“I feel the most important concern is the unknowns. There’s simply not a whole lot of info on the market. My spouse sits on a number of agricultural boards and even they’re seeing a whole lot of unknowns as to how this might unfold,” Ehgoetz says. “Much like what we’ve seen up to now throughout COVID or US tariffs on China in 2018, these unknowns trigger market uncertainty. What I feel we’re seeing proper now’s simply a whole lot of concern on the market on the markets.”
Whereas the worth shock is already hitting some farmers, Ehgoetz notes that the weak point we’re now seeing within the Canadian greenback may assist offset among the instant points. Most agricultural commodities are priced in USD, so among the tariff prices shall be absorbed by the forex quite than the farmer. Regardless of that, he sees ache forward, partially due to the distinctive monetary state of affairs many farmers are in.
Farmers are usually considerably asset wealthy by way of land possession, however cash-strapped as they function companies with important prices and seasonal payouts. Ehgoetz provides that farmers are ‘market takers.’ They’ve nearly no management over the worth of what they develop and promote and no management over the worth of lots of their core inputs like fertilizer and vitality. In actual fact, many farmers have not too long ago skilled a distinct tariff shock when Canada imposed tariffs on Russian potash following the outbreak of battle in Ukraine.
The response he advocates for is making an attempt to lock in costs the place doable. Ehgoetz and his spouse, for instance, have already offered a few of their 2025 and 2026 crops on agricultural futures markets, promoting that future crop when costs had been increased. He notes that there may even be instances when choices methods can be utilized to guard value contracts and offset a few of these pricing shocks.
Past serving to with these enterprise choices, Ehgoetz is providing key counsel as a monetary advisor. He makes use of plans as a touchstone with shoppers and might spotlight what they’ve already discovered as viable sources of liquidity within the occasion of a protracted financial or market downturn. He highlights areas of price that they will attempt to handle and works on small tweaks and portfolio rebalances that may preserve shoppers on monitor. Amidst a macro-induced disaster, he tries to maintain his shoppers centered on what they will management.
