Ukraine invasion, sanctions could see countries turning to Sask.: Business analyst

With Russia appearing to be close to launching an invasion on Ukraine, the financial impacts could be felt in Saskatchewan.

Business analyst Paul Martin said Ukraine is similar to Saskatchewan in a number of ways, such as both relying on agriculture to drive their economies.

According to the Saskatchewan Ministry of Trade and Export Development, Saskatchewan’s exports to Ukraine amounted to $4.1 million and imported $1.3M in goods and services in 2021. Agricultural machinery and parts comprised the majority of Saskatchewan exports to the country.

With the threat of a Russian invasion still there, a number of countries are bringing in sanctions against Russia.

Martin believes that could also affect a country like Belarus, which is a major potash producer in the world.

“Belarus is shoulder to shoulder with Russia on this one and many of the sanctions will be flowing across to them,” Martin said. “One example would be Yara — the large Scandinavian fertilizer producer — who are well-known in Saskatchewan because they produce nitrogen here, but they buy their potash from Belarus.

“They have announced they are going to suspend or discontinue their purchases starting April 1. It’s all a part of the fallout of the sanctions.”

Martin said Yara represents about six to eight per cent of the entire potash bought in the world. With sanctions affecting Belarus, the company would have to look elsewhere to purchase potash.

“The only place that’s really large enough is really going to be Saskatchewan,” Martin said.

Ukraine is a big grain producer as well, which could mean that if its supply chain is affected, more countries may look to Saskatchewan and Canada.

“Saskatchewan had a drought last year and so inventory share is not all that strong — not as strong as they could be. If there are disruptions or the interruptions of the ability to get supplies out of Ukraine, that is probably going to put more pressure on the grain bins on Saskatchewan to fill that gap,” Martin said.

“Between that and what could happen with fertilizer prices is probably going to mean higher prices for grains, oil seeds, fertilizer and everything related to agriculture.”