FCC Event with J.P. Gervais

We were fortunate to attend an event with J.P. Gervais this week in Calgary thanks to Farm Credit Canada.
Below are some pictures of his presentation and my commentary and notes from his presentation:

• Inflation seems to be staying above 3% = may require more of an economic slow down. Consumer spending must come down for that to happen.
• Pop growth this past year is the highest in 60 years.
• To what effect does government increased taxation (carbon tax) cause more total spending by consumers and government and fuel inflation.
• Food inflation was usually about 1% above total inflation %
• Short term house costs are the big challenge for Canadians, longer term health care costs will be the big conversation.
• Short and long term borrowing rate averages may not be done going up (a hike in fall 2023 or early 2024 is probably) but hard predicting where and when the trend moves.
  • Rate hike by late 2023 or early 2024

• Cost of funds went up this quarter, 1 year rate higher vs 5 and 10 y rate (not normal) 
• Question for borrowers: What % of your loans are coming due ? May indicate if you should take 5 year right now.
• ​Alberta unemployment and employment levels both going up! (due to more people coming here.)
• Markets - in theory wheat $ is lower than should be. Canola has room for upside growth. Corn and in turn Barley price is low but that’s probably the right price with lower exports of corn from the USA.
  • Ethanol market mature = stable in USA, (40% of corn used in ethanol in USA!) bio diesel room to grow in USA. (Soy and Canola)
• 2023 profitability map - higher/opportunity land cost - lower yields means poor profitability numbers before crop insurance factored in.
• Land rents probably follow land price increase generally, where does it slow down?
  • ​Alberta land value up 6% year over year on average.
• Cattle:
  • Feeder cow price strong. Economic slowdown that hasn’t happened yet (or will it). Cattle profitability seems to be high with room for more upside.
    • But heifer count 12% down since 2020...

My favourite comment from J.P.:

• Productivity gains in ag have allowed cost of food inflation to be as low as it has been.
• Any tax on agriculture, for example carbon tax can’t be passed on by farmers, so how do we as society deal with this?