Resiliency and Opportunities in an Unusual Year
October 2, 2020 | Suzanne Armstrong
Steve Duff, OMAFRA’s Chief Economist, had a lot of positive things to say about the resiliency of the agricultural sector in his update to the CFFO Provincial Council earlier this week.
The agri-food sector is seen as generally resilient in times of economic downturn because people still need to eat, even if purchasing and consumption patterns may change. Furthermore, there is clearly strong demand for our locally produced goods here at home and abroad. Agri-food as a sector has received considerable recognition recently. Duff recommended we build on that recognition to become stronger and more economically and environmentally sustainable.
In particular Duff mentioned the processing sector in Ontario. The large federally inspected plants have been impacted especially by closures in other surrounding regions. The risk of closure still looms, here and elsewhere.
However, he noted that our provincially inspected processing facilities have proven to fill a key role within the industry. They have been able to increase volume by about 25–30% compared to the same time last year. What is even more promising is that, while the maximum capacity of federally inspected plants is reasonably well known, it is not clear how far provincially inspected plants may be able to increase their overall capacity. Farmers usually see higher value for meat marketed through smaller processors directly to consumers in the local market. There is optimism that the increased demand will support growth in this part of the province’s processing sector.
Duff also touched on BRM programs, as well as farm income and debt. He highlighted that one issue with BRM programs currently is getting enough participation to have the programs work as they are intended. He noted also that with low interest rates and high land values, farmers are generally in a strong position. He noted that farm profitability does vary considerably by sector. This means that land is more likely to be used for growing grains and oilseeds than as pasture or orchards, for example. Even beef farmers may currently question the value of feeding corn to cattle rather than selling it directly as grain.
Thankfully, there has been no spike in food prices, but there has been significant change in demand. Food continues to flow between provinces and across borders, especially with our most integrated trade partner, the US. Observers are watching to see what primary sector production will be by the end of the season compared to last year, but at the moment it looks like farmers continue to excel at producing food, even under these extraordinary conditions.
Suzanne Armstrong is Director of Policy & Research for the Christian Farmers Federation of Ontario. The CFFO Commentary represents the opinions of the writer and does not necessarily represent CFFO policy. The CFFO Commentary is heard weekly on CFCO Chatham, CKXS Chatham, CKNX Wingham, and CHLP Listowel.