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68 THE RURAL VOICE
NEWS
BANK FORECASTS MIXED WEATHER
The outlook is supposed to be
brighter for mid -western Ontario's live-
stock producers, but is not as optimistic
for cash croppers, say experts from the
Royal Bank.
About 150 farmers heard five speak-
ers from the bank make forecasts for the
year ahead at one of the bank's "Update
'90" seminars held recently in Chesley.
The good news for cattle and hog
producers came from Bill Gray of the
Royal Bank's agricultural services divi-
sion. He sees benefits coming from the
declining Canadian exchange rate, in-
terest rates that he said should begin
falling this spring, and lower feed costs.
Fat cattle could hit $90 to $95 this year,
Gray said, with the best price coming in
April from strong demand leading up to
the barbecue season.
Although Ontario's share of the beef
market is declining and moving west to
Alberta, Gray said packers here don't
have the capacity to slaughter anyway,
and that should keep them bidding up
prices.
Despite declining beef consumption
since a peak in 1976, the beef herd is
expanding since in hit bottom in 1986.
Gray also had good news for hog
producers, predicting that they could ex-
pect from $70 to $75 cwt. this year, with
a falling U.S. inventory despite USDA
predictions for an expanding herd.
But while predictions of cheaper
grain are welcomed by livestock farm-
ers, the picture isn't as bright for cash
croppers. Com will hover in the $2.80 to
$3.17 range, he said, down from $3.60
last year, mostly because of a predicted
increase in production which will boost
world supplies despite a low carryover.
Soybeans, faced with a 14 per cern
increase in world production and a
heavy carryover, could plummet to the
$5.35 to $7.11 range from an average of
$8.08 in the 1988-89 crop year.
"If you're a bean grower in Chat-
ham, it means one thing. If you're a
feeder then it's good news," Gray said.
Roy Carver, manager of the Royal's
agricultural centre in London, talked
about input costs, saying seed prices
will go up slightly this spring, but not as
much as in 1989, while fertilizer will in-
crease 3 to 4 per cent and fuel consump-
tion and prices will be up marginally.
Land prices increased for the first
time since 1981, some 14.5 per cent,
Carver said, "maybe due to non-farm
purchases." He predicted increases in
areas close to larger metropolitan areas,
"but not in Chatham."
He also gave a price overview for
other commodities, saying soft white
winter wheat has lost $50 a tonne since
the phasing out of the two -price system
and could fall more.
Royal Bank economist Mike Gre-
gory of Toronto sees only a half a per
cent growth in the Canadian economy in
1990, with a "50-50" chance of a reces-
sion which won't be as serious as the last
one in 1981-82. He wasn't sure which
way inflation — which will run in the 4
to 6 per cent range — was headed, but
predicted that the Goods and Services
Tax alone would add 1.2 per cent to the
rate in 1991.
The Bank of Canada interest rate, up
6 per cent since 1987 to 13.41, should
decline 1.5 per cent by the third quarter,
in tandem with falling U.S. rates.
Gregory warned, though, that in the
long term rates could go up to protect the
Canadian dollar, which could fall to
81.5 or 80 cents U.S. later this year.
"There is danger in relying on for-
eign investment to finance the (govern-
ment) deficit because they can pull out
their money," Gregory said, and this
leads to a highly volatile dollar. "It (the
lower dollar) will give us some export
opportunities."
Part-time farmers are getting more
attention from the Royal, said George
Arnold, vice-president of the Royal's
agricultural division. He added that the
bank sees agriculture dividing into two
distinct sectors: full-time corporate
farmers and those who work off the farm
full-time or part-time.
For the part-timer, the Royal is offer-
ing a new basic service option at a low
cost, Arnold said. The service includes
simple and convenient loan documents,
life insurance, detailed account state-
ments, and automatic revolving operat-
ing loans.
Arnold said the Royal remains
strongly committed to agriculture in
Ontario, with 100 bank professionals
serving farmers through 24 agricultural
centres.OJim Fitzgerald