It is not every day one gets the chance to ask the governor of the Bank of Canada a direct question about agriculture.
In fact, the last time I got in front of a governor it was Gordon Thiessen, and holy cow, that’s a long time ago.
Stephen Poloz was in Saskatoon last week at an event organized by the Saskatchewan Trade and Export Partnership, and much of his speech was about exports, as well as, of course, inflation and interest rates.
Clearly, the Canadian economy has not entirely rebounded since the crisis of 2008. Indeed, many sectors, particularly manufacturing, have been hammered and companies have closed their doors.
Poloz had said he was puzzled by lagging exports, and recently directed his staff to prepare a discussion paper on Canadian non-energy exports. The report noted that among the 31 subsectors of such exports, about 55 percent have been either performing as expected or outperforming their U.S. benchmarks.
Agriculture was among them. The report found that food, beverage and tobacco products, as well as farm and fishing products, have indeed grown in line with or exceeded their benchmarks.
However, the report says these products are not likely to help lead Canada’s export recovery.
“Farm and fishing products have seen strong growth that is not likely to be repeated going forward, owing to recent record farm yields,” the authors said.
That does not mean that Poloz has a negative view of ag exports, despite this year’s transportation mess.
“We expect exports to be stronger this year because the logistical constraints around that almost for sure have to ease up,” he said during a news conference.
The logistics represent “more of a mechanical thing in the forecast as opposed to whether they’ve been tracking.
“We have every reason to believe that as the U.S. market continues to gather momentum, so will those export categories.”
Poloz said there are many risks in exporting, not limited to transportation logistics. While it’s true that logistics could cause the loss of a contract, “it’s fundamentally a commodity business such that people need to buy the commodity. Relationships help you … relationships that have been built over the years, so that’s a positive which can then, if you like, be a mitigant to this problem.”
More on Poloz’s views next week.