There are three things on my mind this morning which I think will be of great importance to the province of Saskatchewan and its economy. One is weather related and there isn’t a darn thing we can do about the weather and the other two items, I think will be significant economic factors in Saskatchewan’s economy and we can do something about them if we put our mind to it.
The forecast for wide-spread frost this week in Saskatchewan will be devastating for the agricultural community if it occurs in a severe manner. A lot of the crops in this province were planted later than normal and have been held back by the cold, rainy wet weather we experienced this summer. Frost will downgrade a significant part of the crop and therefore, downgrade prices farmers will receive. If this should occur, it will really bring into focus the missed marketing opportunities and prices we have experienced because the 2013 crop could not be moved by Canada’s railroads on time.
In this last week’s Western Producer, there is an article about the difference in price between gasoline and diesel fuel in North America and that we will probably experience a diesel fuel shortage on top of rising prices this fall and through the winter. If you remember last winter, we had a spread of up to 25 cents a litre more for diesel fuel than gasoline. Saskatchewan’s economy and all facets of our production is driven by diesel fuel. Because so much of our economy relies on transportation and the timely movement of raw products, Saskatchewan is particularly vulnerable to rising diesel prices and scarcity of that product when we get into rationing like that which happened late last fall.
A few cents a pound often times is the difference for making a sale or not with many of our commodities. Large jumps in the price of diesel fuel can easily eat up those few cents a pound. The question that must be asked is….and you have seen me ask it many times in this commentary and elsewhere is….why for the love of Mike do we not have more refining capacity in western Canada and particularly in Saskatchewan which is dedicated to the production of diesel fuel? We have an abundance of the lower grade oils which are suitable for diesel production.
The third item which has caught my attention is the fact that CHS which is one of the largest farmer-owned co-ops in the United States is going to begin the construction of a very large nitrogen fertilizer plant just a couple of hours south of the Canada-US border in North Dakota. The press release announcing this endeavour mentions that this plant will be one of the largest urea fertilizer operations in North America and will certainly rival in size the former Saskferco now Yara plant at Belle Plain, Saskatchewan. When this plant is completed, it will employ 160-180 people.
It looks like Saskatchewan has lost another opportunity to manufacture fertilizer at home in a jurisdiction which should be as cost competitive as any in North America. We have all of the necessary raw ingredients here and the know how to make this happen. So we need to ask ourselves what exactly has Brad Wall’s Sask Party’s government been doing to let opportunities such as this slip by. In fact the question has to be asked on the diesel fuel question because the supply of that product and its price directly affects how well our economy will do in the future. And even on the first item I raised today, the fact that so much of our grain and other products were not marketed in a timely manner last winter begs the questions of where our provincial government and its supposed-influence in national affairs was when the trains weren’t moving.
There are estimates that Saskatchewan lost up to $2.5 billion in sales during that period of time – monies which could come in really handy if a lot of this year’s crop is frozen and downgraded. There should be a lot of people in this province asking the same questions that I ask this morning.
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These issues must be debated for “The Right Reasons”.