Drought last year blamed for dip in province's GDP
Driven by last year's drought, Saskatchewan gross domestic product (GDP) fell by 0.3 per cent in 2021 — marking the province as the only jurisdiction across Canada that saw a dip.
Reporting the contraction earlier this week, Statistics Canada stated this was the most significant decline for the agricultural industry since reporting of such metrics began in 1997.
“We see agriculture, in particular, that was where it was hit fairly hard,” said Matthew Prescott, Statistics Canada chief of the provincial and territorial GDP by industry program, in an interview on Friday.
Prescott said agriculture production fell by 47 per cent because of the severe drought that hampered farmers and livestock producers last year.
“When we look at the drop in 2021, it's really the severity of the drop in crop production and agriculture as a whole that's driving this Saskatchewan economy to be negative in 2021,” he said.
Last year was tough for many farmers and livestock producers, said Ian Boxall, president of the Agricultural Producers Association of Saskatchewan.
“That has a huge effect, and it just shows how reliant Saskatchewan is on agriculture for our economy,” he said. “But farmers are an optimistic bunch and always have been. So, we're going to seed the best crop ever this year.”
Boxall said even though grain farmers saw losses in yield, higher prices may have softened the financial blow.
Many livestock producers, he said, sold some of their animals to make sure they didn't run thin on feed.
“There's things we can do, but just the access to risk management programs for the livestock sector is something that remains to be looked at,” he said.
During question period earlier this week, the Opposition NDP took aim at the government for the contraction.
While finance critic Trent Wotherspoon noted on Friday the drought hampered the GDP, he said growth continues to remain flat.
“It just shows that this is a government that isn't aware of the economic realities,” Wotherspoon said. “We have a government that's just been on a regressive economic track and the realities are there in the black and white.”
The finance ministry said in a statement said the 2021 forecast was in close alignment with other forecasts released by other major financial institutions.
It said when the agriculture sector is omitted from Statistics Canada data, Saskatchewan had yearover-year GDP growth of four per cent across all sectors.
With commodity prices remaining high and “more stable agricultural conditions,” the ministry projects the province is poised to have strong economic growth in 2022.
Premier Scott Moe said Tuesday exports from Saskatchewan have been up by $37 billion this year, a roughly 25-per-cent increase from 2021.
Wotherspoon said the GDP contraction comes as Saskatchewan sees slow population growth,
high inflation and an increase in the unemployment rate, which is currently 5.5 per cent.
Prescott said Saskatchewan GDP has experienced its fifth decline over the past seven years.
In 2021, he said manufacturing was up 12 per cent, mining and oil and gas production saw an increase of 6.7 per cent and utilities were up by 3.7 per cent.
Construction was down by 3.1 per cent.
Service producing industries largely remained strong and recovered from 2019, Prescott said, though there was a one-per-cent dip in transportation and warehousing.
“I think it's really just the severity of that drop in 2021,” he said. “When we're looking at the economy across the board, big rebounds in a lot of places.”
Going forward, Boxall said producers aren't yet in “panic mode” despite seeding this year being behind the five-year average.
He said conditions remain dry for livestock producers, who are also dealing with higher feed costs.
“I think they would like some timely rains to get the pasture going and the hay going,” he said. “I'm a grain farmer having probably started a few days late, but I'd take a rain. Anyone in Saskatchewan after last year would take a rain.”