Goodale Blames Harper for Potash Sales?

I see where recently on his Facebook Page, Saskatchewan MP Ralph Goodale blames Prime Minister Harper's inaction for the fall in revenues at the Potash Corp of Saskatchewan. Really? Because some of us economists were following the story at home. I have been bullish on Potash for months, but I jumped off the short term bandwagon when I found out that Canadian farmers were boycotting the fertilizer because it was too effective and thus became too expensive.

Potash is arguably the most effective fertilizer on the planet, but it is hardly the only option. It was so good so fast that crop producers bid up the price to astronomical levels. Then a global recession hit and everyone realized that the price was far too high and that there were other options for crop fertilizer. Thus farmers organized a boycott, and profits plummeted drastically. Though Mr Goodale conveniently neglects to mention that the biggest reason for the decline in revenue were local boycotts by Canadian food producers, many in Saskatchewan. Just because Potash is produced in Sask, that doesn't mean farmers should be forced to pay an inflated price when there are substitutes.

Instead, Mr Goodale seems most content to blame POT's woes on Harper's diplomacy, suggesting that the Prime Minister should have somehow forced China to pay an absurd premium for Potash. China, like farmers in the Canadian Prairies is waiting for the price to come down before signing a supply contract, and if the price does not come down, they will simply fertilize with option B. We can't make them pay a price that they can't afford to pay, even if a member of the Canadian Trade delegation got down on his knees and "serviced" the Chairman! As of October 25th, China was delaying signing its fertilizer deal for 2010 because it wanted prices to come down. But the Prime Minister should force them to pay a premium? How does this make any sense?

This is what Mr Goodale had to say on Facebook, a scholarly medium for economic theory...

One of our key exports to China is potash. That market has been in trouble for months. And the trouble is hitting the finances of the Saskatchewan government. Provincial revenues are down. Programs and services for people in Saskatchewan are being cut back because potash sales to China have not been going well.

So what has Mr. Harper been doing to help? In a word – nothing!

Copying the highly successful “Team Canada” trade missions, which begun under Liberal governments, this Prime Minister should have been in China a long time ago – with Premiers and business leaders – strengthening the personal, governmental and business relationships upon which trade with China depends.

Specifically, Stephen Harper should have been playing a direct, personal role in correcting the potash problem for Saskatchewan.

But he was in no position to do so. To repair the damage done by his ineffectual petulance, he now has to mend fences and play catch-up, just to get Canada back into the game.