Taking stock of how agriculture has fared during the pandemic might seem like a daunting task.
Looking towards what the new year has in store for 2021 and how agriculture has weathered the pandemic, Bernard Tobin was recently joined by Patrick Lemelin, vice president of agriculture at National Bank, to talk about the impact of COVID-19 on the economy and agriculture and the outlook for 2021.
The COVID-19 pandemic has been the worst recession in our history, followed by what could be called the biggest monetary stimulus in history, notes Lemelin, in a presentation he recently gave at Farm Management Canada’s annual AgEx Conference.
“It was quite special because traditionally in a recession you see a decline in the GDP between three and five per cent,” says Lemelin. “What is special from that recession, is pre-pandemic, it was going well, so we basically shut down the economy to try to fight against the virus, it led us to a minus 18 per cent peak in GDP, which we haven’t seen in modern history,” Lemelin says.
As soon as the economy reopened, consumers wanted normalcy, and were eager to get that piece of their lives back, says Lemelin, which is why he wasn’t surprised at the speed of economic recovery. He was surprised, however, at the size of stimulus put forth by the governments.
“To respond to that major decline in GDP, governments were the most supportive across the country, a very intense stimulus for business, for consumers, very active in the bond market in order to support the liquidity,” he says.
As for the impact of the recession on agriculture? Lemelin thinks the agriculture sector is the “Steady Eddie” compared to other industries. “Usually recessions are good for agriculture, why? because people need to eat,” says Lemelin. “So the demand is not affected by a typical recession, and governments are stimulating their economy when there’s a crisis or downturn or recession.”
Meat packing plants and adjustment to the way consumers are buying or eating make up the difference for agriculture as compared to the transportation sector as an example.
National Bank is expecting an average or just over average year in 2021 says Lemelin. The Canadian dollar may move up into the range of 80 to 81 cents — the movements are complex and it depends on the U.S. dollar of course.
Catch the full conversation for the outlook for agriculture in 2021: