Cautious optimism for a more profitable year in agriculture was expressed at the farm outlook by Farm Credit Canada.
“We’re going to see interest rate relief,’’ said J.P. Gervais, FCC’s head economist. “Costs are coming down,” he said.
“Consumers are still under pressure (from inflation) and it all starts with the consumer.”
Global consumers face the same inflation as Canadians, he said.
Farm management skills will be important this year to reduce costs and increase revenues, said Gervais.
Profit margins “will be tight” except for the beef sector.
Consumers have shifted their spending patterns from $3,300 a year before the pandemic to $3,100 .
The long-term outlook for agriculture “is extremely positive.”
This year comes on the heels of 2023 when farmers experienced record net farm income, according to Agri-Food and Agriculture Canada.
Last year’s 13 per cent increase in profitability was driven by record cattle prices.
FCC economist Del Sobol expects strong cattle prices in 2024 with drought and a shrinking beef herd contributing.
Feed costs have come down to help the bottom line.
While some consumers have shifted to lower priced pork from beef, he said demand for beef will return when inflation comes down.
In the grains and oilseed sector Gervais expects “tighter profit margins” as the market seems to ignore geopolitical events.
“Any sudden major supply disruption could create volatile prices.’’
Even though global wheat stocks are the lowest since 2015 prices are not reacting.
Reduced feed and interest costs should make the dairy, hog and poultry sectors a little more profitable.
Food processors had a 6.8 per cent increase in revenues last year before inflation.
The 2.5 per cent increase expected in 2024 will be flat after inflation is taken into account.
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