The Rural Voice, 2000-03, Page 39Good times continue
for economy
The good times will continue in
2000 for the Canadian economy,
Harry Hasanwalia, deputy chief
economist with the Royal Bank
Financial Group told an agricultural
economic outlook conference in
Chesley, February 2.
Since 1997 economic predictions
have consistently been outperformed
by actual economic output,
Hasanwalia said and there's no
reason that won't happen again this
year. Looking ahead Hasanwalia said
he had a lot of optimism whether he
looked at the economies of U.S.,
Canada, Europe or even Asia and
Latin America which had suffered
because of a 1998 currency crisis.
The Royal Bank's Canadian growth
prediction of 2.3 per cent for this
year is probably low, he said.
Take away the special factors
related to oil which made
Newfoundland and Alberta the two
fastest growing economies, and
Ontario has had the best overall
growth, he said. Employment growth
has been strong, though down from
the rapid growth of the 1996-98
period. Last year the area from
Stratford to the Bruce Peninsula
actually had the fastest regional
employment growth in Ontario.
He also suggested the Canadian
dollar would increase to 72-73 U.S.
cents by the end of the year as
continued stronger markets for
commodities (40 per cent of
Canadian trade is still in
commodities) bring in more foreign
dollars.
There is always the potential for
something to stop the run-up of the
Canadian dollar, Hasanwalia said.
One factor would be interest rates,
but inflation seems to be low on a
world-wide basis. While there has
been some demand for higher wages,
increased productivity, due to
investment in new equipment, has
offset that. He predicted inflation
rates of 2-2.5 per cent over the next
couple of years. Interest rates might
increase to keep inflation in control
but probably not by more than .25 to
.5 per cent.
News
There's a remote possibility of a
recession but every recession has
followed a period of high interest
rates and interest rates seem under
control at the moment, he said.
The most likely dark cloud on the
horizon, is consumer retrenchment,
Hasanwalia said. Consumers have
not been saving enough and they
could decide they needed to save and
stop spending.
There's also the concern the stock
market is overvalued. Two of three
factors affecting stock values are in
good shape: long-term inteicst rates
and corporate risk. But the third
element, corporate profits, is not in as
good shape as last year.
If there was a market correction
similar to those in the past it would
have a wide -spread effect because
more of people's wealth is in the
stock market than ever before, he
said. But even if there's a stock
market correction the effect would
only be a 1-1.5 per cent slow down in
the economy, he said leaving growth
well above recessionary levels.°
Use technology
to increase profit,
reduce risk
The power of technology will
continue to grow and farmers should
seek to use it to increase profit and
reduce risk, investment advisor Brian
Davenport told farmers attending the
Royal Bank's economic outlook
conference in Chesley, February 2.
Technology is changing the nature
of businesses, Davenport said. Ford
and General Motors see their
businesses changing from man-
ufacturers of equipment to among the
world's largest internet providers as
cars become equipped with wireless
internet connections, he says.
In farming, the new technology
can be used to add value to farm
products through traceability. He
showed information from a website
in France where consumers can trace
their purchases right back to the farm
that produced it. You can take your
meat purchase home from the store,
type the serial number of the package
into the website and receive
information on the producer, the cow
that mothered the calf as well as the
animal that became the meat, the
livestock breeder and the finisher, all
backed up by third party validation
by a veterinarian.
The same kind of tracking is
available for fruits and vegetables, he
said. The cost of setting up such a
website is not large, he said: perhaps
$5,000 - $10,000. The system then
provides the consumer with
traceability whether the food is sold
in Paris, France or Paris, Ontario,
Davenport said.
If you were a consumer, what
decision would you make given this
option, Davenport asked. How much
extra is this added knowledge about
the origin of your food worth to you:
five cents a pound? Ten cents a
pound? Fifteen cents a pound?
And how much extra money can
this extra price return to the farmer,
he asked?
Just as farmers pay for good
advice for any other service, they
should look for technology providers
who can help them adapt to this new
world, he said. Look for non-
threatening places to learn about
using the technology, he advised.°
Kids don't have to go
to city to find work
There's is no need for rural young
people to go to the city to find good
jobs, a speaker at a panel discussion
at the Royal Bank's Agricultural
Outlook meeting in Chesley said,
February 2.
All agriculturally -related
businesses are feeling a shortage as
more people leave the business than
enter it, said Dann Olesen of
Markdale Tractor Sales in taking part
in a panel with other machinery
dealers.
"One of the biggest problems is
that a career in agriculture often
carries a stigma, especially in schools
in larger centres," Olesen said. "The
current bias.seems to be that is you
want to make a good living you have
to go to the city. This couldn't be
more wrong.
"The opportunity to continue to
live in the country and raise a family
with traditional rural values is still
very much available," he said. "Our
MARCH 2000 37