OTTAWA — Farm Credit Canada says demand for commodities and food are a growth opportunity, but one requiring farms, agribusinesses and food processors to innovate and manage risk. The organization sees strong prices for grains, oilseeds and beef into 2022 — but more limited growth potential for dairy and hogs.
Elevated prices mean seeded acres of soybeans and canola are projected to climb in 2022, while corn acres are likely to come down because of the high cost of fertilizer. The price of fertilizer skyrocketed last year. FCC says that rise is anticipated to stop increasing at a fast pace, but nonetheless remain elevated.
FCC forecasts a decline in the number of fed cattle in 2022 because of high feed costs. However, given higher prices, cattle receipts should grow.
“Canadian beef consumption slowed in 2021, but the positive five-year trend in consumption pre-pandemic is expected to resume while export demand remains robust,” FCC chief economist J.P. Gervais explained.
Consumer appetite for dairy products grew in 2021 but not to the expected level. While the dairy farm price is expected to see an increase, milk output at the farm level could see only limited growth.
After strong growth in hog receipts in 2021, FCC sees limited growth potential for that sector in 2022. Hog prices are projected to decline slightly and with marginal growth in production. High feed prices will challenge profitability and may hinder production growth.
“There is plenty of optimism for this sector looking at the year ahead; however, two of the biggest economic trends that could impact profitability are rising crop input costs and the impact of global political tensions on trade,” Gervais said. “I can’t emphasize enough the value of farm management and strategic thinking. Producers need to continue to plan for disruptions like we’ve seen in the past year.”