EDMONTON — Agriculture will be one of the bright lights in Alberta’s economy in the coming year, an economist told a meeting at Edmonton’s FarmTech.
Todd Hirsch, senior chief economist with ATB Financial, said that agricultural prices are expected to remain strong over the next few years, unlike the oil and gas industry with its dropping prices.
“2013 could be another very good year in agriculture in this province,” Hirsch said. “It is fair to say agriculture is seeing an upswing.”
Hirsch said he doesn’t believe strong agricultural prices will be a one-year event. Rather, agriculture will see a reversal of its 30-year gradual decline.
“Agriculture is going to be a growing contributor to Alberta’s economy.”
Hirsch said dropping oil and gas prices will continue to hurt Alberta’s economy.
Prices for oil produced in Alberta are $30 to $40 a barrel, considerably less than the West Texas Intermediate price of $90 to $95 a barrel.
Alberta prices have always been discounted because the province’s oil needs more upgrading and must be transported farther.
However, the traditional $10 to $20 differential has become significantly wider in the last six months.
“This is a problem for Alberta producers and the Alberta government at this price. They are receiving a weak price at the moment,” said Hirsch.
“To get world price, it is an advantage to get it to a sea port and ship it on tankers.”
Plans for proposed pipelines south to the Gulf Coast, west to Vancouver and Kitimat, north to Alaska and east to Churchill have all been discussed, but none have been approved.
“It’s unclear if we are going to be able to get our product to market. It could throw Alberta’s economy into a tail spin.”
In brighter news, Alberta’s forestry sector has started to recover after several years of decline.
“The 2013 fortunes in Alberta’s forestry sector have turned around. They’re the best prices in years,” said Hirsch, who pointed to strong demand for lumber in the Canadian and U.S. housing market.
“Forestry is one of the bright lights at the moment.”
Hirsch said the Canadian economy isn’t strong enough for the Bank of Canada to raise interest rates, despite the highlights of Alberta’s agriculture and forestry sector.