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Emerging Markets Driving Ag Demand

The global economic recovery - and along with it, demand for agricultural products - hinges on growth in emerging markets and the ability of Europe and the US to contain their debt problems.

That's according to JP Gervais, senior economist with Farm Credit Canada.

The "economic divide" is number one on Gervais' list of economic issues Canadian farmers should watch in 2013.

He says there are signs that China's economic growth rate is returning to the pace seen several years ago.

"China has been slowing down. Right now the pace of economic growth in China is the lowest it's been in 12 years. The good news is we're seeing strong evidence that they are bottomed out, and they should be starting to grow again," explains Gervais. "Now even though they have slowed down, they're still a lot higher than what we see in Canada and the US, but we need that growth in the emerging markets - with China being the big one, but also others like Indonesia and India - to continue because that's one of the major drivers of agri-food markets."

"As long as Europe and the US can contain their mess within their borders, that's all positive," he says. "From the US standpoint, despite the disagreements they have, I still believe they're going to be able to successfully manage this crisis, although there will be a lot of drama and volatility in the market."

He says austerity measures in Europe have so far been quite successful at limiting outside damage.

"Those policies have been inflicting a lot of pains on Europeans, but basically they've kept their mess within their borders, and so we haven't seen any of the spillover effects that we may have anticipated a few years ago," says Gervais.

JP Gervais' top five economic issues for producers to focus on in 2013:

1) The economic divide
2) World production conditions
3) Farmland values
4) Enhancing productivity
5) Western Canadian labour gains and pains

Watch for additional stories on other issues.

Source: PortageOnline