It’s clear that Alberta’s economic challenges in the last year have largely resulted from a contraction in the petrochemical industry due to the lower global price of oil. While such boom and bust cycles are not unexpected, they often lay waste to our provincial economy for years! What does that mean for your investment choices today? Hansen Land Brokers would like to suggest that you seriously consider increasing your investment in agricultural land.
US Energy Independence
It is America’s stated goal to increase their national energy independence. With a Trump presidency this could be emphasized more than ever. New gas field discoveries and general American protectionist policies may be even more likely to decrease their imports of Canadian oil and gas. Perhaps it’s not the time to increase your personal oil/gas sector investment.
Agricultural Exports Increasing
The Financial Post in a March 5, 2013 article strongly suggests that the three industries that will lead Alberta’s economy in the next decade are Forestry, Agriculture, and Tourism. When comparing agriculture’s 27.6% share of GDP in 1985 to the 36.1% share in 2014, we see a definite pattern of growth. All agriculture — whether crops or livestock — requires significant tracts of land. Today’s second largest economic export is agricultural (crops and livestock), second only to petrochemicals. Again this suggests agricultural land is an investment to consider.
The recent CETA trade deal signing between the European Union and Canada is projected to boost Canadian-EU trade by 20% as a result of decreasing tariffs on Canadian goods in the EU. In 2015, the Canada-South Korea trade agreement was signed. Additionally the TPP deal just signed would have a similar effect of decreasing tariffs and would be a positive for Canadian agricultural exports.
Since BSE (mad cow disease) is pretty much in the past, some long-delayed markets closed to Canadian beef have been opening up again. Mexico and Taiwan are two of the most recent to ease Canadian beef restrictions.
Considering these factors together, Hansen Land Brokers feel that there is significant reason to increase your investment in agricultural land in Alberta. This already second-place industry is growing in Alberta and catching up as the petrochemical industry faces a significant downturn. The potential for rising agricultural land values appears solid. Come in and discuss with us your agricultural investment portfolio. Hansen Land Brokers is conveniently located in High River, Alberta. Call us today at 403-652-1798.