Climate change, protectionism and automation are three forces Bloomberg identifies as major disruptors to the global economic outlook. They’re also among the biggest trends for Canadian agri-food supply chains to watch in 2020. With the potential to both promote and inhibit growth, these forces will shift the profitability of Canadian businesses.
Climate change and protectionism shift ag production and profitability
According to a recent climate change report, Canada is warming at twice the rate as the rest of the world. That’s the long-term forecast. But while forecasts for Canada in 2020 vary, partly due to the challenge of forecasting precipitation, it’s safe to say that both weather and trade disruptions have recently increased volatility of Canadian ag production. Canada's 2019 production of canola, corn and soy fell year-over-year, as a result of either challenged growing conditions or protectionism (or both) that resulted in fewer seeded acres.
In 2020, these are the production and trade risks that will still be present for Canadian agri-food businesses. They’re significant because they’re global.
- New market access issues disrupting trade patterns
- Seasonal drought or excessive rain at seeding and harvest (and the disease and pests too much moisture brings)
- Any shutdown in food manufacturing poses a risk for the entire supply chain, especially in sectors lacking recent investment.
Major global co-occurring heat events are becoming more likely. These hold the potential to re-charge global food insecurity and boost import-dependent countries’ efforts to stockpile ag and food commodities. We may see more intense bidding for available crops. Uneven global growing conditions can raise input costs for Canada’s food processors who import ag commodities or semi-processed food products.
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