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What is Impact of Canadian Loonie on the British Columbia's Lumber and Seafood Industries
The Canadian Dollar (CAD) known as the loonie or the bird on its single-dollar coin is often associated as the ugly duckling or the soaring swan in the currency world due to its unprecedented exchange rate fluctuations (Isaac, 2017). The loonie is affected by the changes in commodity prices, interest rates, inflation, country's productivity, international trade scenario, foreign investment and debt payments (TIPS, 2004). Loonie's performance against other currencies plays a vital role in the performance of domestic industries involved in exports and imports. In this report, the lumber and seafood industries of British Columbia are analysed to determine the level of impact of loonie and capitalizing its performance as a competitive advantage.
British Columbia's Lumber Industry
British Columbia (BC) is one of the global leaders in supplying lumber products which contribute significantly to Canada’s exports (Appendix A). In 2016, softwood lumber products accounted for nearly 50% of all BC forest product exports. In 2016, around 81.4% of softwood lumber production volume was spruce, pine or fir (SPF), and 18.6% was from other species such as cedar, Douglas fir, and hemlock (Appendix B). It major export markets are in Europe, Asia, Australia, the Middle East and the United States. The US is its largest market which accounted for about $4.6 billion in sales in 2016 (Appendix C).
Lumber production is consistent and comparable to the production levels in the last decade when the US housing starts averaged around 1.5 million between 1995 and 1999 and it is still looming around 1.18 million (Appendix D). Prior to the US housing crash, the BC lumber export market was highly reliant on it. Now other markets, especially China, have gained prominence and acquired Canada's export share value. Due to its heavy reliance on exports, BC's lumber industry is subject to the exchange rate fluctuations of loonie to determine the price, value and volume of lumber exported to other countries.
British Columbia Seafood Industry
BC's seafood sector includes the main activities of production from commercial fishing and aquaculture (Appendix E). It is one of the largest producers of farmed Atlantic salmon in the world. The major species in which BC is a leading players in Canada are farmed and wild salmon, halibut, rockfish, farmed oysters, tuna, hake and sea urchins. Total sales of primary seafood production in B.C. were $1.17 billion in landed and farm-gate value from about 100 species – an increase of 31.2 % above 2015. Close to 2,400 vessels harvested 22.2 % more wild fish, shellfish and marine plants in 2016 than in 2015.
The 188,000-tonne commercial fishery harvest generated a total landed value of $392.8 million – up 2.3 % over 2015. In 2016, farmed fish, shellfish and marine plants were produced on 683 aquaculture operations. Total estimated GDP for seafood amounted to $415 million and accounted for 0.2 % of B.C.'s total GDP. In 2016, B.C. exported $1.3 billion in seafood products to 80 markets (Appendix F), an increase of 17 % in value from 2015. Top Five Seafood Export Markets: United States $799 million (60 %), China $265 million (20 %), Japan $106 million (8 %), Ukraine $31 million (2 %), and Hong Kong $24 million (2 %). The fastest growing export markets of the top 10 markets were Ukraine (95 %), South Korea (61 %), Germany (51 %) and China (31 %).
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