lower agricultural prices. Export demand growth will, as a result, be even more crucial for industry prices and profitability."

"While some Canadian producers in central Canada faced challenges due to drought, improved demand and increased production led the sector to solid revenue growth in 2012," said Karl McLaren, Manager, Agriculture, BMO Bank of Montreal. "These factors, along with ongoing technological improvements, continue to have a positive impact on the agricultural sector. We look forward to working with our farm customers to support their growth and success."

BMO Economics noted the following regarding the positives for the industry:

Innovation


 
--  Advances in technology, improvements in management practices and
    industry consolidation have resulted in sustained productivity growth. 
--  Innovation has consistently and significantly expanded the industry's
    productive capacity, with gross output per hectare having more than
    quadrupled over the past half-century. 
--  There are few signs that innovation is slowing - with private spending
    on research and development in the agriculture sector having grown at
    roughly twice the pace of t
he Canadian total over the past decade. 

Global Demand


 
--  Rapid global demand growth has significantly increased agricultural
    product prices over the past decade. The strong export growth is being
    driven largely by rapid population and income growth in emerging
    markets, which has increased food demand in these countries. This effect
    is being compounded as emerging-market consumers shift their diets
    toward higher-value products, such as meat. 
--  Long-term demand growth is virtually guaranteed by domestic and global
    population growth as well as rapidly increasing incomes in emerging
    market economies. 
--  Although imports from emerging markets are growing quickly, Canada
    continues to run a large and growing agricultural trade surplus with
    these economies. Emerging market development represents a large positive
    for the Canadian agriculture industry.

About BMO and Agriculture

BMO's roots in the Canadian agricultural sector date back to 1817, when the Bank first began working with farmers to support and expand the agricultural industry, which has become a key driver of Canada's economy. Today, BMO provides customized loan, deposit, cash management and card payment solutions to Canada's agri-business owners, the single largest core commercial sector that the bank serves.

About BMO Financial Group

Established in 1817 as Bank of Montreal, BMO Financial Group is a highly diversified North American financial services organization. With total assets of $542 billion as at January 31, 2013, and more than 46,000 employees, BMO Financial Group provides a broad range of personal and commercial banking, wealth management and investment banking products and solutions. Contacts: Media Contacts: Peter Scott, Toronto (416) 867-3996 PeterE.Scott@bmo.com

Russell Baker, Toronto (416) 867-3996 russell.baker@bmo.com

Ronald Monet, Montreal (514) 877-1873 ronald.monet@bmo.com

Laurie Grant, Vancouver (604) 665-7596 laurie.grant@bmo.com

Internet: www.bmo.com Twitter: @BMOmedia

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