Economy of Saskatchewan

Origins

From the beginning, Saskatchewan’s economy has been based on extractive industries: furs, fish, forest products, agricultural products, and minerals. In almost all cases, the products are consumed outside the province and generally outside Canada, a situation that makes Saskatchewan one of the most economically vulnerable areas in the world. Because of its dependence on external markets, Saskatchewan’s economy has internally required a variety of governmental supports. As a result, the province has never had a true free-enterprise system, and public enterprise and mixed public and private ventures have characterized the development of the economy from the outset. The first waves of settlers, attracted to Saskatchewan by federal policies, were carried on railways built with federal assistance. From 1897 to 1995, Saskatchewan grain moved to federal terminal elevators at controlled freight rates. Within the province, the political parties in power, regardless of ideology, have sponsored and maintained public ownership of a bus company, an insurance company, and the utilities, as well as publicly operated hospitalization and medical care. The degree of commitment to public ownership has varied over time, however, and a variety of once publicly owned companies have been privatized.

Agriculture, forestry, and fishing

Agriculture has been a mainstay of Saskatchewan’s economy since the late 19th century. The initial focus was on small family farms, many of which produced wheat for external markets. The number of farms peaked in the 1930s at about 142,000. By the early 21st century that number had fallen by more than two-thirds, and the average farm size had increased dramatically. Saskatchewan has a large percentage of Canada’s farmland and the largest average farm size of any province. Although wheat remains a major crop, both the amount of wheat and the amount of land devoted to its cultivation have declined while production of canola (rapeseed) and specialty crops such as mustard, peas, and lentils has increased. In some regions livestock raising is prominent.

Although approximately two-fifths of Saskatchewan is covered by forest, the forest industry is small and mostly concentrated in the southern boreal forest. The only pulp mill is located at Meadow Lake in the northwest part of this zone. Commercial fishing and trapping are also concentrated in northern Saskatchewan but employ only a small number of people.

Resources and power

Saskatchewan has a wide variety of mineral resources, including oil, potash, and uranium. Potash, which is mainly used for fertilizer, is found in a band running diagonally across the province from west to east, its northernmost point being west of Saskatoon. Saskatchewan is one of the world’s largest producers and exporters of potash. The province is also a significant producer of oil and natural gas. Rich uranium deposits support mines in northern Saskatchewan, and diamonds of industrial quality were discovered in the 1980s. Other significant minerals include gold, salt, sodium sulfate, lignite, zinc, copper, and a variety of clays.

Most of Saskatchewan’s electrical energy is derived from coal-powered thermal plants. There are several small hydroelectric dams, and considerable investment has been directed at alternative energy resources such as wind power and biofuels.

Manufacturing

In terms of employment, manufacturing has always played a relatively minor role in the provincial economy. Several factors have limited the growth of manufacturing: transport and tariff policies that favoured Canada’s industrial core in southern Ontario and Quebec, insufficient basic infrastructure, and local markets that were too small to sustain a large manufacturing sector. Nevertheless, the sector has been expanding, and many manufactured goods are exported. Prominent industries include those that add value to provincial resources (e.g., heavy-oil upgraders and canola-crushing plants). Other manufacturers produce intermediate goods, such as chemicals and machinery, for the resource sector. Food processing is among the more important consumer industries. Most manufacturing takes place in small or medium-sized plants, the majority of which are located in the larger cities.

Services, labour, and taxation

In spite of Saskatchewan’s heavy reliance on its resource sector, most employment and much of provincial gross domestic product are derived from service industries. The majority of these services relate to health care, education, and business. Little specialization occurs.

Saskatchewan’s wage levels for both industry and agriculture are never among the lowest for the provinces but are rarely among the highest. Taxation in Saskatchewan has often been higher than in neighbouring provinces. At the beginning of the 21st century, taxes were reduced and incentives implemented to encourage development of the resource sector.

Transportation and telecommunications

Modern Saskatchewan originated with the creation of transcontinental railroads, which carried settlers and supplies in and grain out. Though freight remains an important rail component, passenger services have been reduced or abandoned. The province is now crisscrossed with highways. At the beginning of the 21st century, Saskatchewan had the distinction of having more miles of road infrastructure per capita than any other subnational administrative unit in North America. In rural areas the Dominion Land Survey System provided “road allowances,” strips of territory a mile or two apart that serve as simple, mostly dirt, roads, which when dry are firm and passable and widely used for local travel.

Except for recreation, water transportation is all but obsolete in Saskatchewan. Small shallow-draft steamers formerly sailed the main rivers, but, since the rivers are shallow with shifting sandbars, they have not been significant transportation routes since before World War I. Airlines, by contrast, have developed dramatically in Saskatchewan. Small planes serve the north for both commercial and recreational purposes, and major centres are on scheduled airline routes. Regina and Saskatoon are the principal hubs.

Telecommunications began in Saskatchewan in the late 19th century. Its first significant use was during the suppression of the second Riel Rebellion of 1885. Because of the huge distances and cost of establishing a telecommunications network, private industry showed little interest in the province, and consequently a major part of the network was, and still is, publicly owned.