The COVID‐19 pandemic: Anticipating its effects on Canada's agricultural trade

Abstract

With the deep recession now forecast for the world economy, trade can be expected to fall even more steeply. Agricultural trade will be less significantly affected, being insulated by its relatively low income elasticities of demand. However, a drop in the range of 12%-20% in real trade value should be expected. Canada can be expected to share in this, but, within agricultural exports, cereals will be least affected. This minimal expected impact to cereals stems partly from the risk of wheat export bans by Russia and Kazakhstan, due to increases in wheat prices. Livestock, pulses, and horticulture exporters can be expected to face a larger decline in trade prospects and revenues. An equally large threat, along with falling incomes in our trade partners, is their policy responses, particularly the potential increase in import restrictions. These may take the form of more costly inspections, tightened SPS and food safety regulations, and protectionist measures from competing domestic producers.