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Under the Agridome
Philip Shaw 10/23 5:25 AM
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 resembles November more than mid-October. So it's hurry 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-19 cases keep increasing at elevated levels as Quebec and Ontario hope to avoid widespread shutdowns. There has even been an elevated COVID-19 caseload in Manitoba and Saskatchewan. COVID-19 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. Five-dollar plus corn and $13 plus soybeans have helped the agricultural economy. That has to do with many things discussed here regularly. Its 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. A quarter of a percent doesn't lie. It almost seems science fiction low to me.
COVID-19 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 that is mostly open. It has benefited from 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 things going. Over time, out governments have opened things up and we have begun to pick up the economic pieces.
Inflation went almost to zero. That's very dangerous, which to some extent, continues Thursday. 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 1% to 3%, so maybe we are building that back. Needless to say, we're still not out of the woods, especially with COVID-19 infections rising.
As we move ahead, I'm hoping for better things. Simply put, we need more economic output despite COVID-19. Our GDP last August put us at 5% below pre-COVID-19 levels and manufacturing sales were 7% below pre-COVID-19 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. Comparing your numbers to post-pandemic levels will be skewed.
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 labor that may or may not be able to harvest crops in our horticultural sector. Despite problems with COVID-19, almost all of these inconveniences were dealt with. Add in a good crop across western and eastern Canada, and its been a success story in a very trying year.
Needless to say, how can you have a successful year when 9,858 Canadians have died so far in this pandemic, and on Oct. 22, we had 841 new infections in Ontario and 1,033 in Quebec. These are real people -- fathers, 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 COVID-19. Much of southeast Asia is the same. That's a ray of sunshine in a cloudy environment.
Surely the sun will shine again so I can get my remaining soybean acres off and 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.
Thank you for your all your correspondence.
Regular Mail: Philip Shaw, 29552 St George St, Dresden, Ontario N0P 1M0
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