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FCC Economist Looks Beyond 'The Great Lockdown'

2020 has seen some major disruptions in the agriculture sector.
 
Farm Credit Canada's (FCC) Chief Agricultural Economist J.P. Gervais was one of the featured speakers during the Ag In Motion Discovery Plus event.
 
His presentation "Beyond The Great Lockdown: Risks and Opportunities in Agriculture Markets"  looked at agriculture opportunities post COVID.
 
He says COVID-19 has changed food purchasing behaviors with a shift towards more food consumption happening at home.
 
"Grocery sales are up 12 per cent; 80 per cent of that growth according to Neilson is said to be COVID-19 related. Food Service Sales now are down 40 per cent and we are starting to see a gradual re-opening but it's going to take time getting back to where we were."
 
He notes there's just a lot that we don't know about the future of consumer behavior.
 
Gervais says when you are looking at 'Farm Financial Fitness' the numbers may be different but the overall story for most provinces is relatively comparable. 
 
He used Saskatchewan's numbers as an example to show the change in growth and/or decline in farm cash receipts in 2020 versus 2019.
 
"In terms of the impact, it's definitely on the livestock side of things, 5 percent decline for beef, 7 per cent for hogs."
 
He sees that changing as the strength of demand for red meat nationally and internationally is one of the most positive trends out there. Along with places like China looking to import more protein, as it continues to deal with the impact of African Swine Fever.
 
While the livestock sector has taken a big hit through COVID the crop sector has looked a little more optimistic. 
 
Gervais says overall margins are tighter than what they used to be and net cash income has been declining in Saskatchewan and other prairie provinces. He says there should be a little gross margin profitability when it comes to pulses especially lentils.
 
Stats Canada has reported a 12% increase in Saskatchewan seeded acreage for lentils this year. He feels the pulse market looks positive adding we're about to record an interesting period of growth.
 
"There is no doubt that plant-based proteins are gaining market share at the world level. We've seen investments in developing domestic processing here in Canada which is good news for our growers and producers."
 
Wheat futures have been hammered lately starting with the decline we saw at the start of the pandemic, but they have started to rebound a bit. 
 
He notes Canola has been performing really well, it was range-bound at about $4.50 to $4.75 a tonne but looks to be breaking out now.
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