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Finding an economic “sweet spot”

The latest Canada West Foundation profile and economic forecast for Manitoba underscores a reality that still bites in the farming community.

The wheat economy that built this province has, over time, been overshadowed by a highly diversified economy, which means it doesn’t grow as fast during boom times and it doesn’t fall as far during the downturns.

In the ongoing financial meltdown, it would seem the very qualities that were once seen as a detriment to this province’s long-term outlook – slow, unexciting growth with no superstar industries – are working to its benefit. While the outlook is uncertain, the foundation concludes the global turmoil is far from over.

“How properly equipped is the province in this new context? In two words: pretty well. Manitoba’s economic performance has been very good recently. Many dials on the dashboard indicate positive results so far for 2008,” the report says.

“If one ignores outside factors for a minute, it is striking how Manitoba is currently sitting in an economic ‘sweet spot’ where prosperity comes from different sources, none of which dominates enough to upset the economic apple cart too much.”

The foundation isn’t the only analyst of late to make note of Manitoba’s diversified economic profile. In a paper presented to the Roblin Professorship conference held recently at the University of Manitoba, economist Derek Hum noted that although agriculture once dominated the Manitoba economy through the export of staple commodities; it now represents less than five per cent of the provincial GDP.

In fact, its contribution to the GDP today is relatively small, similar to that of the entertainment and information sector.

Manitoba’s economy is now dominated by the service sector – retail, distribution, knowledge and technology – which contributes 72 per cent of its GDP.

There are several ways of looking at this economic shuffle. For one thing, it would appear the notion of not having all your eggs in one basket works off the farm as well.

Conventional wisdom in the farming community says its declining economic contribution is a bad thing for farmers.

Even though the days have long past since the agrarian vote called the shots in the economy or the government, we still hear the lament that farmers are feeling disenfranchised from their rightful status in society. Keystone Agricultural Producers regularly holds “hug-a-farmer” days to remind urbanites that farmers are important too.

The effectiveness of these events is somewhat questionable. While ways must be found to communicate with a public that is largely disconnected from agriculture, it is difficult to avoid coming across as being insecure and self-absorbed. Nurses, mechanics, schoolteachers and undertakers also provide important functions in our society, but they don’t constantly ask the public for reaffirmation.

Perhaps the trick for farmers to regain some of the stature they feel they are losing is for them to focus less on their economic value to the province and more on their role in the service sector, specifically, environmental services. Cities already contain most of the people living in Canada and they are gaining more every day. But the rural areas still have most of the water.

And that is an inescapable talking point connecting those two solitudes.

In its first benchmark study of Canada’s watershed demographics back in 2006, Statistics Canada catalogued where people in this country live in relation to watersheds. Seventy per cent of Canada’s population now resides in very high urbanized or highly urbanized watersheds. Six per cent of Canada’s population lives within 133 rural watersheds that cover 57 per cent of Canada’s land area.

There is increasing evidence, through programs such as Alternative Land Use Services, that farm organizations and governments are beginning to recognize and address that disconnect.

As other jurisdictions have discovered, there are mutual benefits that can accrue when city and rural work together to address mutual concerns. Perhaps the most famous example is the decision by New York City planners to work with farmers in the 80,000-acre watershed supplying its water to improve the city’s water quality.

The city determined it could save $8 billion on the cost of a new water filtration plant by spending $1.8 billion to help private landowners improve their watershed management. Plus the city saved another $300 million on the cost of operating the plant that it never built.

Environmental services don’t always come naturally and they don’t come cheap. But in a highly diversified and relatively healthy economy such as Manitoba’s, they are an investment the electorate may well find justifiable.

Zeroing in on their role in providing environmental services may require different economic choices on the part of farmers but it may also be a way for the sector to develop its own economic sweet spot. [email protected]

About the author

Vice-President of Content

Laura Rance

Laura Rance is vice-president of content for Glacier FarmMedia. She can be reached at [email protected]

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