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
"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
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
-- 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.
-- 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
-- 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
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.
Peter Scott, Toronto
Russell Baker, Toronto
Ronald Monet, Montreal
Laurie Grant, Vancouver
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