Canadian farmers hurt by crisis in Argentina

Reading Time: < 1 minute

Published: January 3, 2002

A federal government economist says the political and economic chaos

unleashed in Argentina could have a severe and long-lasting dampening

effect on Canadian grain prices.

Four years of recession, 18.3 percent unemployment and plummeting

living standards in the South American country sparked a wave of

strikes, riots and violence that prompted the resignation of president

Fernando de la Rua.

The country’s new interim government has already stopped payment on

Argentina’s crippling $132 billion US debt and is moving to abandon a

Read Also

 clubroot

Going beyond “Resistant” on crop seed labels

Variety resistance is getting more specific on crop disease pathogens, but that information must be conveyed in a way that actually helps producers make rotation decisions.

decade-old policy of pegging the peso to the American dollar on a

one-to-one basis.

Analysts predict the country will devalue its currency.

That would be bad news for Canadian farmers, said Pierre Charlebois,

chief economist of Agriculture Canada’s economic analysis section.

Argentina is one of the top five grain exporting nations in the world

and a devalued currency would make its exports more desirable.

Charlebois used a forecasting model to determine the impact of the

devaluation on Canadian grain prices over the next five years.

Under the worst case scenario where the free market would dictate the

value of the peso, it could lead to a $8.98 a tonne decrease in

Canadian canola prices, a $3.22 a tonne decline in wheat prices and

$1.09 a tonne drop for barley.

That’s just for one year. Similar price declines would happen in the

other four years of the forecast.

If Argentina pegged the peso to the U.S. dollar at a new level, say 1.2

pesos to one U.S. dollar, the worst year of price declines in the next

five years would amount to $3.45 less per tonne for canola, $1.16 for

wheat and 57 cents for barley.

“It’s just one other piece of bad news,” said Charlebois.

About the author

Sean Pratt

Sean Pratt

Reporter/Analyst

Sean Pratt has been working at The Western Producer since 1993 after graduating from the University of Regina’s School of Journalism. Sean also has a Bachelor of Commerce degree from the University of Saskatchewan and worked in a bank for a few years before switching careers. Sean primarily writes markets and policy stories about the grain industry and has attended more than 100 conferences over the past three decades. He has received awards from the Canadian Farm Writers Federation, North American Agricultural Journalists and the American Agricultural Editors Association.

explore

Stories from our other publications