10/11/2012 02:14 EDT | Updated 12/11/2012 05:12 EST

Bank of Montreal sees fertile year ahead for Canada's agriculture industry

CALGARY - A report by the Bank of Montreal says Canada's real agricultural output is on track to increase 7.5 per cent this year, laying fertile ground for the sector's performance heading into 2013.

David Rinneard, the bank's national manager of agriculture, calls the rebound impressive and says improved demand, prices and growing conditions have been a clear boon to the industry.

BMO says emerging markets with expanding populations and incomes are a key growth opportunity for the sector.

Producers are also shifting toward higher-return products other than wheat that are of high demand in developed economies.

Canadian growers also benefited from a rise in corn and soybean prices caused by a major U.S. drought this summer.

Although Ontario suffered from dryness as well, generally Canadian growing conditions were much better than they were south of the border.

One downside is that the high Canadian dollar has been tough on agricultural exporters.