Dr. Brian Oleson – University of Manitoba
An agricultural economics professor with the University of Manitoba is advising Canadian agricultural producers who rely on the export market to consider action to protect themselves from the effect of a strengthening dollar.
Fluctuations in the value of the Canadian dollar are again causing concern among Canadian agricultural producers who rely on the export market.
Dr. Brian Oleson, an agricultural economics professor with the University of Manitoba’s Faculty of Agricultural and Food Sciences, says for the most part a strong dollar is hard on the agriculture industry.
Dr. Brian Oleson-University of Manitoba:
A weaker dollar definitely helps people who are in the exporting industry.
When we had a 65 to 70 cent dollar it was much much more easy to be competitive than it would to be competitive at par.
Of course in agriculture we are an export-oriented industry and so for the crops and the livestock we are driven off U.S. prices.
When translated by the higher dollar we get lower prices in Canada.
That of course is true of everything but supply management where the prices are basically made in Canada.
Cattle and hog prices there’s no question that prices are set in the United States so when you translate them across the border then the Canadian producer with the higher dollar is always looking at lower prices.
The other side of it of course is that the feed costs are slightly lower because of the fact that the Canadian dollar is higher.
There’s a bit of a tug and pull there but on balance those prices really are hard on the cattle and hog industries.
Dr. Oleson expects the value of the Canadian dollar to range between 97 cents U.S. and $1.04 possibly peaking as high as $1.10 U.S. through 2011.
He suggests, if you’re currency vulnerable, it might be worth looking at ways of spreading out that risk through forward currency contracts, futures and so on.
For UniversityNews.Org, I’m Bruce Cochrane.
*This first appeared in the September 9 edition of University News, a presentation of the University of Manitoba’s Faculty of Agricultural & Food Sciences, to learn more click here.