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Alberta

Canadian grain storage arrived just in time for Ukrainian farmer

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CHERNEVE, LVIV OBLAST, UKRAINE — Oleh His marches with pride and purpose in rain-soaked mud through row upon row of large white polyethylene bags, each stamped with a Canadian logo and filled to bursting with this year’s harvest of grain.

The 24-year-old grain farmer with a slight build, fair hair and braces is also a volunteer with the Ukrainian military. He splits his time between running the family farm and sourcing money and supplies for the front.

When Russia invaded Ukraine last year, His knew right away he would have a problem.

“The logistical connection of agricultural products with the rest of the world has broken,” His said in Ukrainian through a translator at his farm, AgroKorovai, just 17 kilometres from the border with Poland.

Despite the relatively safe location, the war has devastated local farms in the region.

Usual trade routes through the Black Sea to Africa and Asia were cut off. The cost of diesel and fertilizer used to grow and harvest crops grew substantially.

The port blockages caused a food crisis in some parts of Africa. Without large warehouses to keep the harvest from rotting, His said some farms had to sell their grain at a loss and went bankrupt. 

In December, after farmers delayed harvesting their crops for as long as they possibly could, the UN Food and Agriculture Organization (FAO) distributed 26,000 grain sleeves donated by Canada and Japan all over Ukraine. 

“We thought they wouldn’t arrive in time but everything was fine,” said His, who received 10 sleeves from Canada and also bought some of his own, just in case.

The sleeves are long white plastic bags that span the lengths of the field. They protect grain from the elements until it can be sold and exported.

“We sleeved it and freed up our hands to wait and get it out smoothly. This saved us a lot of money,” His said.

The mild winter was on their side, as far as timing was concerned, said Pierre Vauthier, head of the FAO control office in Ukraine.

“Some of it arrived very late and yes, of course, they’re going to use (the sleeves) next year, but it’s very, very marginal,” Vauthier said in an online interview from Kyiv. 

Many farms closer to the front line have seen what little storage capacity they had blown up or destroyed by enemy shelling and landmines, said Vauthier, and about 15 per cent of the grain storage capacity in the country is gone. 

“The impact is quite big,” he said. 

The news prompted Canada to partner with Japan to prevent Ukrainian grain from going to waste with a $52-million investment into the sleeves. 

The project was announced last June, when Prime Minister Justin Trudeau met other G7 leaders in Germany to discuss measures to halt the famine caused by the Russian invasion.

Altogether the grain storage should prevent more than five million tonnes of grain from going to waste, but the challenges are unlikely to abate as Ukraine enters its second year of war. 

A deal struck in the summer between Russia and Ukraine to open up ports in Odesa to allow grain exports to be transported through the Black Sea has improved the situation, but it’s slow and inefficient, Vauthier said.

It is up for renewal in March, and Vauthier said reaching another deal is essential.

“I hope that they’re going to come to an agreement, they’re going to agree to continue to do what is absolutely critical for the country and for food security worldwide,” he said. 

He expects exports to be squeezed again in 2023, and said more grain sleeves might be needed to preserve the grain harvest. Smaller farms will need mobile grain storage units, which look like plastic circus tents, for warehousing grain.

The FAO is also working to deliver seeds and generators to farms near the front line to keep up production.

His said he hopes Canada and other countries will donate more sleeves, but with the profit he was able to salvage this year he plans to buy some of his own next year.

“It is much more profitable than building a warehouse,” he said. “Building materials have become more expensive, so building warehouses is more costly than before. We built warehouses for 5,000 tons last year, which was expensive, and now it would be even more costly.”

The war has also spurred him to look for new markets for his grain, rather than selling directly to traders in Odesa.

He now has a truck that his farm loads up with grain from the sleeves and delivers it directly to Poland.

“Any crisis is an opportunity,” His said.

“Even in such a crisis, we do not give up but start looking for opportunities.”

This report by The Canadian Press was first published Feb. 23, 2023.

Laura Osman, The Canadian Press

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Alberta

Alberta’s fiscal update projects budget surplus, but fiscal fortunes could quickly turn

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From the Fraser Institute

By Tegan Hill

According to the recent mid-year update tabled Thursday, the Smith government projects a $4.6 billion surplus in 2024/25, up from the $2.9 billion surplus projected just a few months ago. Despite the good news, Premier Smith must reduce spending to avoid budget deficits.

The fiscal update projects resource revenue of $20.3 billion in 2024/25. Today’s relatively high—but very volatile—resource revenue (including oil and gas royalties) is helping finance today’s spending and maintain a balanced budget. But it will not last forever.

For perspective, in just the last decade the Alberta government’s annual resource revenue has been as low as $2.8 billion (2015/16) and as high as $25.2 billion (2022/23).

And while the resource revenue rollercoaster is currently in Alberta’s favor, Finance Minister Nate Horner acknowledges that “risks are on the rise” as oil prices have dropped considerably and forecasters are projecting downward pressure on prices—all of which impacts resource revenue.

In fact, the government’s own estimates show a $1 change in oil prices results in an estimated $630 million revenue swing. So while the Smith government plans to maintain a surplus in 2024/25, a small change in oil prices could quickly plunge Alberta back into deficit. Premier Smith has warned that her government may fall into a budget deficit this fiscal year.

This should come as no surprise. Alberta’s been on the resource revenue rollercoaster for decades. Successive governments have increased spending during the good times of high resource revenue, but failed to rein in spending when resource revenues fell.

Previous research has shown that, in Alberta, a $1 increase in resource revenue is associated with an estimated 56-cent increase in program spending the following fiscal year (on a per-person, inflation-adjusted basis). However, a decline in resource revenue is not similarly associated with a reduction in program spending. This pattern has led to historically high levels of government spending—and budget deficits—even in more recent years.

Consider this: If this fiscal year the Smith government received an average level of resource revenue (based on levels over the last 10 years), it would receive approximately $13,000 per Albertan. Yet the government plans to spend nearly $15,000 per Albertan this fiscal year (after adjusting for inflation). That’s a huge gap of roughly $2,000—and it means the government is continuing to take big risks with the provincial budget.

Of course, if the government falls back into deficit there are implications for everyday Albertans.

When the government runs a deficit, it accumulates debt, which Albertans must pay to service. In 2024/25, the government’s debt interest payments will cost each Albertan nearly $650. That’s largely because, despite running surpluses over the last few years, Albertans are still paying for debt accumulated during the most recent string of deficits from 2008/09 to 2020/21 (excluding 2014/15), which only ended when the government enjoyed an unexpected windfall in resource revenue in 2021/22.

According to Thursday’s mid-year fiscal update, Alberta’s finances continue to be at risk. To avoid deficits, the Smith government should meaningfully reduce spending so that it’s aligned with more reliable, stable levels of revenue.

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Alberta

Premier Smith says Auto Insurance reforms may still result in a publicly owned system

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Better, faster, more affordable auto insurance

Alberta’s government is introducing a new auto insurance system that will provide better and faster services to Albertans while reducing auto insurance premiums.

After hearing from more than 16,000 Albertans through an online survey about their priorities for auto insurance policies, Alberta’s government is introducing a new privately delivered, care-focused auto insurance system.

Right now, insurance in the province is not affordable or care focused. Despite high premiums, Albertans injured in collisions do not get the timely medical care and income support they need in a system that is complex to navigate. When fully implemented, Alberta’s new auto insurance system will deliver better and faster care for those involved in collisions, and Albertans will see cost savings up to $400 per year.

“Albertans have been clear they need an auto insurance system that provides better, faster care and is more affordable. When it’s implemented, our new privately delivered, care-centred insurance system will put the focus on Albertans’ recovery, providing more effective support and will deliver lower rates.”

Danielle Smith, Premier

“High auto insurance rates put strain on Albertans. By shifting to a system that offers improved benefits and support, we are providing better and faster care to Albertans, with lower costs.”

Nate Horner, President of Treasury Board and Minister of Finance

Albertans who suffer injuries due to a collision currently wait months for a simple claim to be resolved and can wait years for claims related to more serious and life-changing injuries to addressed. Additionally, the medical and financial benefits they receive often expire before they’re fully recovered.

Under the new system, Albertans who suffer catastrophic injuries will receive treatment and care for the rest of their lives. Those who sustain serious injuries will receive treatment until they are fully recovered. These changes mirror and build upon the Saskatchewan insurance model, where at-fault drivers can be sued for pain and suffering damages if they are convicted of a criminal offence, such as impaired driving or dangerous driving, or conviction of certain offenses under the Traffic Safety Act.

Work on this new auto insurance system will require legislation in the spring of 2025. In order to reconfigure auto insurance policies for 3.4 million Albertans, auto insurance companies need time to create and implement the new system. Alberta’s government expects the new system to be fully implemented by January 2027.

In the interim, starting in January 2025, the good driver rate cap will be adjusted to a 7.5% increase due to high legal costs, increasing vehicle damage repair costs and natural disaster costs. This protects good drivers from significant rate increases while ensuring that auto insurance providers remain financially viable in Alberta.

Albertans have been clear that they still want premiums to be based on risk. Bad drivers will continue to pay higher premiums than good drivers.

By providing significantly enhanced medical, rehabilitation and income support benefits, this system supports Albertans injured in collisions while reducing the impact of litigation costs on the amount that Albertans pay for their insurance.

“Keeping more money in Albertans’ pockets is one of the best ways to address the rising cost of living. This shift to a care-first automobile insurance system will do just that by helping lower premiums for people across the province.”

Nathan Neudorf, Minister of Affordability and Utilities

Quick facts

  • Alberta’s government commissioned two auto insurance reports, which showed that legal fees and litigation costs tied to the province’s current system significantly increase premiums.
  • A 2023 report by MNP shows
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