BMO expects farm sector to grow

Friday, April 29, 2011

by PAT CURRIE

The Bank of Montreal on Thursday forecast that Canada’s agricultural sector will grow by between 3.5 and 4 per cent this year barring major flooding that may hurt crop yields.

"Momentum from the second half of last year has carried over into 2011, with farm output up 3.3 per cent from a year ago in January," said Kenrick Jordan, senior economist, BMO Capital Markets.

After two years of contraction, Canada's agricultural sector now enjoys the prospect of "better prices, healthier global economic activity, improved financial conditions, expanding global economic activity and improved financial conditions as favourable factors," according to the bank’s Canadian Agricultural Prospects report.

The crops segment is expected to grow faster than its livestock counterpart, where activity will be limited by smaller breeding herds and high feeding costs. Canadian farmers are likely to continue to experience solid financial performance this year, with crop and livestock prices expected to remain buoyant and output rising on stronger demand and improved yields.

"Our agriculture customers tell us they are well poised to capitalize on this opportunity," said David Rinneard, National Manager, Agriculture, BMO Bank of Montreal.

The BoM report was released only a day before the Supreme Court of Canada upheld Ontario’s ban on farm labour unions.

"That gives farmers of little bit of confidence, some cautious optimism going at a time when volatile fuel prices are causing some concern," said Ron Bonnett, a Sault Ste. Marie area farmer and president of the Canadian Federation of Agriculture, a group that represents 200,000 Canadian farm families. BF