The document summarizes key issues in the Canadian agriculture and food processing sector in July 2016. It discusses rising food prices and commodity prices. Equipment sales are also up. The document outlines factors that will impact Canadian crop production such as emerging market growth, slowing global production, and changes in agricultural trade. It also discusses the potential effects of carbon taxation and high electricity rates on farmers' costs.
3. Paul Young - Presenter
Bio
• CPA/CGA
• 25 years of experience in Academia, Industry and Financial solutions
• Youtube Channel -
https://www.youtube.com/channel/UCAArky1bAXPSuV2NLtUnyLg
4. Agenda
• Food Prices
• Commodity Prices
• AG Equipment
• Crop Outlook
• Carbon Tax/Pricing
• Power Cost
5. Food Pricing
• On average, households spent $8,109 on food
in 2014, accounting for 13.7% of their total
spending on goods and services. Households
spent an average of $5,880 on food purchased
from stores, and an average of $2,229 on food
purchased from restaurants.
• Households in Alberta reported the highest
average spending on food at $8,740, while
households in Prince Edward Island spent the
lowest average amount at $7,388. Couples with
children reported the highest average spending
on both food purchased from stores ($8,720)
and food purchased from restaurants ($3,204).
The lowest average spending on food purchased
from stores was reported by one-person
households at $3,295. One-person households
headed by a senior aged 65 years and older
spent the lowest average amount on food
purchased from restaurants at $783.
Source: http://www.statcan.gc.ca/daily-
quotidien/160212/dq160212a-eng.htm
9. Canada Crop Outlook/Yields
What does it mean for Canadian agriculture?
• 1. Emerging/developing markets to drive food consumption growth through 2025
• Emerging/developing market population growth, income growth and changing dietary preferences will drive food consumption growth.
Their consumption of more varied proteins, processed foods, sugars, fats and oils is expected to grow as more people spend more of
their income increases on food
• Overall per capita food consumption is projected to grow in developing markets, although developed countries will likely account for the
highest per capita consumption. Cereals will remain the world’s dominant food per capita, despite reduced consumption in developed
countries. Meat intake will also grow, particularly in North America as the U.S. economy expands and prices fall.
• 2. Global production to grow more slowly
• Overall ag output is expected to grow 1.6%/year until 2025, with crop output at 1.5%/year.
• 3. Ag trade will slow – and change
• Trade in crops and meats will slow in the outlook period compared to the last decade, a trend likely to be accentuated by further
concentration of exports from major exporters – including Canada. The OECD-FAO projects that for wheat, beef, grains, canola, pork and
soybeans, the top five exporters will account for 70% of total exports by 2025; Canada is expected to export at least 40% of the world’s
exports of oil seeds (other than soy).
• 4. China’s impact uncertain
• China’s 2006-2015 GDP growth of 9.0% is expected to slow to an average of 6.2%/year by 2025, which will help to slow growth of global
cereals imports. A major importer of many ag commodities, China’s economic slowdown is likely to impact trade and prices overall. A
second impact may be felt as China releases its grain stocks, particularly corn and soy.
10. Carbon Taxation/Agriculture Sector
• Jean cited data from the Canadian Tax Journal that said a $30 carbon
tax will increase electricity prices by 7.5 per cent, food costs by two
per cent and the shelter costs by 1.2 per cent.
• Jean said the initiative will do little or nothing to change people's
behaviour.
Source: http://www.cbc.ca/news/canada/edmonton/carbon-tax-will-
cost-alberta-families-at-least-1-000-wildrose-says-1.3541177
11. Power Impact
• Source: http://powerforthefuture.ca/wp-content/uploads/2016/06/Electricity101.pdf
Energy needs and reliability has grown tremendously
over the decades. Today, Ontario farmers are dealing
with one of the highest electricity rates in North
America. These expenses are driving up the cost of
doing business, making it harder for Ontario farmers
and farm processors to compete on a national and
international scale. OFA will continue working with
the government this year to secure a competitive
industrial/farm electricity rate. Natural gas and access
to this lower cost energy source is also on OFA’s list of
energy issues. OFA believes natural gas expansion to
farms and rural Ontario communities should be our
provincial and federal government’s first priority
when it comes to investing in infrastructure in rural
Ontario. Natural gas will boost business opportunities
by significantly lowering energy costs, and OFA
continues to push for better infrastructure across
rural Ontario. Natural gas infrastructure is an
investment for the future as powering the farm fleet
could be possible with biogas supplied from farms as
a renewable Source:
http://www.ofa.on.ca/media/news/ofa-continues-
work-on-key-issues-in-2016