Good quality gets its worth from a low dollar value

            Canadian agriculture producers have long prided themselves in being among the best in the world.

            In terms of dryland farming, there is little doubt that Canadian producers are good at getting the most bushels out of every acre.

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            Certainly the technology is there.

            There are numerous companies working to create ever better varieties to grow, not to mention working on the nutrient concoctions to optimize production, and of course the chemicals to combat disease, fungus and weed issues.

            At one point the production of the highest quality grains was a definite edge in the marketplace.

            Bakers desired Canadian wheat for its milling quality. The production was targeted to premium markets.

            That seems less of an advantage today.

            Of course, as consumers we too tend to look less at the quality of food, or at least we tend to balance that consideration with price.

            The idea of non-brand name products on the store shelves seems to be increasing. We are even now seeing store-specific label lines getting aggressive ad campaigns, even though they are often marketed as lower cost options.

            The cost is definitely more of a factor on many levels today.

            Recently, Farm Credit Canada (FCC) noted Canadian agriculture benefited from a relatively low dollar throughout 2016 and this trend is expected to continue into 2017.

            That was the report at least according to J.P. Gervais, FCC’s chief agricultural economist.

            “There are certainly other factors that could influence Canadian agriculture, such as the global economy, the investment landscape, commodity and energy prices,” said Gervais in a release. He was speaking of his top five agriculture economic trends to watch in 2017. “The Canadian dollar, however, has been a major driver for profitability in the last couple of years and could have the biggest influence on the overall success of Canada’s agriculture industry in 2017.”

            Gervais is forecasting the dollar will hover around the 75-cent mark and will remain below its five-year average value relative to the U.S. dollar in 2017, potentially making the loonie the most significant economic driver to watch in Canadian agriculture this year.

            The dollar means Canadian production can be purchased at a lower real cost. Marketers can walk into a foreign purchasing agent offering the usual quality we are known for, but at a price made lower by the dollar.

            There is of course a flipside to that dollar, as anyone who turns to online sources such as Amazon.com and ebay.com will recognize at present.

            And a lower Canadian dollar will make a number of farm inputs more expensive, at least those imported to this country.

            It does come down to a trade-off, determining if the low dollar stimulates sales enough to offset increased input costs.

            Gervias says it will.

            “Given the choice, producers are better off with a low-dollar than one that’s relatively strong compared to the U.S. dollar,” he said.

            Whether those same economic realities will extend to the non-farming Canadian is perhaps less clear though.