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The value of the Canadian dollar has trended upward over the past several years peaking last November.

Over the past weeks the dollar has softened somewhat and some analysts are predicting it could slide to the low to mid 90 cent U.S. range by year's end.

Farm Credit Canada vice president prairie operations Mike Hoffort notes Canadian agriculture is export dependent and, as the value of the dollar increases, returns from exports decline so a softening of the dollar would be good news for agriculture.

Mike Hoffort-Farm Credit Canada

There's a number of factors and that's where the complexity of the whole agriculture sector comes into play that go beyond the dollar.

At this stage, and using the hog sector as an example, as much as the Canadian dollar was really a big story in the past 12 months in terms of when it was appreciating and the corresponding reduction in hog values, right now an equally important factor would be the price of feed.

So whether it's corn or those products that go into hogs, that's impacted some of that profitability and definitely comes into play there.

We've had historically high grain and oilseed prices r3ecently and even with the higher dollar, our grains and oilseed producers that have been able to get a good crop have done quite well.

On the other side, on the livestock side, the Canadian dollar appreciation combined with some of the increase in feed prices really took a lot of profitability out of that sector and actually some producers have been running some losses in recent months.

There's quite a number of different stories that take place depending on what your primary sector is and how you're structured.

Hoffort adds, if the dollar drops, the price of feed could drift up which could reduce profitability in the cattle and hog sectors.

However, overall, he believes we'd see improvements in profitability on Canadian farms if the dollar softens.

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