Year in review: Searching for sunshine (and rain) amid the shadows.

Twin shadows cast gloom over an otherwise promising year on Saskatchewan's business and economic scene. One shadow exploded upon us from a sunny blue sky and eclipsed nearly all else in our vision; the other relentlessly crept over us in gathering twilight and was hardly noticed at all.

The obvious shadow spread from the series of events surrounding the terrorist attacks on the United States, Canada's largest trading partner and the country most often coveted by Saskatchewan exporters. The attacks now referred to simply as September 11 dominated media coverage for weeks and will surely be replayed and recalled by year-end pieces in every forum.

The unnoticed shadow painted another layer of grey across an industry already hidden by near-total darkness. Drought conditions in Saskatchewan the likes of which have rarely been seen since the Great Depression would normally attract attention at least outside provincial borders. Yet after decades of seemingly endless troubles in the province's once-king industry a summer of catastrophe is a faint memory even by year's end.

To help shed light on the past year Saskatchewan Business Magazine asked Minister of Economic and Co-operative Development Eldon Lautermilch to take a sector-by-sector look back at how the province's economic fortunes unfolded in 2001.

"We're all aware the agricultural sector has been under serious strain," Lautermilch says. Prices for our farmers' product remained artificially depressed thanks to massive subsidies in other countries while input costs continued to rise. By early July it was apparent drought had set in and crops matured too quickly, cutting production by at least 30 per cent in many areas.

"The total effect is that we lost 10,000 jobs in a one-year period," Lautermilch says. All this after months of negotiations with the federal government ended March 1 in a $500-million aid package, of which Saskatchewan farmers received nearly 25 per cent.

"We need to focus in this province on value-added production," Lautermilch insists, noting in the past year the Food Centre in Saskatoon has enhanced its ability to help business development and marketing. "There has been growth but there is a lot more room for growth."

Prairie Plant Systems in Saskatoon ended 2000 on a high when it was awarded a $5.75-million marijuana-growing contract while Regina's Crown International Ag Pulse plant started 2001 off right by taking advantage of Saskatchewan's position as Canada's top producer of pulse crops. The Saskatchewan Wheat Pool restructured its debt on March 1 and continued a sell-off of non-core competencies throughout the year.

Saskatchewan pork producers enjoyed high prices and Canadian livestock producers were unscathed by a summer outbreak of foot-and-mouth disease in Europe. Stomp Pork Farms vowed to rebuild after 14,000 pigs died February 22 in a fire near St. Gregor and Big Sky Farms opened a $30-million pork operation near Rama on July 4.

"Probably one of the best-kept secrets within Saskatchewan is our ag biotech industry," Lautermilch says. The arrival of 60 high-tech and high-paying jobs at the Veterinary Infectious Disease centre was a boon to Saskatchewan graduates, the minister says, and outside investment brought by Phiom Bios has been invaluable. Also in the ag biotech field, on April 4 Saskatoon-based operations were awarded $15 million in grants for genome research.

The most volatile of Saskatchewan's industries in 2001 was the energy sector. Producers and exporters of oil and natural gas saw fortunes rise and fall as world market forces pushed prices all over the map.

"We had a pretty good year in oil and gas, despite the fluctuating prices," Lautermilch says. "We've enjoyed record drilling in the last number of years and the industry has grown to a value of about $6 billion per year."

The Petroleum Research Centre at the University of Regina is taking a major role in enhancing overall productivity in the oil and gas industry, and in particular, efficiency within Saskatchewan's industry. Research into heavy oil processing, horizontal drilling techniques and carbon dioxide injection recovery technology is leading to practical applications in the province.

The mid-March announcement of a $255-million upgrade to Consumers Co-operative Refineries Ltd. was welcome news in Regina. The refinery, which will see output increased by 40 per cent when the upgrade is finished late in 2002, is a large producer of jobs in that city.

Drivers and homeowners also felt a little queasy from the oil and gas ride of 2001 when heating bills soared by nearly 25 per cent and gasoline prices spiked to above 80 cents per litre early in the year. Relief came when prices returned to normal by summer and late autumn.

The United States' energy mini-crisis and their new government's pro-nuclear stance signaled good times ahead for uranium producers. Cameco shares more than doubled in less than a year on news the Bush administration hungers for more nuclear-generated power.

Elsewhere in Saskatchewan's $2.5-billion mining sector it was a rather ho-hum year, with the notable exception being diamond prospects. Promising results from companies such as Shore Gold and non-negative results from other exploration companies in the Fort a la Come area, 70 kilometres east of Prince Albert, encouraged further drilling.

"Mining companies are investing very heavily in that area which leads one to believe there may be a viable mine there at some point," Lautermilch says. "Remember though, these are long-term projects and there is a lot more investment that needs to be done."

Rumblings of a trade dispute in the $10-billion-per-year Canada-U.S. lumber sector began April 1 and grabbed headlines when the U.S. implemented full-scale trade action. What began as a 19 per cent duty was bumped to, effectively, a 30 per cent penalty on Canadian lumber going into the U.S.

"There has been an impact here in Saskatchewan, without question," Lautermilch says, but remains confident this tariff issue will be resolved just as all trade disputes are settled. (Does anyone remember the aerospace beef Brazil had with Canada early in 2001?)

"I'm very excited about the forestry industry. It had $750 million in sales and it will be strong again, to the point where we'll see a doubling in the sector within the next few years."

Two examples of the industry's growth potential Lautermilch points to from the past year were oriented strand board plants in Hudson Bay and Meadow Lake. Total investment in those two projects neared $300 million and opened Saskatchewan's door to further investment.

"We most definitely have an economy that is diversifying," Lautermilch concludes. "The opportunities are all there - we just need to reach out and grab them."

RELATED ARTICLE: Business briefs of note through 2001:

* The TSE 300 index began the year at about 9,000 and moved steadily downward, thanks largely to a continued plunge of Nortel Networks stock. The Canadian dollar slid in relation to the U.S. dollar as did interest rates, the prime rate dropping more than two points in 2001.

* A large downtown Saskatoon development went kaput February 15 with the bankruptcy of its expected major tenant, Loews Cineplex. Development plans remain stalled.

* The Canadian Light Source synchrotron in Saskatoon, the largest single technological investment in Canada, continued lining up beam line clients in anticipation of a 2004 opening.

* The TSE gobbled up the CDNX March 28, with the CDNX to operate as a separate unit.

* That same day, the Saskatchewan operations of accounting firm Ernst and Young were sold to rival Deloitte and Touche.

* The March 30 provincial budget was declared prudent in its effort to balance a two per cent small business tax cut with increased spending on health care and highways.

* Molson closed its Regina brewery May 9.

* Doepker Industries of Annaheim won three awards at the October 27 Achievement in Business Excellence awards in Saskatoon, including Business of the Year. Doepker also has operations in Moose Jaw and Humboldt. The company re-dedicated themselves to further investment in Saskatchewan and implemented plans for growth into new markets.