Good times roll for value-added businesses

We recently published an op- ed by Michael Holden with the Canada West Foundation, who asked why we always talk about diversification when times are bad.

Excellent question. We should be talking about it when times are good, when stuff like building buildings and buying machinery is actually affordable.

Therefore, points go to the Sask-atchewan government for discussing value-adding now, when agriculture has become ascendant and is even quite sexy. Sexy industries attract investment; moribund ones, not so much.

Premier Brad Wall, in his vision for the province, said he wants ag exports to rise to $15 billion by 2020, up from $10 billion today. To achieve these stellar numbers, he wants to see investment in research and innovation, irrigation and value-added processing.

The government has committed $20 million toward research in its latest budget, up 50 percent since 2007. About $30 million from both levels of government has gone into irrigation.

Value-adding, however, apart from a couple of programs such as Sask-atchewan Agri-Value Initiative for smaller businesses, receives little direct money.

After a recent speech delivered to the Greater Saskatoon Chamber of Commerce, agriculture minister Lyle Stewart noted that most value-added investment would come from business. Government support is likely to come through tax relief and infrastructure. It might be the right approach. Past public sector investments into hogs and potatoes have certainly gone awry, at least from a taxpayer’s perspective.

And, as Stewart rightly points out, there is more value-added business in Saskatchewan than ever before, notably canola crushers and pulse processors. Cargill, for example, hardly needs pittances from the government to support its business plans.

Such value-added initiatives have indeed come from industry, although if Keith Downey and his crew had not created canola, there would be nothing to add value to. If you look at it that way, investing in research and waiting for business to commercialize the product makes sense.

However, while agriculture in Saskatchewan is sexy right now, so it is in Manitoba, Alberta and the United States. Saskatchewan may have to be aggressive — and innovative — in attracting more value-added investment dollars.

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