(Reuters) - Canada’s farm sector is in line for better than average growth in 2012 and beyond due to rising demand from fast-growing emerging markets like China and India, the Bank of Montreal (BMO) (BMO.TO) said on Thursday.
The sector will expand by 2.5 to 3 percent in 2012 and in subsequent years by 2 to 3 percent, the Canadian lender said in a report. The growth figure is based on projected production and prices.
Canada is the top producer of canola/rapeseed and the seventh-biggest wheat grower in the world.
Crop prices are expected to ease this year, but remain at relatively high levels, while production looks set to rebound after two years of flooding, wrote the report’s author, senior BMO economist Kenrick Jordan.
Drought that has damaged South American corn and soybean crops is expected to underpin prices.
Limiting the farm sector’s growth are a strong Canadian dollar and higher costs of fertilizer and fuel, the report said. The Canadian dollar recently touched its strongest level in seven months. <CAD/>
Reporting by Rod Nickel in Winnipeg; Editing by Jeffrey Hodgson