Strong Canadian Dollar Hurts Agriculture, Manufacturing

CANADA - An agricultural economist with the University of Manitoba says a stronger Canadian dollar will take its heaviest toll on Canadian agricultural commodities that rely on exports and on manufacturing, writes Bruce Cochrane.
calendar icon 8 January 2010
clock icon 3 minute read

The Canadian dollar has recently shown renewed strength against its US counterpart.

Dr Brian Oleson, an agricultural economics professor with the University of Manitoba's Faculty of Agricultural and Food Sciences, recalls in 2000 the US dollar and the euro were at par both worth about 1.50 Canadian but today, while the value of the Canadian dollar compared to the euro is unchanged, it's near par with the US dollar suggesting the US dollar has weakened more than the Canadian dollar has strengthened.

Dr Brian Oleson – University of Manitoba

The exporting sectors are always hurt by a strong dollar and the importing sectors are helped.

What that says is that agriculture and manufacturing are going to be hurt and we see that.

Except of course, and this is a very interesting exception, supply management, our poultry and dairy sectors where those sectors have been set up as basically domestic-oriented sectors and so they're not really affected.

But, in terms of the crops, in terms of beef, in terms of hogs, it is just a very, very strong and profound impact that the strong dollar has.

In the decade that Canada went from a 67 cent dollar to essentially par it was brutal and this past year in terms of moving ten per cent in the exchange rate it really hurts in agriculture.

It hurts on the grain prices and it hurts on the livestock prices.

Dr Oleson expects the Canadian dollar to be bouncing around par with the US dollar during 2010 in a range from about 96 cents to 1.03 US and then future factors will influence whether that strengthens or backs off.

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