Recently I followed the president on his first international visit to Ottawa, Canada. I didn’t have a Marine helicopter (within budget, of course) or an escort, but I conducted four presentations with producer groups while I was there. The following are some interesting perspectives.
First, Canada is lagging the U.S. concerning the breadth and depth of the recession. Western Ontario is reeling from layoffs in the auto industry. Eastern Ontario, near the capital city, is still doing very well.
Canadians are very concerned about protectionism. As economies are contracting around the world, protectionism is alive and well. Some feel that COOL legislation and the local food movement are forms of protectionism.
The Canadian banking system is being touted as a model for the American banking system. Yes, there are five major Canadian banks that go through a major review every five years by a federal regulator. They are careful not to allow investment banking and commercial banking to mix. The U.S. had a similar system after the Glass-Steagall legislation was enacted out of the Great Depression. However, some of our legislators allowed exceptions and overturned this landmark law, which created shadow banking, resulting in the subprime lending crisis. The rest is history. These politicians are now blaming regulators for the problems. Perhaps they should look in the mirror.
Finally, most Canadian agricultural enterprises are doing well, with the exception of beef and hogs. The agribusiness community is very astute in conducting planning, developing strategies, and following up with execution. Land values are still very strong in most provinces, very similar to the U.S.
P.S.: Despite the good news, most producers realize that when the U.S. economy catches cold, Canada catches the flu, so they are bracing for eventual economic fallout!
Editor’s note: Dave Kohl, Corn & Soybean Digest trends editor, is an ag economist specializing in business management and ag finance. He recently retired from Virginia Tech, but continues to conduct applied research and travel extensively in the U.S. and Canada, teaching ag and banking seminars and speaking to producer and agribusiness groups. He can be reached at sullylab@vt.edu.