Shawn Hansen hasn’t changed his mind about Saskatchewan government investment in the potato industry.
The longtime grower and packer, who operates Riverside Gardens at Craven, Sask., unhappily predicted a price crash back in February 1997, shortly after the province announced it was financing a seed potato expansion at Lucky Lake.
“It’s going to decimate the table potato industry,” Hansen said at the time.
Two years later, he is still in business but losing money. Table potato prices are at half the five-year average.
He blames the government for overproduction and low prices, and he says the bankruptcy of Lake Diefenbaker Potato Corp. is evidence the government has hurt itself too.
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The government is involved through Sask Water’s Spudco division, which was formed in January 1997 to increase seed potato production by capitalizing on irrigation facilities in the Lake Diefenbaker area. It planned to strike deals with other growers to help increase acreage.
Sask Water also built several potato storage facilities in the region with the intent to sell the facilities to local companies and getting out of the industry.
Earlier this year, Lake Diefenbaker Potato Corp. bought two facilities for $5.81 million. Sask Water financed the sale through a $3 million long-term debenture and a $2.81 million mortgage. When the company went bankrupt in early May, it left taxpayers on the hook for the sale amount and back rent.
Hansen thinks the corporation got too big too fast, mainly because of the government push on potatoes. Lake Diefenbaker quickly became the largest grower in the province, he said, and excess seed potatoes were dumped onto the fresh market, causing the price drop.
The Saskatchewan government has denied it is responsible. Sask Water says Spudco only grew 1,600 acres of potatoes last year.
Statistics Canada figures show acreage climbed from 8,500 acres in 1997 to 13,500 in 1998. Production increased 68 percent to 158,700 tonnes.
Hansen said if the government didn’t boost that acreage, he doesn’t know who did.
In the legislature earlier this spring, the minister responsible for Sask Water said Spudco would be crop sharing in 745 acres this year. Maynard Sonntag said the number is down from the previous year because many growers have decided to grow on their own.
He also said Saskatchewan’s production represents one percent of western North American production.
“Spudco would represent probably one-tenth of one percent,” Sonntag said. “So to suggest that Spudco has any significant influence on the world price of potatoes is I don’t think a logical conclusion.”
When the opposition Saskatchewan Party later asked the government to admit it contributed to the drop in potato prices by flooding the market, economic development minister Janice MacKinnon said that kind of thinking was “absolutely frightening.
“Saskatchewan produces a lot of oil as well,” she said. “So does that mean if we open a few extra oil wells in the province, the price of oil is going to tumble?”
Hansen said that demonstrates the government’s lack of knowledge about the potato industry. He said Saskatchewan’s acreage may still be small but the increase in a couple of years is significant.
He said the province should have secured contracts for the increased production it helped create.
“They’re doing it strictly on speculation and if you want to speculate on any commodity this is what you’re going to get,” Hansen said. “They went out and put in all those potatoes without determining what the demand was.”
Lake Diefenbaker had hoped to use some of the production in a $4.2 million flaking and dehydration plant it announced last April. And the province said two years ago it wanted to attract a french fry plant.
When two french fry plants were subsequently announced for Alberta, those plans fizzled.
