Above average crop prices, a weaker currency and easing cost pressures
    are main reasons

    TORONTO, Nov. 6 /CNW/ - Despite the growing likelihood of a global
economic recession next year, a combination of still relatively high crop
prices, a weaker Canadian dollar and an easing in cost pressures are expected
to lead to another good year for Canada's overall farm sector in 2009
according to TD Economics in a new report entitled "2009 Prospects for
Canadian Agriculture." While some simmering down in cost pressures will be
welcome news for livestock producers, next year will continue to prove
challenging for that area in light of the recent imposition of
country-of-origin labeling (COOL) for beef and pork products by the U.S.
government.

    Recovery from rollercoaster ride

    2008 has been a rollercoaster year for agriculture prices, with prices
surging to the moon during the first half of the year only to retrace those
gains in subsequent months. An unexpected surge in global crop supplies has
been a key dampening influence. And while agriculture markets are not as
vulnerable to a global recession as other commodity areas, they have not been
immune to the general flight out of commodities and other perceived riskier
assets. TD Economics believes that the further downside risk to prices is
limited and that a recovery should be in place by mid-2009. As well, the
Canadian dollar, which is expected to trade in a lower range of 80-90 US cents
in 2009 compared to nearly parity through much of this year, should continue
to prop up prices in Canadian-dollar terms.

    Emerging markets and ethanol mandates creating demand

    Though the speculative element is unlikely to return to the same extent
in the foreseeable future, crop prices should remain above their 2002-07
average level. For one, firm demand in China and India and a number of other
emerging markets is expected to remain in place both in 2009 and beyond. Total
global imports of food and live animals to China alone have more than doubled
since the start of the decade. Second, while lower oil prices will likely curb
the push for alternative energy sources, existing ethanol mandates in place in
the U.S., Canada and abroad will continue to create incremental crop demand.
We'll likely also see U.S. livestock prices rise, fuelled by lower inventories
of cattle and hogs. Unfortunately for Canadian livestock farmers, the benefits
of higher U.S. prices are likely to be muted by falling demand for Canadian
imports due to the newly-implemented U.S. country-of-origin labeling (COOL)
legislation, which has increased the cost to U.S. packers of segregating
products from outside the country.

    Farm incomes boosted by lower costs

    While U.S.-dollar agricultural prices overall should end 2009 on a firmer
note compared to the start of the year, the average level of prices forecast -
which is expected to be well below that of 2008 - should be a drag on farmers'
net incomes next year. However, a number of other factors will help to provide
an offsetting boost to bottom lines in 2009, including a softer Canadian
dollar, falling energy prices, anticipated lower transportation and fertilizer
prices, and a gradual easing in credit conditions. A simmering down in cost
pressures facing farmers will be the number one factor supporting net farm
incomes over the near term.

    Future looks bright

    TD Economics released a positive report last year, entitled "A New Era
for Agriculture." The thesis of the report was that even though agriculture
markets would always be prone to short-term swings, the sector's overall
longer-term fortunes, especially for crops, had brightened in the wake of
rising incomes in emerging markets, government mandates for ethanol and other
opportunities in areas such as organics. Despite this year's flurry of
developments and ongoing challenges in the livestock sector, TD Economics
stands by that assessment. While significant challenges remain, the pendulum
will continue to swing to the sector's unprecedented opportunities in the
global marketplace.

    To view the full report go to: www.td.com/economics

For further information: Derek Burleton, TD Bank Financial Group, (416)
982-2514