Canada’s maple syrup industry could well tap into better profits in 2019 through greater trade access to Asia and higher U.S. demand. Black Press file

Canadian profits limited due to berry oversupply denotes FCC

First ever outlook on country’s horticultural sector focuses on big berry and maple syrup exports

It’s a first for Farm Credit Canada (FCC), as the corporation steps up with an outlook on 2019 in the horticultural industry.

More specifically, the FCC focussed on three sectors that deal at lot in exports — maple syrup, blueberries and cranberries.

J.P.Gervais, FCC’s chief agricultural economist, expects maple syrup will continue its strong profit margins with blueberries improving over last year while cranberries are anticipated to be close to breaking even in 2019.

“We didn’t cover all of the products involved in this very diverse sector. We decided to stick to commodities that are from across the county, but are also big Canadian exports,” said Gervais.

RELATED: Guarded but encouraging outlook for Canadian crops in 2019

Cranberries

Prices in this sector have struggled for a few years as production far outsourced demand, something Gervais says will continue to define the market this year.

While cranberry production south of the border rose three per cent in 2018, reports suggest that Canadian production increased upwards of 70 per cent.

“It takes time for that kind of supply to be absorbed by the marketplace,” Gervais said.

“Producers here did a bit better last year because they sold to the organic market or had some specialty production products.”

RELATED: Canada’s food processing growth trend anticipated to continue in 2019

While the U.S. is doing a few things to battle the oversupply such as limiting 2019 sales to 75 per cent of historical volumes, trade tensions and the remaining excess supply will keep the squeeze on Canadian prices.

“Canada’s preferred access to the European Union may open doors as U.S. exports become relatively more expensive due to a 25 per cent tariff on cranberry juice concentrate,” noted Gervais.

“Meanwhile, Canadian access to Japan and other Asian nations will be enhanced by the implementation of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.”

Some other good news for producers is the steady growth of consumption in Canada — an average of 5.67 pounds per person annually — a trend that should continue with consumers moving more toward dried varieties and juices.

Blueberries

Gervais explained this sector has been hindered by an over-abundance of supply the last few years, which has been more difficult for producers to handle than those with cranberries.

“Profitability in Canada should perform better, mostly because you have to give the marketplace time to absorb some of the very strong production of recent years,” he stated.

“A decline in inventories should also lead to stronger farm-gate (direct from the producer) prices as demand globally grows, even with the tight margins.”

READ MORE: Loonie, trade will have affect on Canadian agribusiness

Unlike cranberries, production of blueberries declined in Canada in 2018. Quebec, Canada’s largest producer, saw a drop of 4.4 per cent — to an estimated 75 million pounds — in 2018 with B.C. production jumping an estimated 15 per cent.

Gervais said these figures — plus a record harvest in the U.S. Pacific Northwest — weren’t enough to offset a North American production decline due to weather and other production issues. That included a 33 per cent drop in Michigan, which is a top five U.S. producer, to just 66 million pounds.

However, record breaking consumption in the U.S., which is estimated at 1.79 pounds per person in 2017, combined with more opportunities in Asia will see profitability rise for the Canadian sector.

READ MORE: Low strength of loonie to help poultry producers

Maple syrup

Meanwhile, the 2018 total harvest in Quebec hit 118 million pounds, a decline from the 152 million pound record in 2017. Combine that with reserves and there remains more than enough product to supply all domestic and global demand this year. Canadian demand equates to an estimated 1.43 pounds (2017 figure) per person.

Gervais noted that new markets for maple syrup along with greater access may lead to higher demand as well.

READ MORE: Canada’s dairy sector expected to remain profitable as import market starts to expand

Challenges

While growth in these sectors is expected in Canada due to a consumer trend toward locally sourced products, the industry as a whole faces upward trending interest rates and inflation in Canada and the U.S.

“A proper evaluation of the financial risk is especially important for producers, since a lengthy period of climbing interest rates could use up revenue just to cover paying off interest on loans,” he said.

“As well, expect a weaker global economy due in part to uncertain trade and economic tensions to hinder possible profit margins.”

On the plus side though, Gervais noted a weaker Canadian dollar, which is forecast to average 75 cents USD in 2019, will give back some of the possible foreign market losses through greater exports to the U.S.

This is the sixth of seven articles in a series looking at the agricultural sector for Canadian producers.

Just Posted

Bashaw leads fight on water

Concerns raised convinced other municipalities to halt water increase

RCMP makes arrests in significant Bashaw area theft cases

Suspects caught due in large part to wonderful public assistance, reporting

Smash and grab at Bashaw Sports

Police looking to identify suspects in brazen early morning theft

Fashion Fridays: A masterclass on H&M knitwear

Kim XO, helps to keep you looking good on Fashion Fridays on the Black Press Media Network

Couple who bought $120k banana duct-taped to wall say artwork will be ‘iconic’

Pair compared it to Warhol’s ‘Campbell’s Soup Cans,’ which was initially ‘met with mockery’

Alberta to change drug coverage for 26,000 patients, expects to save up to $380M

Patients being treated with biologics on government-sponsored drug plans must switch to biosimilars

Race to replace Andrew Scheer could be a crowded one

Many familiar faces, such as Maxime Bernier, Jason Kenney, Doug Ford and Kevin O’Leary, have said no

Pet medical neglect cases on the rise in economically ailing Calgary

Alberta’s unemployment rate was 7.2 per cent in November compared with 4.4 per cent five years ago

Alberta premier opens war room to promote ‘truth’ about energy industry

Effort includes a $2.5-million public inquiry into foreign funding of anti-oil advocacy groups

Feds urge Air Canada to fix booking problems as travel season approaches

The airline introduced the new reservation system more than three weeks ago

Most Read