Farmscape for July 24, 2017

Farm Credit Canada says, despite the prospects of higher interest rates, the outlook for Canadian agriculture remains positive.
On July 12, for the first time since September 2010, the Bank of Canada increased its overnight lending rate, from .50 percent to .75 percent.
J.P. Gervais, Farm Credit Canada's Chief Agricultural Economist, says we need to be revising financial plans at least once a year and ideally every quarter and this is an excellent time to review financial strategies.

Clip-J.P. Gervais-Farm Credit Canada:
I think the environment is absolutely positive for us.
We are just coming off a record year in terms of farm income.
Asset values are almost reaching a record high year after year.
I don't think that this rate increase is going to change anything with regards to asset values.
The only thing, perhaps producers not only have to look at their financial strategy but maybe even think of their marketing strategy because a higher interest rate can actually cause the Canadian dollar, we've seen actually, to go up.
In recent past the low Canadian dollar, the weak Canadian dollar has been a source of gains for us in the farm sector.
It has actually supported and increased farm income to some extent.
If the loonie or our Canadian dollar gains a bit of value against the U.S. dollar that could actually change or lead producers to rethink their marketing strategy for the fall.
Having said that I think the trends or the outlook for farm income is still very positive in 2017, the demand for Canadian agricultural commodities is still every strong so I don't think this is going to change a whole lot the outlook and what producers need to do.
I think we're well positioned, got a strong balance sheet in agriculture, we're well positioned to face that rate increase.

Gervais recommends farmers keep an eye on the state of the economy.
He says factors such as increased inflation, decreased unemployment and the Canadian dollar gaining value signal the financial market expects the Bank of Canada to increase interest rates, possibly before the end of 2017.
For Farmscape.Ca, I'm Bruce Cochrane.

       *Farmscape is a presentation of Sask Pork and Manitoba Pork