Canadian farming trends to watch in 2025
The agricultural sector in Canada has faced significant challenges over recent years, according to Aaron Goertzen, Senior Economist, BMO. The challenges have been influenced by economic fluctuations, commodity prices, and global events. Here are nine major trends shaping the landscape for Canadian producers.
Global Economic Stability
Global economic growth remains resilient despite challenges. Strong economic performance in countries like the U.S. supports global demand for agricultural products, even as other regions face slowdowns. While uncertainties persist, growth is expected to improve slightly in 2025, provided geopolitical and trade tensions remain under control.
Crop Surpluses and Livestock Prices
Recent strong harvests have boosted global crop supplies, creating price pressures. However, livestock prices have risen steadily, driven by lower cattle supplies. Crop prices may stabilize next year if growing conditions align with historical averages, while livestock producers begin to rebuild herds after years of drought.
The Canadian Dollar's Impact
A weak Canadian dollar, trading around US$0.71, has supported domestic agricultural prices. However, higher input costs for imported goods offset some benefits. Exchange rates are expected to remain low in the near term, with gradual appreciation possible over time.
Rising Input Costs
Farmers face elevated costs for fuel, fertilizer, and equipment, driven by global inflation and currency fluctuations. Although some input prices have eased, overall expenses remain high, creating challenges for profitability.
Lower Interest Rates
Interest rates in Canada have started to decline, providing relief for farmers managing loans and financing. The Bank of Canada is expected to continue reducing rates gradually, supporting the agricultural sector’s financial stability.
Improved Labour Market Conditions
The Canadian labour market has softened, easing previous labour shortages in agriculture. However, immigration and temporary foreign worker exemptions have helped maintain a steady workforce for the sector.
Trade Uncertainty
Global trade dynamics continue to pose challenges for Canadian agriculture. Tariffs and geopolitical tensions could disrupt markets for key commodities, while domestic policies may shield producers from major impacts.
Climate Challenges
Producers face volatile weather patterns and evolving climate policies. While agricultural emissions have decreased relative to production growth, extreme weather events continue to pose risks to yields and operations.
Productivity Gains
Canadian agriculture remains a leader in productivity growth, driven by investments in technology and innovation. Farmers produce significantly more per hour than decades ago, demonstrating resilience and adaptability.
Despite uncertainties, Canadian agriculture continues to adapt and thrive, driven by innovation and strategic adjustments to changing market conditions.