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Weak Canadian dollar reduces regional exports, but numbers can be 'deceiving'

GRAND FORKS - The Canadian dollar remains significantly weaker than its U.S. counterpart, which may be affecting exports from northern states like North Dakota and Minnesota.

Graphic by Carli Greninger / Forum News Service

GRAND FORKS – The Canadian dollar remains significantly weaker than its U.S. counterpart, which may be affecting exports from northern states like North Dakota and Minnesota.

The value of exports to Canada from the north-central region of the U.S., which includes the Dakotas and Minnesota and stretches to Missouri and Ohio, were down roughly 10 percent in the first half of this year compared to the same time period in 2014. North Dakota saw its export values drop almost 24 percent to $1.5 billion, compared to a 17 percent slide in Minnesota, according to the U.S. Census Bureau.

"I think the exchange rate (is) the key factor," said Phil Cyrenne, an economics professor at the University of Winnipeg. One Canadian dollar was worth around 76 U.S. cents this week, continuing a slide that started in mid-2013, when the currencies were last on par.

But some weren't sounding the alarms over the trade figures.

Dean Gorder, executive director of the North Dakota Trade Office, said those numbers can be "deceiving." He pointed out that North Dakota's largest export to Canada is technically oil and gas, which is actually shipped there to "piggyback" on an existing pipeline system only to return to the U.S. That phenomenon is happening less often as development in the Bakken region "matures," Gorder said.


Shifting commodity prices may obscure the actual amount being exported north, Gorder added.

"It ends up being a statement that even though export dollars are down, in some cases volumes are flat or even up," Gorder said, adding that data showing actual volume of goods going to Canada from North Dakota are harder to come by.

The value of North Dakota machinery exports to Canada dropped 28 percent this year, chemicals dipped 25 percent and petroleum and coal products were down 29 percent, according to the Census data. Agricultural products, the fifth-largest export to Canada, was actually up 60 percent in the first six months of this year.


Jim Lilleberg, the vice president of marketing at Titan Machinery in Fargo, said the exchange rate is making it "really difficult to do business with a Canadian grower."

Arctic Cat, which has a plant in Thief River Falls, Minn., exports 30 percent of its sales to Canada, according to its latest annual report. The ATV and snowmobile manufacturer expected the "unfavorable foreign currency exchange" to reduce net sales by $12 million to $15 million in its fiscal year 2016.

The trade figures follows concerns from those in the Grand Forks retail and hospitality industries that the exchange rate is discouraging more Canadians from coming here. The number of personal vehicles crossing the border at Pembina, N.D., was down 8 percent to 145,600 in the first six months of this year, according to the Bureau of Transportation Statistics.

Ashok "Smiley" Thakker, who owns seven hotels in Grand Forks, said his business has been significantly affected by the low exchange rate.


"When it goes below 80 cents, then you see it right away," he said.

Barry Wilfahrt, president and CEO of the Chamber of Grand Forks and East Grand Forks, said the lower Canadian traffic may prompt the business community to take more interest in bidding for things like athletic tournaments.

"I think the hotels and restaurants have talked more about how do we capitalize more on some of the North Dakota events," he said. "I think you're going to see more push for that in the coming months if the rate stays low."

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