There's not much good news in the most recent TD Bank Financial Group forecast of Saskatchewan economic growth.
It significantly downgrades the province's expected gross domestic product (GDP) growth in 2010 to a modest 2.1-per-cent increase this year from the 3.2-per-cent increase the bank predicted earlier. And what's potential worse is that this might be a relatively optimistic projection. The TD report suggests growth could fall to a meagre one-per-cent increase.
Nowhere will this economic downgrade be felt more than in rural Saskatchewan where the impact of this year's flooding is playing a major role in the province's economic slowdown. It's particularly unfortunate, given that the past couple years of good crops with relatively strong commodity prices was finally giving rural Saskatchewan a bit of an opportunity to recover.
But if there is any reason for rural Saskatchewan to take solace in these numbers, it is this: They serve as a pretty sharp reminder to city folk how important agriculture still is to the Saskatchewan economy.That was a lesson that was pretty easy to forget in 2008 and previous years when both NDP and Saskatchewan Party governments in particularly were riding a wave of potash, oil and gas prosperity. (That the revenue from potash, oil and gas - including land lease sales - also comes from rural Saskatchewan is something else that city residents don't always quite get.)
However, reality somewhat hit home in 2009 when the world economic downturn caught up to Saskatchewan. The phenomenal $3.7 billion in potash, oil, gas and Crown land sales revenue originally predicted in the March 2009 budget dwindled to almost $1.8 billion by year's end. (Of course, this was the net result of the government's overly optimistic potash projections that proved to be $2 billion off base.)
Losing a devastating one-fifth of all provincial government income would have been an even bigger disaster were it not for Saskatchewan farming. In fact, what's been lost in all the talk in recent years of the province's booming economy is the role agriculture has played.
For example, realized net farm income in 2008 - the year of record resource revenue - was a then record $1.6 billion. The biggest reason Saskatchewan didn't face an even bigger economic disaster in 2009 was that farming was even better than the previous year. A 6.6-per-cent decline in fuel, fertilizer and machinery and an even better crop last year boosted 2009 net farm income $1.9 billion. Given the collapse of potash, it couldn't have come at a better time.
But if city folks and others were oblivious to how much farming saved our economic bacon last year, perhaps they will be slightly more cognizant of how important farming still is to the Saskatchewan in the wake of TD Bank report.
The bank cites the 70-per-cent increase in June rainfall as the reason one third of the province's normal seeded acreage won't be producing a crop this year. With crop production accounting for about nine per cent of Saskatchewan's real GDP - compared with about one per cent in Alberta and three per cent in Manitoba - the unseasonably wet year will Saskatchewan hard with a potential $1.6-billion loss in gross revenue, according to the TD Bank.
"Lower farm incomes could trickle through to other parts of the economy, such as less consumer spending, which could lead to a slower pace of consumption growth in the province," the report explained. "In fact, with agricultural output falling by nearly a third, and taking these indirect effects into account, real GDP could drop by about two per cent."
Obviously, this isn't the best news for anyone.
But rural Saskatchewan might take at least a little satisfaction in knowing how important farming still is to the province's economy.
Murray Mandryk has been covering provincial politics for over 15 years.
