Industry Lens: Agriculture—August 2022
The Conference Board of Canada,
August 5, 2022
This report examines the short-and medium-term economic and profitability outlook for Canada’s agriculture industry.
- Last year’s drought in the Prairies shocked the agricultural sector and pulled agricultural real GDP to its lowest level since 2016. A major rebound is in store for the next two years. Agricultural production will increase by 11.4 per cent in 2022 and another 7.1 per cent in 2023 as the sector gets back on track.
- The cannabis subsector has expanded at a torrential pace since legalization in 2018. But its high-growth era may be coming to a close as overproduction has hurt prices and profitability.
- Prices for farm goods have hit record highs. Poor harvests last year have been exacerbated by Russia’s invasion of Ukraine, as the two countries are important global producers. We expect prices to decline in the second half of 2022 but remain elevated.
- High prices have boosted the growth of nominal exports even as real exports plummeted. Real exports are expected to increase in the latter half of 2022, but growth will remain negative for the year before growing in 2023.
- Farmers have faced labour shortages and an aging work force for years. Low wages, rurality, and seasonal work make attracting young workers difficult. Many of the jobs lost last year will need to be replaced with new machinery rather than with new workers.