Business climate as vital as water in irrigation success

Water is a necessary, but not sufficient resource to make the proposed $4 billion expansion of Lake Diefenbaker’s irrigation area a success.

The stable water resource and the increased agricultural output it should produce must be the carrot that attracts investment into value-added processing that will multiply the economic activity that generates jobs, spin-off enterprises, community advancement and tax revenue.

To fully benefit from irrigation development, the vision must be much more than the adage “if you build it, they will come.”

Private investors look for jurisdictions with competitive tax and regulatory regimes, superior infrastructure and labour resources when they spend their money.

The Saskatchewan government will have to look at its position in all these areas to ensure they are sufficient to attract would-be investors.

If they are, then over the coming decades the province could see its multibillion-dollar investment in irrigation expansion paid back many times over in a more vibrant and stable valued-added agri-food sector that helps to balance the economy that currently rests too much on cyclical mining, oil and gas and commodity crops and livestock.

But if done wrong, the irrigated crop production will be put on trucks or trains to be hauled off elsewhere to be processed, taking the jobs and economic activity with them.

The competition is strong from provinces and states that border Saskatchewan.

Next door in Alberta, the Lethbridge-Taber food corridor booms thanks in large part to the largest irrigated area in Canada and a business-friendly environment.

The promotional and co-ordinating effort of the region’s economic development agencies partnering with food processors, industry associations, supply chain companies and research organizations, called Canada’s Premier Food Corridor, has a website touting the area’s strengths.

Key among them are Alberta’s distinctions of having no sales tax. And the provincial government is lowering its corporate tax rate to eight percent by 2022 from 12 percent in 2019. It hopes this cut, as well as regulatory reduction, will help to attract $1.4 billion in direct agricultural processing investment over the next four years.

Saskatchewan’s corporate tax stands at 12 percent.

Alberta and Manitoba over the years have done much better than Saskatchewan in attracting large potato processing and livestock slaughter and processing plants.

Manitoba also attracted the almost $500 million Roquette pea processing plant to Portage la Prairie and Burcon NutraScience Corp. is spending $65 million to process peas in Winnipeg even though the vast amount of peas are produced in Saskatchewan.

The Saskatchewan Party government appeared to recognize shortcomings in its policy environment in its 10-year, 2020-30 growth plan released last year.

The plan set many goals for an expanded agricultural economy but on irrigation it identified only modest growth from infill in existing projects.

Now, only about six months later, the province is going all-in on irrigation.

However, it will have to double-down on its growth plan commitments to ensure the province will have a competitive tax and regulatory regime, qualified labour pool, enhanced transportation and logistics systems, support for technology development and adoption and improved trade infrastructure.

The federal government must also be a major partner in this venture.

It will take commitments from all levels of government, area farmers and the local population to create the environment that will attract the needed investment into agricultural value-adding to unleash the full potential and economic returns from irrigation development.

And all of it will occur in the wake of the COVID-19 pandemic that severely disrupted the economy and government finances. Money will be tight and the public will have to be convinced of the value of investment in irrigation against competing needs in health, education, social services and other priorities.

Much work lies ahead.

I do not have room here to talk of the other necessary prerequisites, including studying the environmental impact on the development area and on areas downstream, particularly in the context of what we know about climate change.

Consultations with First Nations will also be critical in this time of reconciliation.

But if done sensitively, investment in this project could pay dividends to all people — rural, urban and First Nations — and enhance wetlands and native habitat.

When Saskatchewan Premier Scott Moe announced the plan, he called it a “generational project.”

Indeed it is. A 2012 paper by the province’s Department of Agriculture on Lake Diefenbaker irrigation was aptly entitled Unfinished Business.

This generation must work to complete the project started by previous generations so that future generations can benefit.

About the author

Markets at a glance


Stories from our other publications