The chief economist at Farm Credit Canada is telling producers to keep a sharp eye on the Canadian dollar this year as it is expected to have big impact on the agriculture and agri-business sector.

Energy prices, commodity prices, investment landscape, and global economy will all play a role, but not as big as the one the Canadian dollar will play.

J.P. Gervais, says that the Canadian dollar will impact every business across the entire agri-food supply chain in 2017.

“It is quite clear that the Canadian dollar, or the value of the Canadian dollar, especially in regards to the U.S. dollar, has been a major driver of 2016 farm income and profits, overall in the agri-food supply chain, all the way from farm input suppliers to processors, I think 2017 is going to be much of the same,” says Gervais.

A low Canadian dollar will help producers by keeping the demand for Canadian agricultural commodities healthy, which is important especially considering the higher projected supply of livestock and crops.

“For cow-calf operators it is a little bit of the opposite. We’ve enjoyed our recorded strong profits in 2014, 2015, 2016 and then 2017 is probably going to be a year where it is going to be below average for the past five years. Nevertheless, they will remain profitable.”

According to Gervais, food processors are also expected to reap the benefits of a low Canadian dollar, because Canadian food products are less expensive for foreign buyers, while at the same time it is more difficult for foreign food processors to compete in the Canadian market.