Bloomberg identifies climate change, protectionism and automation as major disruptors. Farm Credit Canada agrees that these significant trends could affect the Canadian agri-food supply chain.
“We call them disruptors for the simple fact that these trends could significantly change the way Canadian farm operations, agri-businesses and food processors do business at home and around the world,” said J.P. Gervais, Farm Credit Canada’s chief agricultural economist. “The test is how they will adapt to take advantage of the opportunities or mitigate the challenges that come with each of these trends.”
Changing weather patterns impact production and demand
According to Canada’s 2019 Climate Change Report, Canada is warming at twice the rate of the rest of the world. Increases in both annual and seasonal mean temperatures may extend growing seasons with additional hotter days. However, the potential for warmer weather also increases potential for more rain during seeding and harvest, which makes controlling disease and pests more challenging. It also brings a higher likelihood of extreme weather events, such as floods and droughts.
Trade agreements: protection against protectionism
Protectionism contributes to market volatility, which has an overall detrimental impact on the world economy. This would appear to be especially true for Canada, which was the world’s fifth largest exporter of agriculture commodities in 2018 behind the United States, Brazil, the Netherlands and China.
However, Canada has done extremely well in establishing strong trade relations in a number of key markets, thanks to a long-held focus on getting trade agreements in place, according to Gervais. And while more market access issues could arise in 2020, it’s just as possible that market disruptions could create new opportunities for Canadian producers and exporters.
Automation and innovation fuel future success
Despite global economic turmoil, the outlook for Canadian agriculture and food in 2020 remains positive due to ongoing investments in technology and innovation.
With interest rates expected to remain low, the environment for continued investments in innovation and technology looks positive, Gervais said.
Source: Farm Credit Corporation January 7, 2020 news release