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A remote Canadian province shines amid global supply crunch

Gwrong gust The great-grandfather was from near Dubno, a small town in what is now western Ukraine. He settled between Saskatoon and Regina, two of the largest towns in Saskatchewan, Canada, where he bought a 160-acre piece of land for $10. Today, the patchwork farm is 100 times the size of the one Mr. Gust ran with his father and brother. Each year they harvest wheat, lentils and rapeseed.

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Each planting season, a 23-meter-wide “seeder” sows seeds and fertilizer directly into the soil for 16 hours a day. Then everything returns to heaven. Almost all crops in Saskatchewan depend on rainwater rather than irrigation. Last year was “very dry”, Mr Gust said. “We can’t have another bad year.” And neither can the world, it seems. The province typically produces 15 million tons of wheat and 20 million tons of other crops a year, crucial for a market roiled by the war between Russia and Ukraine. The same will be true of almost everything else produced in Saskatchewan.

When Ukrainian immigrants first flooded into Canada in the late 1800s, the government of the day gave them a role: to settle on the vast prairies between Ontario forests and the Rocky Mountains. The immigration minister knows what he wants: “a stalwart farmer in a sheepskin coat, born on the land, farmed for ten generations, with a stout wife and six children.” Those without calluses on their hands can look elsewhere.

This is a great game. Many people think of Bukovina and Galicia in western Ukraine. Its aspen groves need clearing, but the soil is fertile and land is cheap. By the time of World War I, tens of thousands had arrived and settled around the onion-domed church, often living next to their neighbors in their hometown. This immigration has created the second largest Ukrainian diaspora in the world, after Russia.

In Saskatchewan, where a tenth of the population has Ukrainian ancestry, events in Eastern Europe have again changed the fortunes of the region. Russia’s invasion of Ukraine didn’t prompt a flock to the prairie — refugees arriving in Canada mostly preferred the comfort and vibrancy of eastern cities. But that has sent prices of many of the commodities that drive Saskatchewan’s wobbly economy surging at unprecedented rates.

Almost everything produced in the province saw prices skyrocket due to the war. This includes wheat and oats first grown by early settlers, whether Ukrainians or otherwise, as well as newer crops such as canola, pulses (lentils, chickpeas, etc.), and mustard (see chart). This is a far-reaching bonanza. Saskatchewan will grow 6 per cent this year, more than any other province in Canada.

Most important is what’s in the ground: oil, natural gas, uranium, and most importantly, potash, the jagged crystalline mixture of soluble potassium salts that’s a key ingredient in fertilizer. It is sometimes called “pink gold” because of the hue it takes on before it is refined into a white powder. Saskatchewan produces one-third of the world’s production, almost all of which is exported.

Russia and Belarus, two other potash-rich countries in the world, produce as much as Saskatchewan. But due to sanctions and shipping blockades, the world cannot get most of their products. Ken Seitz, boss of Canadian potash miner Nutrien, told Reuters recently that stranded potash supplies could reach 8 million tonnes this year, accounting for a fifth of global potash exports.

That means the biggest importers, such as Brazil, India and Indonesia, as well as Europe, will find it harder to procure the fertilizer they need to grow their crops and sustain their citizens. Saskatchewan is one of the few places in the world where production can increase on short notice, said Bronwyn Eyre, until recently the province’s energy and resources minister. Ambassadors and other officials have been calling with urgent demands. To them, “this is a national security issue.”

Often referred to as the heartland of Canada, Saskatchewan is full of cheerful, down-to-earth people who have only been on the farm for a generation or two, if not on the farm. The ups and downs of farm life have helped create a culture of mutual support. In 1962, the province was the first in North America to provide universal health care. But the recent boom, and perhaps the influence of Alberta, the oil-soaked neighboring province with separatist tendencies, has changed things a bit. Saskatchewans today seem to want smaller government and lower taxes. Ms Ayre’s conservative Saskatchewan Party caters to that.

The potash industry is at the center of this new sentiment. The tallest steel and glass office building in the largest city of Saskatoon is the Nutrien Tower. Mosaic’s buildings in the provincial capital, Regina, are almost as striking. The names of these companies adorn stadiums and events. For anyone traveling across the province along the Yellow Head Highway, half a dozen mines and their huge powdery and white tailings piles are visible in the pancake-like flat landscape.

Companies are scrambling to take advantage of what one boss calls “outrageous” prices, which have tripled in a year. But new mines take time. Potash deposits lie about a kilometer underground, beneath a thick layer of pressurized water. To sink the shaft, the water must freeze from above, a process that can take two years or more. BHP BillitonThe world’s largest mining company is racing to complete its first potash mine in Saskatchewan, a year ahead of its original 2027 start date.

Existing mines are also working to increase production. Nutrien plans to mine an additional 1 million tonnes of potash in 2022, equivalent to 7% of its production. Mosaic has restarted its mine that was put on hold in 2019. But transportation problems have stymied such plans. Ms. Ayer said what Canada needs is more pipelines to move oil and gas, which would free up rail capacity to move more potash and crops to ports for shipment abroad. Left-leaning Prime Minister Justin Trudeau disagrees.

Like much of Canada, the province suffers from a labor shortage. No other province has seen such slow population growth. Over the past century, Saskatchewan’s population has halved to 1.2 million, while the country’s population has quadrupled. The provincial government has been keen to take in as many Ukrainian refugees as possible. But despite ample jobs, cheap housing and expats, Ukrainians are not flocking to the country.

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