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Agricultural Markets and Trade

Exports of agricultural products are a mainstay of the Saskatchewan economy. The province is endowed with one of the world’s most important agricultural resource bases. The Canadian Prairies are ideally suited to dryland crop production, being characterized by a cool climatic regime that naturally controls many diseases and pests, and an adaptable to extensive mechanized agricultural production. Individual farmers enjoy high productivity. As a result, farms generally produce far more than their consumption requirements and, indeed, the consumption needs of Saskatchewan’s entire population. The surplus is available for export, which can take a number of different forms. The base of Saskatchewan’s agricultural production is cereal grains and oilseeds. While grains can be exported in unprocessed form, they can also be fed to livestock that can be exported either as live animals or as processed meat products. Grains can also be processed for human consumption in the form of breads, bakery goods, and pastas. Similarly, oilseeds can be exported in bulk, or processed into vegetable oil and protein meal and then used domestically or exported. More processing and other value-adding activities prior to export lead to more employment and economic activity in Saskatchewan, fostering economic spin-offs and broad-based economic development. Consequently, it has been a long-standing public policy in Saskatchewan that adding value to agricultural products prior to export should be encouraged.

While grains and oilseeds and their respective value-added products such as beef, pork, and Canola oil and meal are the overwhelming components of Saskatchewan’s agricultural export base, a range of pulses, cool Climate fruits and Vegetables also thrive in the province, particularly in some of its micro-climates. These products enter specialty market export supply chains and are a growing segment of agricultural exports. In recent years, Specialized Livestock such as bison, nutraceuticals, and organic products are being produced and adding diversity to the province’s exports. Saskatchewan’s cold winters, however, mean that fresh fruits and vegetables are not available locally in winter months and must be imported. Of course, tropical products are also imported. The steady globalization of consumers’ culinary tastes and the increasing ethnic diversity of Saskatchewan’s population have led to rising imports of specialty and international foods, often in a highly processed form.

Saskatchewan is one of Canada’s most successful trading provinces. Over 40% of the province’s gross domestic product is derived from exports; in terms of agricultural goods and services, the contribution of exports is considerably greater. While this export success is something the farm and agribusiness sector can look on with pride, it is also a source of vulnerability for the province. Export success has also meant export dependence. In itself, export dependence is not a bad thing, but when exports are not well diversified, volatility in export markets or the decline in the relative value of key exports translates into an unstable economic environment and reductions in relative prosperity. Both tend to inhibit investment. International markets for major agricultural products, particularly prairie grains, exhibit considerable volatility. This is exacerbated by high levels of agricultural protection in some major potential markets such as the European Union, and the heavy subsidization of agricultural production and exports by Canada’s competitors. As a result, the sector is often characterized as “boom or bust.” This increases the risks associated with investing in not only agriculture but also the wider provincial economy. Unfortunately, the prices of most major agricultural commodities tend to move together, meaning that it is difficult to diversify the risks associated with export market volatility within the province’s agricultural sector. Further, some of the province’s major non-agricultural exports such as potash (an input to fertilizer) are also dependent on international agricultural markets.

Rapid rates of technological change in agriculture have resulted in food becoming relatively cheaper over the long run, particularly in grains. This means that, over time, Saskatchewan’s grain exports are able to buy less and less imports of non-agricultural products. Thus, it is important to encourage more processing and other activities that add value in Saskatchewan prior to exporting, because highly processed products can fetch premiums in international markets.

In normal years, Saskatchewan exports nearly $2 billion in wheat. Wheat exports, along with international sales of Barley ($150 million/year) are coordinated by the Canadian Wheat Board, a uniquely Canadian state trading agency. In 2002, live animal exports exceeded $400 million, and meat products added $130 million. Pulses and vegetable exports were nearly $400 million, while canola exports were in excess of $400 million.

William A. Kerr

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This web site was produced with financial assistance
provided by Western Economic Diversification Canada and the Government of Saskatchewan.
University of Regina Government of Canada Government of Saskatchewan Canadian Plains Research Center
Ce site Web a été conçu grâce à l'aide financière de
Diversification de l'économie de l'Ouest Canada et le gouvernement de la Saskatchewan.