Action to Reduce Value of the Dollar Expected

CANADA - Farm Credit Canada says action to halt the rise of the value of the Canadian dollar would be welcomed news for Canada's red meat sector, writes Bruce Cochrane.
calendar icon 1 September 2009
clock icon 3 minute read

The financial viability of Canada's livestock sector has been rocked by a combination of factors including a strengthening in the value of the Canadian dollar.

Last week the Bank of Canada indicated persistent strength in the dollar could slow Canada's economic recovery and suggested action could be taken to halt or reverse that trend.

Farm Credit Canada's senior vice president portfolio and credit risk Remi Lemoine says a large percentage of Canada's agricultural gross domestic product is exported so a lower dollar is generally an advantage.

Remi Lemoine-Farm Credit Canada

A lower dollar right now, especially for the red meat sector in particular the beef industry, the hog industry, they've been suffering economically quite a bit lately and their situation has been quite desperate and a lower dollar right now would be one huge step in the right direction to help that industry recover.

One thing is the volatility of it is hard to manage at times for producers.

The other, as I started to mention hogs earlier, just to give you an example of how that impacts the industry, a one cent change in the Canadian dollar with all things being equal in costs and everything right now roughly translates into a dollar per hog.

There's a lot of other factors that can help there as well, the price of grain obviously and fuel costs and hopefully we can leave the H1N1 impact behind us as well.

We're looking forward to sometime in the next 12 months a recovery of the industry.

Mr Lemoine suggests he can say, with confidence, the red meat sector would certainly welcome a lower Canadian dollar right now.

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