Booming Alberta has company
Published in the Ottawa Citizen, November 3, 2007
As you approach your leaf encrusted lawn for one last raking before the snow falls, pause a moment to consider Saskatchewan’s pulsating economy. If what comes to mind is vast horizons and endless skies, you’ve intuitively placed yourself in a narrative that sees this prairie province emerging from its agricultural cocoon and establishing itself in the global economy in new and unexpected ways.
Take, for instance, that fertilizer you applied to your lawn earlier this year. It contained potash, or potassium chloride, a mineral responsible for increasing root growth in plants. It’s the result of ancient inland oceans that once covered Saskatchewan and then evaporated, leaving behind an estimated 75% of the world’s potash reserves. Like other products in a commodities’ boom that includes agricultural produce, oil, gas, uranium and (soon) diamonds, potash is flying high in international markets, is being exported to every corner of the globe and in 20 years of mining has delivered $2 billion to provincial coffers.
So what is going on here? Have the hewers of wood and drawers of water changed the product line or is something else happening? With 44% of Canada’s improved farmland located in Saskatchewan, what happened to Canada’s bread basket?
That’s the old story, says Peter W.B. Phillips, an LSE trained economist, former deputy minister in the Saskatchewan government and now head of political studies at the University of Saskatchewan. The new story is similar to the old but with new twists and add-ons. “Everything we produce now involves new technologies, management and marketing strategies.”
Technology drives everything from resource extraction to product marketing and delivery, Phillips explained to me. This has placed Saskatchewan at the cutting edge in global niche markets. “For instance, oil wells were originally ‘stripper’ wells that shut down when prices went down. Now we have horizontal drilling wells that extract far more from the wells. Similarly uranium used to be a low grade yellow cake. Now it is high grade uranium ore.”
In other words, Saskatchewan products have moved up the value chain and that’s before you take into consideration biofuels, biotechnologies that are creating more resilient grains and seeds, the Synchrotron project in Saskatoon and the carbon capture and storage facility at Weyburn. Agriculture remains the largest single sector in the production of goods but value is added “off farm”. Hauling grain, for instance, is now a commercial operation and feedlots have consolidated the cattle finishing process, leaving fewer and fewer people on the farm. Saskatchewan remains Canada’s breadbasket, says Phillips, but now it is only part of a larger picture.
In any case, there is no one driver of the economy any more. Prices may be high for minerals but they are also strong for grains and livestock.
Don’t forget, Phillips reminds us, that Saskatchewan is the largest exporting jurisdiction in Canada. It uses only a fraction of what it produces and the rest has to be sold elsewhere. In 2002, for instance, Saskatchewan was responsible for 10% of world trade in wheat, 60% in durum, and 40% in canola. Canada, in the meantime, uses only 5% of Saskatchewan’s potash production.
“Saskatchewan is massively interconnected with the global economy. Ontario has cars, Alberta has oil, both of which are sold in the United States. Saskatchewan is not so dependent on one market.”
Taken together, it’s meant a boom in the services sector, notably housing. To the relief of many, it’s also meant an upswing in in-migration, reversing a decades old trend to depopulation that was held in check only by high aboriginal fertility rates.
With a GDP rate of 4.7%, Saskatoon has the highest rate of municipal growth in Canada, edging out even Calgary. According to a recent RBC press release, Saskatchewan “is now vying with Alberta for the title of Canada’s growth leader.”
Is this why a generous pharmacare program is part of one package voters will consider in Wednesday’s provincial election? “Social developments are not tied to economic prospects here. Medicare was a question of doing the right thing,” says Phillips. “Questions of how the economy and social considerations should relate are foundational to all liberal democracies,” he adds. “In this election, Saskatchewan has one future with two interpretations on offer.”
Today, as never before, that future is full of vast horizons and endless skies.
MARGRET KOPALA’s column on western perspectives appears every other week.