This morning I woke up to a sight which I was hoping not to see for another month. There was "white" stuff on the front lawn i.e. snow. On the Swenson farm, we still have yellow peas, spring wheat, oats, flax, soybeans and grain corn still to harvest. Because all or part of these crops are irrigated, they did not have the early maturity of other crops in southern Saskatchewan which were heat stressed.
A hail storm on July 9th further slowed development. So we are now experiencing what much of the rest of the province has experienced in September with early snowfalls and the inability of harvest to proceed as we would like. It's very difficult to generate cash flow with crops still standing in the field and being downgraded by Mother Nature. Our provincial and federal governments need to monitor this situation very closely because farm families are going to have a tough time paying the bills on outstanding input costs and other associated agricultural issues. This cash flow problem resonates through the entire business community in our province.
On a happier note, it appears late last night that Canadian and American negotiators have come up with a template for a new trade agreement. Changes to supply management and how Canadian manufactured automobiles flow across the US border are not big issues in Saskatchewan. The preservation of Chapter 19 in the old NAFTA agreement - the dispute resolution mechanism - appears to have been preserved by Canada's negotiating team. In my view, this is crucial to our wellbeing.
The free flow of our commodities through a mutually-beneficial trading relationship to our largest customer is crucial to our wellbeing. We cannot have that relationship subject to the vagaries of US politicians and a US court system which is subject to political pressures as we have seen with the Kavanaugh circus surrounding his appointment to the United States Supreme Court.
Evidentially the new agreement will not be referred to as NAFTA because Donald Trump needs to be able to go out and brag to his political base about how he whipped the Mexicans and Canadians into line and is going to make America great again. I have little concern about what political grandstanding Donald Trump does as long as we have his signature on an agreement which I can take to my banker when planning next year's crop. The same goes for people in all the other commodity businesses that export our commodities to the United States, Mexico and around the world. It will be interesting to look at the details of this agreement and see if the Trudeau government has kept its promise to Canadians of waiting until the last minute to signing a good agreement and not being bullied into a bad one by Mr. Trump.
My final comment of the day is related to the above topic. There was an announcement last week in Alberta that Canadian companies have allied themselves with Chinese ones to construct another oil refinery in Alberta. If built, it would be the 2nd largest in western Canada at 167,000 barrels a day of oil use. This announcement is good for Alberta, it is good for western Canada and it tells me that the Chinese are prepared to put money into creating finished petroleum products in Canada to send back to their domestic markets.
I have felt for a long time that we should be pipelining finished product to the west coast rather than concentrating exclusively on raw oil and particularly bitumen from the oil sands. A spill of gasoline or diesel fuel does not cause the environmental concerns of raw heavy oil because it floats to the surface rather than sinking to the bottom of any affected water body.
The development of the Energy East Pipeline and increased refining capacity I believe are fundamental to continue prosperity in western Canada. The up to $40 a barrel spread between the WTI price and the local Canadian western price for our oil going south is an absolute travesty.
Progressive Conservative governments in the 1980s understood this fact and partnered with FCL and Husky to remedy part of the problem. Our visionless Sask Party government needs to get off the pot and start thinking about a longer term view and solutions rather than their 4 year election windows to save their political backsides.
These issues must be debated for “The Right Reasons”.