REGINA, Saskatchewan—Falling oil prices will cause Saskatchewan’s export revenues to drop by five per cent this year, masking an otherwise positive export outlook for the province, according to Export Development Canada’s (EDC) global export forecast.
“Saskatchewan will take a nasty hit to its energy exports this year, but the loss will be mostly offset by growth in other sectors,” said Peter Hall, Chief Economist, EDC. “Growth in the agri-food and fertilizer industries will shore up the bottom line, helped by favorable prices and the low Canadian dollar. Altogether, Saskatchewan’s exports outside of energy will grow by an impressive 10 per cent in 2015.”
The agri-food sector, which accounts for 40 per cent of Saskatchewan’s exports, headlines that growth with an expected 7 per cent jump in export revenue this year. Sales are getting a needed lift from the weaker Canadian dollar as global product prices remain low. The swelling ranks of an increasingly hungry emerging market middle class are forecast to be a meaningful driver of global demand for food.
“This demand will drive sales of Saskatchewan’s agricultural goods, but also extend further into the province’s agri-food spectrum,” said Hall. “Countries that want to increase their own agricultural capabilities will look to Saskatchewan as a source of equipment, farming knowledge and technology. As such, export prospects for the entire industry are positive.”
Saskatchewan’s fertilizer exports, specifically potash, will benefit from a more favourable pricing environment, with a whopping 18 per cent increase this year, followed in 2016 by a more moderate 5 per cent increase. Strength in these sectors will enable Saskatchewan to absorb the blow of a 27 per cent drop in energy exports this year.
A partial rebound is expected in 2016, as increased global demand and oil prices at the $70-per-barrel level will re-boot energy exports by 20 per cent.