The Impact of Rising Energy Costs on Agricultural Production and the REgional Economy: A Case Stufy of Saskatchewan

Higher energy prices, particularly those for crude oil, have been a worldwide reality since the creation of the Organization of Petroleum Exporting Countries (OPEC). Since many of the inputs in agriculture are either petroleum products or largely petroleum based, the agricultural industry has faced an unprecedented rise in input costs. Canada is no exception to this trend. By the third quarter of 1981, fertilizer prices had increased to 387.1 percent of their 1971 price level. Similarly, the price of fuel jumped to 279.3 percent of its 1971 level. Trends in the future may be even more dramatic. According to the Alberta Agreement,2 the price of oil will increase from $21.25 per barrel in October 1981, to $57. 75 by October 1986--an increase of 172 percent. For Saskatchewan, primarily because of the predominance of grains in the total agricultural production, 3 rising energy costs appear to be a threat to the future viability of the industry.