Late September and early October gave us good weather for fall harvest. Well, so much for that. Last Sunday, the first raindrops shut down my soybean harvest and it’s been raining ever since. I only have about 5% of my total soybean harvest left, but the weather is resembling more like November instead of mid-October. Its hurray up and wait for me once more, before I can change over to corn. Patience is a virtue in this farming profession and as we head into the last days of October, I will certainly be employing that.
Covid cases keep increasing at elevated levels as Quebec and Ontario hope to avoid widespread shutdowns. There have even been an elevated Covid caseload in Manitoba and Saskatchewan. Covid is poised to be an economic drag on us as the weather grows colder. What is next? Man, I wish I knew the answer to that question.
These are weird times for sure and it’s hard to put lipstick on a pig. $5 plus corn and $13 plus soybeans have helped the agricultural economy. That has to do with many things discussed here regularly. It’s been a good thing for agriculture, but of course we are only part of the Canadian economic story. Keeping our greater Canadian economy together has certainly been a challenge over the last few months. Governments have responded with huge stimulus, while the Bank of Canada has first cut then held the line on interest rates. 0.25% doesn’t lie. It almost seems science fiction low to me.
Covid was such a shock to our economic system. Essentially, our governments shut our economy down in order to save lives when all of this started. It might feel different to you now, but we’re still here. Cases are higher, amid an economy, which is mostly open. It has benefited by billions of dollars of stimulus. This is true in Canada as well as the United States and around the world.
Intuitively, how does this work? Well, think about it. You suddenly had an economy without economic activity. People had no work to go to. Supply lines were cut. You name it, we had an economic calamity. Infusing government capital into the void was one way of keeping economic activity going. Over time, our governments have opened things up and we have begun to pick up the economic pieces.
Inflation went almost to zero. That’s very dangerous. No economist or government policy maker wants to see declining prices over time. For instance, over the last two months according to Statistics Canada the consumer price index has been .1%, but now is .5%. The Bank of Canada target for inflation is between 1-3%, so maybe we are building that back. Needless to say, we’re still not out of the woods, especially with Covid infections rising.
As we move ahead, I’m hoping for better things. Simply put, we need more economic output despite Covid19. Our GDP last August put us at 5% below pre Covid levels and manufacturing sales were 7 % below pre Covid levels. Unemployment numbers were higher too. Things have continued to improve and year over year comparisons will likely get better. This will partly be because time will go by and year over year comparisons won’t be as relevant.
Thankfully the Canadian agricultural economy has done better for a whole host of reasons. In the beginning, nobody really knew how we would adjust. Agricultural demand at the micro level was fractured as the restaurant and hospitality trade was shutdown. We worried about offshore labour that may or may not be able to plant and harvest crops in our horticultural sector. Despite problems with Covid, most all of these inconveniences were dealt with. Add in a good crop across Western and Eastern Canada and it’s been a success story in a very trying year.
Needless to say, how can you have a successful year when 9858 Canadians have died in this pandemic and on October 22nd, we had 841 new infections in Ontario and 1033 in Quebec. These are real people, father, mothers and friends. We move ahead, counting our blessings, hoping for a better day and wishing for that vaccine. It will be an integral part of turning this corner.
There is always hope. Just take a look at the grain markets for a moment. Most of you would agree, those prices are more than you had realistically hoped for back when the pandemic was declared. Chinese demand has helped. The Chinese economy is doing relatively well, as they have kept a draconian control on Covid19. Much of SE Asia is the same. That’s a ray of sunshine in a cloudy environment.
Surely that same sun will shine again, for me to get my remaining soybean acres off and to switch over to corn. Surely it will shine on our Canadian economy again. 2020 has been a brutal year for a potpourri of reasons. Keeping going needs to be part of the equation.