The purpose of this document is to describe the features of the Agriculture and Agri-Food Canada (AAFC) Medium Term Outlook for Canadian Agriculture covering the period 2008 to 2018. The outlook is an attempt to outline a plausible future of the international and domestic agri-food sectors. It serves as a benchmark for discussion and scenario analysis.
The outlook makes specific assumptions and outlines their implications. Since it assumes that policies remain unchanged from existing legislation, the outlook is not a forecast of future events. In particular there are no assumptions made regarding the outcome of the Doha round of trade negotiations. Finally, it is assumed that there will be no significant animal disease outbreaks or unusual climatic conditions over the period of the outlook. The outlook was produced with two econometric models of agricultural markets based upon information available in November 2008.
The AGLINK/COSIMO model of the Organization for Economic Cooperation and Development (OECD) and of the Food and Agriculture Organization (FAO) was used to produce the international outlook and the AAFC Food and Agriculture Regional Model (FARM) was used for the national outlook. The medium term assumptions used and published by the OECD/FAO in the Agricultural Outlook 2008-2017 are by in large maintained in the AAFC’s outlook but updated to reflect short term price forecasts produced and released by the U.S. Department of Agriculture (USDA) in November 2008. The November 2008 macroeconomic forecast published by the International Monetary Fund (IMF) was
also incorporated in the outlook and in particular a 32% reduction in the crude oil price in 2009. AAFC assumed that 3 years will be necessary before the crude oil price returns to the level used in the OECD/FAO medium term outlook. The outlook for crop year 2008-09 and 2009-10 may not coincide with the forecast published in AAFC January Bi-Weekly Bulletin because this publication takes into account more recent information. The Canadian macro-economic forecasts for 2008 to 2013 are from the Conference Board of Canada outlook published in December 2008 except for the crude oil price and the exchange rate in 2009, 2010 and 2011 which reflects the IMF outlook. The average year-toyear percentage change over that period is used for the remainder of the outlook period for each macro-economic variables used in FARM.