Is Canada a third world country?
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Fast Money & Foreign Objects
JPMorgan: Without More Softness in the Loonie, the Next Domino In Canada's Oil Patch Could Fall Soon
Oil sands shut-ins on deck.
Luke Kawa LJKawa
January 18, 2016 — 1:04 PM EST
The beaten-down Canadian dollar has to fall even further to support real economic activity, according to JPMorgan, putting pressure on the Bank of Canada to cut its policy rate on Wednesday.
The collapse in oil prices has dealt a serious blow to Canada's aggregate national wealth via a corresponding decline in the exchange rate. On a more micro level, the revenue generated per barrel of oil sold has obviously come down considerably for companies, but real activity remains solid. "We'll make it up in volume!" has been the order of the day among oil sands producers, and inasmuch as there has been acute pain, it's been borne by the oilfield services space.
For a look at how activity in the oil patch has been holding up, consider this: through October, non-conventional oil extraction industry output was up 1.6 percent year-over-year, while support activities for mining and oil and gas extraction have plunged nearly 47 percent.
Canadian oil producers sell a product whose price is denominated in U.S. dollars, yet the majority of their costs (which have come under the knife considerably) are in local currency terms. On Monday morning, the front month futures contract for Western Canadian Select, a heavier blend of crude, traded at around $14.50 per barrel (U.S.). Thanks to the massive decline in the Canadian dollar, however, heavy oil producers would receive over $21 (Canadian) per barrel. That's how the exchange rate is acting to cushion the blow for these firms, and is thus helping to sustain output and employment.
But according to Daniel Hui, executive director of global FX strategy at JPMorgan, we've nearly reached a point at which further weakness in Canadian heavy crude prices, in local currency terms, will threaten the prolonged resilience in activity.
"CAD will continue weakening as the BoC cuts next week and as WCS prices threaten to fall below the cliff of marginal operational costs per barrel, where further declines could generate new spillovers and thus impact the FX less linearly," wrote Hui in a recent note to clients. "[W]ith West Canada Select (WCS) now sitting just a dollar above the average per-barrel operational cost of $20 (Canadian), the risk is that any further decline will cause a whole new host of spillovers including potential shutdown and retrenchment of energy extraction and exports (with its attendant growth and balance of payment effects) or the potential of highly leveraged companies running operational losses, and the more contagious financial impact that might have in Canada, with broader spillovers."
JPMorgan
Economists who believe the Bank of Canada should maintain its policy rate at 0.5 percent on Wednesday have cited the dramatic decline in the Canadian dollar as all the monetary accommodation needed for now, and raised concerns of a deterioration in consumer confidence and spending if the currency moves another sharp leg downwards. A rate cut, they caution, could do more harm than good.
But Hui believes the loonie isn't excessively weak in light of the drop in oil and other commodity prices as well as the two-year rate spread between Canadian and U.S. government bonds.
"[W]hile CAD is notably optically weak, continuing to plunge 14-year lows versus the dollar, neither pricing nor positioning is extreme; indeed we believe risks continue to be considerably skewed to the CAD weak-side in the near-term, and that conditions for better stabilization and recovery will only come at or after mid-year," the strategist wrote.
Separately, TD Chief Canada Macro Strategist David Tulk observed that a the Canadian dollar had fallen roughly as much in the six months prior to the surprise January 2015 rate cut as it has in the six months following July's reduction in the policy rate. A little less than one-fifth of the decline in oil prices passed was offset by the decline in the Canadian dollar during both spans.
"While the decline is not nearly as dramatic in dollar terms, current prices are approaching levels where existing production becomes uneconomic," wrote Tulk, espousing the same view as JPMorgan's Hui.
These analyses contradict the notion that the exchange rate has done a sufficient amount of the "heavy lifting" for Canada's central bank, and therefore no further monetary stimulus is needed.
Moreover, some of the recent depreciation is presumably tied to the rise in the implied odds of a rate cut from the Bank of Canada on Wednesday, and is therefore prone to a reversal in the event that Poloz & Co. do not deliver on market expectations.
Canadian oil sands projects typically have high upfront fixed costs, but relatively low operational costs. That's one factor, apart from the decline in the loonie and cost control exercised by companies, keeping oil sands production aloft.
However, Hui notes that we're in a period in which the oil market is oversupplied, and it is therefore reasonable to expect the market to be brought back into balance at least in part from the shuttering of higher-cost production. One of the only ways Hui envisions Canadian production managing to avoid coming under the axe is if the currency is far more responsive to downward pressure in oil prices than it has been since crude began to fall in the second half of 2014.
"[O]ne of the few scenarios that would keep bitumen producers above marginal cost amid a further decline in global energy prices, is for CAD to depreciate substantially and at a much higher beta to oil price than has been the case in the past 18 months," he concludes.
If Canadian heavy crude production is curtailed because the decline in the loonie is insufficient to keep prices above the marginal cost of production, Hui thinks USD/CAD could break above 1.52 in response to the drop in activity.
JPMorgan: Without More Softness in the Loonie, the Next Domino In Canada's Oil Patch Could Fall Soon
Oil sands shut-ins on deck.
Luke Kawa LJKawa
January 18, 2016 — 1:04 PM EST
The beaten-down Canadian dollar has to fall even further to support real economic activity, according to JPMorgan, putting pressure on the Bank of Canada to cut its policy rate on Wednesday.
The collapse in oil prices has dealt a serious blow to Canada's aggregate national wealth via a corresponding decline in the exchange rate. On a more micro level, the revenue generated per barrel of oil sold has obviously come down considerably for companies, but real activity remains solid. "We'll make it up in volume!" has been the order of the day among oil sands producers, and inasmuch as there has been acute pain, it's been borne by the oilfield services space.
For a look at how activity in the oil patch has been holding up, consider this: through October, non-conventional oil extraction industry output was up 1.6 percent year-over-year, while support activities for mining and oil and gas extraction have plunged nearly 47 percent.
Canadian oil producers sell a product whose price is denominated in U.S. dollars, yet the majority of their costs (which have come under the knife considerably) are in local currency terms. On Monday morning, the front month futures contract for Western Canadian Select, a heavier blend of crude, traded at around $14.50 per barrel (U.S.). Thanks to the massive decline in the Canadian dollar, however, heavy oil producers would receive over $21 (Canadian) per barrel. That's how the exchange rate is acting to cushion the blow for these firms, and is thus helping to sustain output and employment.
But according to Daniel Hui, executive director of global FX strategy at JPMorgan, we've nearly reached a point at which further weakness in Canadian heavy crude prices, in local currency terms, will threaten the prolonged resilience in activity.
"CAD will continue weakening as the BoC cuts next week and as WCS prices threaten to fall below the cliff of marginal operational costs per barrel, where further declines could generate new spillovers and thus impact the FX less linearly," wrote Hui in a recent note to clients. "[W]ith West Canada Select (WCS) now sitting just a dollar above the average per-barrel operational cost of $20 (Canadian), the risk is that any further decline will cause a whole new host of spillovers including potential shutdown and retrenchment of energy extraction and exports (with its attendant growth and balance of payment effects) or the potential of highly leveraged companies running operational losses, and the more contagious financial impact that might have in Canada, with broader spillovers."
JPMorgan
Economists who believe the Bank of Canada should maintain its policy rate at 0.5 percent on Wednesday have cited the dramatic decline in the Canadian dollar as all the monetary accommodation needed for now, and raised concerns of a deterioration in consumer confidence and spending if the currency moves another sharp leg downwards. A rate cut, they caution, could do more harm than good.
But Hui believes the loonie isn't excessively weak in light of the drop in oil and other commodity prices as well as the two-year rate spread between Canadian and U.S. government bonds.
"[W]hile CAD is notably optically weak, continuing to plunge 14-year lows versus the dollar, neither pricing nor positioning is extreme; indeed we believe risks continue to be considerably skewed to the CAD weak-side in the near-term, and that conditions for better stabilization and recovery will only come at or after mid-year," the strategist wrote.
Separately, TD Chief Canada Macro Strategist David Tulk observed that a the Canadian dollar had fallen roughly as much in the six months prior to the surprise January 2015 rate cut as it has in the six months following July's reduction in the policy rate. A little less than one-fifth of the decline in oil prices passed was offset by the decline in the Canadian dollar during both spans.
"While the decline is not nearly as dramatic in dollar terms, current prices are approaching levels where existing production becomes uneconomic," wrote Tulk, espousing the same view as JPMorgan's Hui.
These analyses contradict the notion that the exchange rate has done a sufficient amount of the "heavy lifting" for Canada's central bank, and therefore no further monetary stimulus is needed.
Moreover, some of the recent depreciation is presumably tied to the rise in the implied odds of a rate cut from the Bank of Canada on Wednesday, and is therefore prone to a reversal in the event that Poloz & Co. do not deliver on market expectations.
Canadian oil sands projects typically have high upfront fixed costs, but relatively low operational costs. That's one factor, apart from the decline in the loonie and cost control exercised by companies, keeping oil sands production aloft.
However, Hui notes that we're in a period in which the oil market is oversupplied, and it is therefore reasonable to expect the market to be brought back into balance at least in part from the shuttering of higher-cost production. One of the only ways Hui envisions Canadian production managing to avoid coming under the axe is if the currency is far more responsive to downward pressure in oil prices than it has been since crude began to fall in the second half of 2014.
"[O]ne of the few scenarios that would keep bitumen producers above marginal cost amid a further decline in global energy prices, is for CAD to depreciate substantially and at a much higher beta to oil price than has been the case in the past 18 months," he concludes.
If Canadian heavy crude production is curtailed because the decline in the loonie is insufficient to keep prices above the marginal cost of production, Hui thinks USD/CAD could break above 1.52 in response to the drop in activity.
JPMorgan: Without More Softness in the Loonie, the Next Domino In Canada's Oil Patch Could Fall Soon
ADevilYouKhow
Rhyme Reason
88m3
Fast Money & Foreign Objects
Trudeau Set to Make Sales Pitch at Davos While the Canadian Economy Tanks
By Tamara Khandaker and Justin Ling
January 18, 2016 | 6:50 pm
As Prime Minister Justin Trudeau prepares to rebrand Canada's economy on the world stage in Davos, opposition parties are demanding a say on how his government plans on spending its way out of a weak loonie, tanking oil prices, and a sluggish economy.
As Trudeau gets set to board a plane to Switzerland on Wednesday, interim Conservative Party leader Rona Ambrose has requested a meeting with the prime minister "at the earliest opportunity to discuss the rapidly deteriorating economy," in a letter released to the public on Monday.
Trudeau's speech to the World Economic Forum is already receiving hype from the likes of Bloomberg, even despite Canada's precarious financial situation.
His sales pitch to world markets, and a raft of private meetings that will bookend it, is expected to focus on his planned infrastructure and technology investments. Reportssuggest that Trudeau will work hard to brand Canada as something more than an oil-reliant energy state, and that he's slated meetings with tech industry giants like Jack Ma, founder of online trading hub Alibaba.
Back at home, controversy is brewing over whether or not the new government will consult with opposition parties before drafting its inaugural budget.
Related: The Loonie Is Plunging, and Oil Is Dirt Cheap in Canada
Normally, members of Parliament from all parties, as well as industry groups, NGOs, and economists, are invited to discuss and debate federal spending ahead of a budget. But this time, amid a faltering economy thanks mostly to plummeting oil prices, that might not happen, at least according to senior Liberals who spoke to the Globe & Mail. Finance Minister Bill Morneau and Liberal MP Wayne Easter admitted they were "not sure" whether the government would strike a committee to get insight on the budget from Canadians.
The government wasn't able to get the committee off the ground before the current recess, and the House of Commons won't return until January 25. Easter told the Globe the time frame for holding hearings will be "very, very tight." Once the committee is officially formed, they'd have to quickly figure out how to meet—perhaps every day for two weeks, he said. But in order to have any impact at all, the committee would have to hold their hearings and release a report at least three weeks prior to the budget's release, which typically happens in March.
In her letter, Ambrose, who has embarked on a national tour ahead of the winter session of Parliament, said Morneau and Easter's comments were "disconcerting."
"The government has been in office long enough to have a clear plan to deal with the current economic situation, but the sense of urgency from the Trudeau Liberals has been completely absent," Ambrose said in the statement. "With markets tumbling, the oil price remaining depressed and the dollar weakening, the time is now for the government to demonstrate leadership."
New Democratic Party leader Thomas Mulcair, meanwhile, called the possibility of forgoing the budget hearings "unseemly," and noted that even Trudeau's predecessor, no fan of working with the opposition, invited the other parties to participate in budget discussions.
Related:Canada's Oil Country Is Bleeding Jobs and Suicides Are on the Rise in Alberta
At a press conference in Ottawa on Monday afternoon, Mulcair said he would be pressing the prime minister to scrap the Trans-Pacific Partnership, arguing it would cost "tens of thousands" of Canadian manufacturing jobs, in stark contrast to Ambrose, who said in her statement that she would be calling on Trudeau to sign and ratify the deal brought in by the Conservatives.
Speaking with reporters at a Liberal cabinet retreat in New Brunswick on Monday, Trudeau said he looks forward to meeting with Ambrose to discuss her concerns. He wouldn't answer directly, however, when asked if he was considering letting the deficit balloon to $30 billion — significantly higher than his promised $10-billion limit — in order to stimulate growth, as some economists have recommended.
He also wouldn't say whether or not there was a chance of the budget being released early — a senior government official told the Globe and Mail last week that the budget might come out on the third week of March.
Trudeau acknowledged that Canada has "underperformed in the way of growth in the past decade," blaming this lack of growth on his predecessors. "We need to turn that around," he said.
Addressing oil-related economic challenges in Alberta, Trudeau said "we recognize that for 10 years, there has been a government that has not understood the way to support our resource industry is environmental oversight and responsibility" and committed to meeting with provincial and municipal partners across Canada to "create an economy that will thrive while protecting the environment."
Trudeau Set to Make Sales Pitch at Davos While the Canadian Economy Tanks | VICE News
By Tamara Khandaker and Justin Ling
January 18, 2016 | 6:50 pm
As Prime Minister Justin Trudeau prepares to rebrand Canada's economy on the world stage in Davos, opposition parties are demanding a say on how his government plans on spending its way out of a weak loonie, tanking oil prices, and a sluggish economy.
As Trudeau gets set to board a plane to Switzerland on Wednesday, interim Conservative Party leader Rona Ambrose has requested a meeting with the prime minister "at the earliest opportunity to discuss the rapidly deteriorating economy," in a letter released to the public on Monday.
Trudeau's speech to the World Economic Forum is already receiving hype from the likes of Bloomberg, even despite Canada's precarious financial situation.
His sales pitch to world markets, and a raft of private meetings that will bookend it, is expected to focus on his planned infrastructure and technology investments. Reportssuggest that Trudeau will work hard to brand Canada as something more than an oil-reliant energy state, and that he's slated meetings with tech industry giants like Jack Ma, founder of online trading hub Alibaba.
Back at home, controversy is brewing over whether or not the new government will consult with opposition parties before drafting its inaugural budget.
Related: The Loonie Is Plunging, and Oil Is Dirt Cheap in Canada
Normally, members of Parliament from all parties, as well as industry groups, NGOs, and economists, are invited to discuss and debate federal spending ahead of a budget. But this time, amid a faltering economy thanks mostly to plummeting oil prices, that might not happen, at least according to senior Liberals who spoke to the Globe & Mail. Finance Minister Bill Morneau and Liberal MP Wayne Easter admitted they were "not sure" whether the government would strike a committee to get insight on the budget from Canadians.
The government wasn't able to get the committee off the ground before the current recess, and the House of Commons won't return until January 25. Easter told the Globe the time frame for holding hearings will be "very, very tight." Once the committee is officially formed, they'd have to quickly figure out how to meet—perhaps every day for two weeks, he said. But in order to have any impact at all, the committee would have to hold their hearings and release a report at least three weeks prior to the budget's release, which typically happens in March.
In her letter, Ambrose, who has embarked on a national tour ahead of the winter session of Parliament, said Morneau and Easter's comments were "disconcerting."
"The government has been in office long enough to have a clear plan to deal with the current economic situation, but the sense of urgency from the Trudeau Liberals has been completely absent," Ambrose said in the statement. "With markets tumbling, the oil price remaining depressed and the dollar weakening, the time is now for the government to demonstrate leadership."
New Democratic Party leader Thomas Mulcair, meanwhile, called the possibility of forgoing the budget hearings "unseemly," and noted that even Trudeau's predecessor, no fan of working with the opposition, invited the other parties to participate in budget discussions.
Related:Canada's Oil Country Is Bleeding Jobs and Suicides Are on the Rise in Alberta
At a press conference in Ottawa on Monday afternoon, Mulcair said he would be pressing the prime minister to scrap the Trans-Pacific Partnership, arguing it would cost "tens of thousands" of Canadian manufacturing jobs, in stark contrast to Ambrose, who said in her statement that she would be calling on Trudeau to sign and ratify the deal brought in by the Conservatives.
Speaking with reporters at a Liberal cabinet retreat in New Brunswick on Monday, Trudeau said he looks forward to meeting with Ambrose to discuss her concerns. He wouldn't answer directly, however, when asked if he was considering letting the deficit balloon to $30 billion — significantly higher than his promised $10-billion limit — in order to stimulate growth, as some economists have recommended.
He also wouldn't say whether or not there was a chance of the budget being released early — a senior government official told the Globe and Mail last week that the budget might come out on the third week of March.
Trudeau acknowledged that Canada has "underperformed in the way of growth in the past decade," blaming this lack of growth on his predecessors. "We need to turn that around," he said.
Addressing oil-related economic challenges in Alberta, Trudeau said "we recognize that for 10 years, there has been a government that has not understood the way to support our resource industry is environmental oversight and responsibility" and committed to meeting with provincial and municipal partners across Canada to "create an economy that will thrive while protecting the environment."
Trudeau Set to Make Sales Pitch at Davos While the Canadian Economy Tanks | VICE News
88m3
Fast Money & Foreign Objects
King Kreole
natural blondie like goku
...yeah we're fukked.
They'll be a fourth world country by 2017
The Fukin Prophecy
RIP Champ
I would reconsider that...fukk this im moving to the states once im done school
Trump or Hillary may be the POTUS...
We're fukked...
88m3
Fast Money & Foreign Objects
In Canada, the 8-Dollar Cauliflower Shows the Pain of Falling Oil Prices
By IAN AUSTENJAN. 20, 2016
Photo
Jim McKeen, owner of the McKeen Metro Glebe grocery store in Ottawa, said he had seen high prices before. But this time, he said, was “a perfect storm.” CreditDave Chan for The New York Times
OTTAWA — Steamed, sautéed or stir-fried, cauliflower is standard fare on many dinner tables. In Canada, it is a luxury.
A head of cauliflower there now goes for around 8 Canadian dollars, a tripling in price, the strange foodie fallout from the low price of oil and other commodities.
The recipe for high-priced cauliflower starts with the currency.
As prices for commodities have dropped, the value of the Canadian dollar has fallen, a direct link to an economy that is dependent on oil and other resources. It makes imports, like fresh American vegetables during the dark Canadian winter, look especially costly. Two years ago, one Canadian dollar was worth 93 American cents. On Wednesday, it stood at 69 American cents.
The drought in California, where Canadians get most of their vegetables in the off-season, just compounds the sticker shock. With less bounty in the fields, farmers’ prices, in American dollars, are higher.
As a result, fresh vegetables feel more like a splurge for Canadian consumers.
By IAN AUSTENJAN. 20, 2016
Photo
Jim McKeen, owner of the McKeen Metro Glebe grocery store in Ottawa, said he had seen high prices before. But this time, he said, was “a perfect storm.” CreditDave Chan for The New York Times
OTTAWA — Steamed, sautéed or stir-fried, cauliflower is standard fare on many dinner tables. In Canada, it is a luxury.
A head of cauliflower there now goes for around 8 Canadian dollars, a tripling in price, the strange foodie fallout from the low price of oil and other commodities.
The recipe for high-priced cauliflower starts with the currency.
As prices for commodities have dropped, the value of the Canadian dollar has fallen, a direct link to an economy that is dependent on oil and other resources. It makes imports, like fresh American vegetables during the dark Canadian winter, look especially costly. Two years ago, one Canadian dollar was worth 93 American cents. On Wednesday, it stood at 69 American cents.
The drought in California, where Canadians get most of their vegetables in the off-season, just compounds the sticker shock. With less bounty in the fields, farmers’ prices, in American dollars, are higher.
As a result, fresh vegetables feel more like a splurge for Canadian consumers.
- Photo
Cauliflowers for sale at a grocery store in Ottawa, Canada. CreditDave Chan for The New York Times
Iceberg lettuce sells for 3 Canadian dollars, up from the typical 90 Canadian cents. One head of broccoli goes for $4, compared with $1.50 for two in the past. Last winter, a head of cauliflower was selling for 2.50 Canadian.
“We’ve gone through this cycle before with the dollar,” said Jim McKeen, owner of McKeen Metro Glebe, a grocery store in downtown Ottawa. “But there were issues on prices anyways because of supply in addition to this whole fiasco with the Canadian dollar. It’s a perfect storm.”
The Canadian dollar, in part, reflects the trouble in the country’s economy.
For years, Canada rode the global commodities boom. The rapidly growing Chinese economy — and its seemingly insatiable appetite for commodities — helped increase the price of oil, potash, nickel and the other Canadian resources.
With China’s demand now faltering, commodity prices have reversed course. Oversupply of oil has similarly devastated its price. Both factors are taking their toll on the Canadian economy. The gross domestic product increased just 0.6 percent in the third quarter of 2015, after six months of negative growth.
Since October, the decline in the Canadian dollar, already looking shaky against a surging American currency, has picked up speed.
In many ways, a weaker currency is helpful to the economy. The United States is overwhelmingly the largest market for Canadian exports, which are now less expensive across the border because of the currency’s fall.
Continue reading the main story
GRAPHIC
Why Oil Is Plummeting
A glut of crude oil on the markets is pushing the price of oil down to levels not seen since the global financial crisis.
OPEN GRAPHIC
And commodity exports are almost all priced in American dollars. So foreign exchange gains have helped cushion some of the blow to Canadian oil producers and mining companies.
“From a household point of view, what Canadians see is that their dollar isn’t going as far,” said Craig Alexander, vice president of economic research at the C.D. Howe Institute, an economic analysis and policy group. “But it’s good for Canadians, it’s good for jobs. The primary driver for economic growth going forward has to come from nonresource export sectors.”
Canada’s tourism industry and other service sectors, which had been suffering, are already experiencing gains from the currency drop. Luke Azevedo, the film commissioner for Calgary Economic Development, said there had been a notable rise in production in Alberta, where large portions of the movie “The Revenant” and the television series “Fargo” were filmed last year.
“It’s across the country and the dollar plays a fairly significant role,” Mr. Azevedo said.
Speaking at the World Economic Forum in Davos, Switzerland, on Wednesday, Prime Minister Justin Trudeau emphasized Canada’s strengths in technology and education rather than its ailing natural resource sector.
“Our natural resources are important and always will be,” Mr. Trudeau said. “But Canadians know that growth and prosperity is not only based on what’s under our feet but particularly on what we have between our ears.”
Consumer costs are creeping up in a number of areas.
Photo
Prime Minister Justin Trudeau, in Davos, Switzerland, stressed Canada’s technology strengths.CreditAndrew Vaughan/The Canadian Press, via Associated Press
Just over a year ago, a 16-gigabyte iPad Mini 2 cost roughly the same in Canada and the United States. But this week, it was priced at $269 in the United States and 329 Canadian dollars.
Still, it could be worse. If the device’s price were based on the full movement in the exchange rate, the iPad would have been around 390 Canadian dollars.
Food is more price-sensitive.
The turnover in the grocery aisle, compared with, say, a clothing store, is faster, so changes in currency are more quickly reflected. And profit margins are thin, so grocery stores are less willing to absorb the losses.
The current collapse of the country’s dollar could have a more significant impact in supermarkets than it did in the early 2000s, according to Sylvain Charlebois, a professor at the University of Guelph in Ontario and an author of an annual study of Canadian food prices.
Professor Charlebois estimated that about 140 Canadian food processing plants have closed in recent years. Many were owned by multinationals that have replaced Canadian production with imports from their larger American plants. Kellogg’s ended a century of production in London, Ontario, just over a year ago.
The result, Professor Charlebois said, is that price increases will be seen throughout grocery stores and not just in their fresh produce aisles. Already, he said, some breakfast cereals have hit 10 Canadian dollars.
Continue reading the main story
MULTIMEDIA FEATURE
Oil Prices: What’s Behind the Drop? Simple Economics
The oil industry, with its history of booms and busts, is in a new downturn.
OPEN MULTIMEDIA FEATURE
“We’re only 35 million people in Canada,” he said. “It’s a very small market on the global scale.”
Certain foods may be more insulated. Professor Charlebois said prices had risen only slightly for dairy, poultry and eggs. Those products are protected by a government-sanctioned cartel. The system limits production by farmers to keep prices stable, if high, in comparison with the United States, while effectively shutting out price competition from imports through high tariffs.
After announcing on Wednesday that the country’s key lending rate would stay at 0.5 percent, Stephen Poloz, the governor of the Bank of Canada, noted the impact of oil prices on the cost of groceries. “I sympathize very much for those for who food is a bigger percentage of their spending,” he said during a news conference. But he added that over all, savings from lower energy costs had more than offset price increases for imported products.
Nonetheless, food prices in Canada are climbing, leaving wholesalers, restaurateurs and grocery store owners scrambling.
Fishermen in Prince Edward Island now send most of their oyster harvest to the United States to capitalize on the currency difference. That’s leading to shortages at Canadian fishmongers, forcing some restaurant owners to reimport from the United States.
“It’s mind-boggling that I have to buy Malpeque oysters from my American importer in Boston,” said David McMillan, the co-owner of Joe Beef and two other restaurants in Montreal, adding that the cost of the oysters from Prince Edward Island had risen to 120 Canadian dollars a box from about 90 Canadian dollars. “That’s a lot of money for not a special oyster.”
A similar pattern is developing with Canadian beef heading to the United States. It has prompted Mr. McMillan to develop menus based around less expensive cuts and the recipes that suit them, like stews.
“We’re getting back to basics,” he said. “You roll with the punches. A good restaurant adapts.”
Sal Howell, the owner of two Calgary restaurants, River Café and Boxwood, said she was placing a renewed focus on locally available produce, not easy during Canada’s winter. “There’s a lot to do to wean yourself off of head lettuce from California,” she said. “I think root vegetables will definitely be the kind of thing people are talking about.”
- http://www.nytimes.com/2016/01/21/b...-barrel-of-oil.html?smid=fb-nytimes&smtyp=cur
Interesting thread. We def need more input from our Canadian brehs
