Farm Credit Canada reports Canadian farm financials remain in good shape despite a number of recent challenges.
Farm Credit Canada’s latest analysis of farm assets and debt indicates Canadian agriculture continues to show strength and resilience against a backdrop of higher interest rates, trade uncertainty and volatile commodity prices.
Craig Klemmer, a Principle Agricultural Economist with Farm Credit Canada, observes Canadian agriculture is facing some headwinds but it is still in a pretty good position.
From an historical position Canadian agriculture is very healthy. That being said, we have seen some softening in our ratios so we are seeing this decline where the health of the Canadian agriculture is declining slightly but we feel that we’re in a great position to service these continued increases in interest rates to adjust to changes in commodity prices and for the agriculture sector to remain healthy.
Like I said at the beginning, at the aggregate level we’re overall very strong. Each sector, region by region, we might see some differences. The hog sector is experiencing some challenges right now.
When we look at the crop here that we’ve had in western Canada, we’re not seeing the same output across the board where drought conditions have impacted some areas more than others. So sector by sector, region by region, the story may be a little bit different but over all when think the aggregate of agriculture, we remain in a very strong position and we look to be in a good position to service these headwinds that we see in the markets overall.
~ Craig Klemmer, Farm Credit Canada
Klemmer acknowledges farmers will have to understand their markets and look for opportunities. He says interest rates are expected to move higher, which will make the affordability of land a little less while lower commodity prices will make it a little harder to service debt and while there’s not a lot that farmers can do about the dollar it’s a factor to watch because it will affect profitability.
