Many analysts are saying that the world’s currency markets have finally
fallen out of the love with the United States dollar.
That’s behind the recent rise of currencies such as Canada’s dollar and
the European Union’s euro, they say.
It could be bad news for prairie livestock producers.
“If the (Canadian) dollar went up to 70 cents (in value compared to the
U.S. dollar), that would cause a seven or eight percent decline in
prices,” said agricultural economist Janet Honey of Manitoba
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Agriculture.
There is a strong correlation between Canadian livestock prices and
American livestock markets.
Canadian livestock producers who export their animals to American
farmers or slaughter plants are paid directly in U.S. dollars, so any
decline in the value of the American dollar means they will get fewer
Canadian dollars for the animals they sell.
But producers selling to Canadian slaughter plants will see the same
phenomenon, because those plants sell meat into the U.S. market and
base what they offer Canadian producers on what the U.S. market will
pay.
Honey said any sudden appreciation of the Canadian dollar will disrupt
the financial plans of many producers.
“The problem with the low dollar is that it has been around so long
that it’s built into your cost of production, so when it does go up
suddenly it’s a bit of a shock to the system,” said Honey.
An increasing Canadian dollar wouldn’t be all bad news. Imports from
the U.S., such as many farm inputs, would become cheaper, as would feed
corn or anything else sold in American dollars.
