The federal crown corporation that helps finance exports is predicting the agriculture and food sector will be one of the positive export stories in the Canadian economy this year and next.
In its semi-annual export forecast published Oct. 29, the Export Development Corp. predicted at least a nine percent increase in the value of exports this year and six percent next year, even if the country and the world economy have slipped into recession.
The corporation said agriculture would be one of the few “bright spots in a sea of otherwise weak export prospects next year,” along with consumer spending.
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“Overall, we are relatively bullish on the food side,” agriculture specialist Gerry O’Brien said in a Nov. 1 interview. “After all, people have to eat.”
He said the corporation is projecting that the value of food exports will increase at least $2.3 billion this year and another $1.6 billion next year, even if there is a recession. That would increase the value of exports to $29.93 billion in 2002.
If there is an economic slowdown then the corporation predicts the value of exports will soar $3.5 billion this year to $29.5 billion and by close to $4 billion next year to $33.3 billion.
This is a far more optimistic trade outlook for the food industry than for any other Canadian economic sector.
In total, the corporation expects exports to increase by no more than one percent and perhaps to fall by six percent if there is a recession. Major sectors such as forestry, minerals and aircraft parts will suffer sharp export declines.
O’Brien said the assumption by economists is that tightening world supplies of cereals will lead to significant increases in grain prices during the next year, although canola prices will not keep pace.
Wheat prices will fall this year but strengthen next year.
“We think that markets are dictating higher prices, demand has started to exceed supply,” said O’Brien.
And even if the world economy is in a recession, the outlook for wheat prices is no worse than being stable.
A recession would weaken consumer demand for higher end processed consumer products, said the crown corporation. However, it said that with heightened American and world concerns about border security since the Sept. 11 terrorist attacks, there may be a disruption in the food sector optimism.
“This could seriously restrict access to already declining stocks of available exportable foods.”
