It is rather interesting that in Saskatchewan, a province whose existence is basically based on agriculture, that now as its economy moves more into the world of resources, it is still tied to farming because potash is so reliant on the farm sector for sales.
Moving forward, farming, while retaining importance to the economic fabric of the province, will not be as important as in the past.
It has a lot to do with the evolution of agriculture. By nature farm commodities are not likely to be highly valued in the immediate future. While ultimately agricultural production will have to be higher valued as the world population increases on a finite land resource, that has been expected for years, and has not happened as technology and farm practices have broadened production to new areas.
It is also a case where many spin-off jobs in farming have been lost, especially in Saskatchewan. The processing sector in both hogs and beef cattle has essentially disappeared as the major processing plants have closed with almost no hope of a return. If the BSE border closure could not successfully restart beef processing, in a world of an open border and American processing scale, we aren't going to see those jobs back in Saskatchewan anytime soon.
Certainly the move to a more diversified economy in Saskatchewan has created something of a renaissance. There is a feeling at present that this province is on the verge of the best times in its history, and that feeling is supported by the way it has weathered a worldwide recession, and a government miscalculation which threw its 2009 budget completely off the rails.
While 2009 was a disaster in terms of potash sales, there is no doubt potash is a vital component to the resource sector which is leading Saskatchewan's economic resurgence.
As bad as last year was, there is a realization that even in the short term, potash demand has to grow. That expectation goes directly back to a growing world population, and the need for farmers to fertilize in order to keep people fed.
There are reports which are forecasting an increase in demand for potash of up to five million more tonnes in 2011. The PotashCorp, the world's biggest manufacturer, and a cornerstone of the industry in Saskatchewan, is making the forecast, and that figure alone bodes well for the sector.
Such one year growth speaks to why a company such as BHP Billiton is actively looking at ways to get into the potash business. BHP is a massive company in terms of mining in the world, but has not been in potash. That will change soon.
BHP is exploring actively in Saskatchewan, including looking at a new mine site in the Saskatoon area, and doing work south of Yorkton.
It's also BHP which launched a $40 billion US bid to purchase Potash Corporation of Saskatchewan. That move could be significant given the PotashCorp is the biggest in its field, and would then have the scale of BHP to power it further.
It is forecasts of increased potash demand, supported by population growth which has the potash sector so active.
It's still tied to farming, but it will continue to diversify the economy in the province, and that is the important thing as the farm sector stagnates, weighed down by the idea of cheap food.
