(June 19 2012- GEOnomic Investing)
The agri-business sector is one of Canada’s top five industries, and accounts for approximately 8.5% of GDP. Canada is a major producer agriculture products, wheat, barely, and canola, and a minor producer of rice, corn, and soybeans. Canada’s largest agriculture crops in order are: grains and oilseeds (34%) wheat, durum, oats, barley, rye, flax seed, canola, soybeans, rice and corn; red meats (24%), dairy (12%), horticulture (9%), poultry and eggs (8%).
The country also produces a great deal of crop nutrients: phosphorus, nitrogen and potash (potassium), urea, and gypsum.
Soft Commodities
Major soft commodities produced in Canada, in quantities large enough where the country has a significant influence on pricing include wheat, canola, and barley.
Wheat
Wheat is grown throughout Canada, but the majority of production is in the western Prairie region. Spring non-durum wheat is the largest category of wheat grown in Canada, with 75 percent of the harvested area and 75 percent of production. Winter wheat is 3 percent of the harvested area and 6 percent of production. Durum wheat is 22 percent of harvested area and 19 percent of production. Spring wheat (durum and non-durum) is planted throughout Canada from May to June, and harvested from August to October. All durum wheat in Canada is spring wheat. Winter wheat is planted from September to November and harvested in July and August.
Canola
Canola was developed in Canada, making it the world’s only “Made in Canada” crop, and an extremely valuable one at that, annual exports of canola seed, oil, and meal are valued at over $3 Billion. Annual Canadian exports total 3 to 4 million tonnes of the seed, 800,000 tonnes of canola oil and 1 million tonnes of canola meal.
Barley
Barley is grown throughout Canada; however, most of the crop is grown in the western Prairie region. Barley is planted in spring, from May to June, and harvested from August to October .Most barley is harvested for grain, although in Alberta and British Columbia, around 15 percent of planted barley area is cut and used as a feed for livestock.
Fertilizer
Canada plays a large role as a fertilizer manufacturer and exporter. Canada is the world’s largest potash producing country, accounting for 37% of world, and 85% of North American production. Canada is also the world’s largest potash exporter with about 40 percent share of international trade. Potash reserves are extensive and are the largest in the world, and potash reserves in Saskatchewan are sufficient to meet current demands for hundreds of years. Although transportation to markets adds significantly to delivered cost, Saskatchewan potash operating costs are believed to be among the lowest in the world.
Canada accounts for about 8.9% of the world’s nitrogen trade. Nitrogen facilities are located in Alberta (more than 50 percent of Canadian production), with the other facilities located in British Columbia, Saskatchewan, Manitoba and Ontario.
How to Invest in Canadian Agriculture
The best way to gain direct exposure to Canadian agriculture is to purchase stocks of Canadian companies that operate in this sector. If interested directly in Canadian investments fertilizer stocks are the best bet. Major Canadian fertilizer producers include Potash Corporation of Saskatchewan (NYSE:POT), Agrium (NYSE:AGU), and Intrepid Potash (NYSE:IPI). Sherritt International (TSE:S) ( a diversified company also has exposure to metals.)
If interested in juniors, consider Karnalyte Resources (TSE:KRN), Western Potash (TSE:WPX), and Encanto Potash (CVE:EPO).
Alternatively, if you are not interested in stocks you can invest directly in futures. Of Canada’s major agriculture exports, wheat, canola, and barley futures can be purchased. Canola, barley, and wheat all trade on the ICE.