Prairie farmers are feeling the tremors of Greece’s economic crisis, even though they do little direct agricultural trade with the country.
“Who do they take down with them?” George Morris Centre economist Al Mussell said about the impact of a possible Greek debt default.
“We might care a lot about that.”
Greece has an enormous fiscal deficit, is unable to affordably raise money to fund its government spending and has just received assurances that it will be bailed out by its European Union partners and the International Monetary Fund.
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The situation is already indirectly affecting Canadian agricultural prices as European grain exports gain from the slump in the euro, which makes U.S. dollar-denominated world prices seem higher to European farmers.
European farmers can undercut Canadian prices without seeing an apparent loss in euro-value.
The American and Canadian dollars have bounced around in the last week as confidence in the Greek bailout plan rises and falls.
When worries rise about the bailout, investors move into the perceived safe haven of the U.S. dollar treasuries.
Mussell said the main danger to Canadian farmers is not from problems in Greece, because it is a tiny market.
More worrisome is that if Greece defaults and fear enters the market, other nations with fiscal problems could also lurch into crisis, such as Portugal and Spain.
That could begin a weakening and perhaps an unravelling of the euro and maybe even the European Union if the bloc can’t find a way to persuade creditor nations such as Germany and debtor nations such as Spain to co-operate.
