EDITOR’S NOTE Poor Saskatchewan

Pity poor Saskatchewan. Blessed with prime farmland, plentiful oil and gas reserves, huge deposits of uranium and enough potash to last a thousand years, it’s nevertheless having trouble making ends meet. Prices for all those commodities are at or near their lowest level in years. As a result, for the first time Saskatchewan is facing billion-dollar deficits. The saddest part of this sorry situation is that the price manipulations of these commodities are largely the result of political wrangling. Uranium has always been subject to political pressures and is probably the most regulated market in the world. Oil and gas prices over the past two decades traced the rise and fall of perhaps the most successful government cartel in the twentieth century — until it collapsed in 1985.

Today, farmers everywhere are sufffering from a trade war between the European Community and the United States. Their rivalry has driven grain prices down by one third in the past four years. And as agriculture goes, so goes potash. As more farmland goes out of production — the result of lower prices and subsidies to not grow crops — the demand for fertilizer diminishes, too.

But Canada’s potash producers have managed remarkably well to keep sales at good levels, up 6.8% in 1986 for example and only slightly below peak levels. That has meant increasing market share which has annoyed competitors. The problem is that prices have continued to fall: average prices shipped from Canadian mines fell to about $83 a tonne in 1986 from $95 in 1985 and $115 in 1984.

It’s a struggle, but potash producers appear to have turned the corner — or at least are partway around the curve. Capacity utilization is expected to be at its optimum by 1991 compared to 63% in 1986 and new capacity will have to be put in place in the 1990s since other world producers have very limited potential for expansion. Canamax Resources and the Manitoba government are spending $6 million on a feasibility study to develop potash production in that province and may bring in the Indian government as an equity-holding partner — and an assured customer. BP Resources also has a commercially viable potash deposit in New Brunswick but, because of market conditions, is uncertain whether to proceed with development.

The last thing Canadian potash producers need now is an anti- dumping complaint from U.S. producers such as the one Jim Sutherland, a Saskatoon-based writer, describes in this issue. The last thing the U.S. needs is another industry artificially propped up by government largesse. Canada is the market leader in potash production and that’s based on the quality of the our deposits and the expertise of our miners. We’ll sell potash at what the market will pay, and — although the Americans seem to have trouble realizing it — other producers are going to have to live with that free enterprise axiom.

The plain truth is that U.S. producers can’t compete. Our advice to them is, to paraphrase a former U.S. president, if they can’t stand the heat, get out of the kitchen.