Saskatchewan·Opinion

Farmers are the real victims of the GTH land deal

According to the news-media version of the land scandal at the Global Transportation Hub, taxpayers lost about $14 million to opportunistic land developers. In reality, the cost of the scandal could be in the billions. And the real victims are farmers.

'This is our last chance, and we are screwing it up': Paul Sinclair

Shipping agri-food products out of an intermodal facility in containers offered our province a final, decisive chance to access a massive, increasingly diverse overseas market for food, writes Paul Sinclair. (Global Transportation Hub)

According to the news-media version of the infamous land deal at the Global Transportation Hub, taxpayers lost as much as $14 million to opportunistic land developers. In reality, the cost of the scandal could be in the billions — and the real victims are farmers.

Shipping agri-food products out of an intermodal facility in containers offered our province a final, decisive chance to access a massive, increasingly diverse overseas market for food. The scandal jeopardizes the entire GTH project. The government said as much. 

"No matter what happens to it, [the GTH] will be under such intense public scrutiny it would be difficult for a private business or private tenant to want to become a partner to move into that. So we need to look for something else," Justice Minister Don Morgan said on July 25. 

Containerization allows farmers to do something for which they have yearned for 90 years: to find their own markets, work directly with small- and medium-sized overseas importers and set their own prices.

Saskatchewan is an agricultural export province and we are fiercely proud of it. Let's use some easy-to-find numbers. In 2016, we exported $14.4 billion of agri-food products, up 32.1 per cent over the 10-year average, government promotional literature tells us. Sounds like an occasion for another round of high-fives. 

But look at Shandong Province in China, a province in a country that is supposed to be clamouring for our foodstuffs so it can feed its people. In 2016, Shandong Province exported $15.6 billion US in agri-food products (about $21 billion Cdn back then), about one-third the value of Canada's entire agri-food exports for the year. They are selling into Japan, South Korea and Southeast Asia, markets where we are desperate to establish ourselves. These are the fruits of containerized agricultural trade.

The container did not just speed things up, the New York Times observed back in 2006. It created winners and losers. Cities that bet big on container traffic — like Qingdao (in Shandong), Los Angeles and Hong Kong — became central to the world's economy while others stagnated. The same choice faces our agriculture industry.

For our part, we are not very enthused about containers. In 2016, the Port of Vancouver shipped out almost 200,000 empty containers, more than 70,000 of which were 20-foot containers, perfect for agricultural commodities and difficult to come by in Saskatchewan. Think of the irony of this: Empty bulk cars bound for the Prairies meet empty containers on the rails returning to high-value markets in Asia.

Wheat, pea, durum and canola seed exports account for about 65 per cent of the 18 million tons of exports, virtually none of which is or ever will be moved by container. (CBC)

And let's take a closer look at our top 2016 Saskatchewan agricultural exports by volume. Wheat, pea, durum and canola seed exports account for about 65 per cent of the 18 million tons of exports, virtually none of which is or ever will be moved by container. Yet by value these same products account for only about 41 per cent of the value of Saskatchewan exports. 

In the early 1970s, plant breeders Keith Downey of the Agriculture Canada Research Centre in Saskatoon and Baldur Stefansson at the University of Manitoba began what was probably the most productive and profitable academia-industry-government collaboration ever: the development of the canola industry. Indeed, canola production has made prairie farmers billions. But canola production also discourages experimentation with containerized agricultural products.

In much of Saskatchewan, farmers choose their crops not to diversify rotations but to maximize canola production. In the familiar canola-wheat-pea rotation, peas are a fantastic nitrogen-fixer that reduce expensive fertilizer inputs and make good money when prices are high. Wheat is easy to grow and the perfect place-holder in a tight rotation. Canola is the killer cash crop that pays the bills. 

All this works until it doesn't. In the area where I live, peas recently stopped growing properly on fields that hosted repeated pea crops. Farmers did the prudent thing and tightened up their rotations yet further: canola-wheat, canola-wheat, canola-wheat. 

A successful intermodal hub would give farmers 40 cash crops, not two or three. A cluster of processors at the GTH expelling, extruding, compacting, pelletizing, isolating, filtering, sorting and testing raw agricultural commodities would create high-value products and by-by-products, some of which don't currently exist. 

Co-located co-packers, shippers and logistics companies would bottle, label, box, palletize and containerize. Ordering, stuffing and shipping a container would take a farmer days, not weeks, which is the current dismal state of affairs. But such a scenario depends on one thing: firm commitment to containerization and intermodal traffic from our government. 

Let's be realistic, Saskatchewan: This is our last chance, and we are screwing it up. 


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About the Author

Paul Sinclair

Contributor

Paul Sinclair is an associate professor in the Faculty of Business at the University of Regina. He also manages a small exporting business with a partner.