What's the difference between a potato and the Saskatchewan cabinet A potato has eyes.

The cabinet wasn't seeing things too clearly last January when they provided $8 million in loans and assistance for the Lake Diefenbaker Potato Corporation (LDPC) with little or no security. Only three months later, the operation is in receivership and our government is at the back of the line of creditors, behind the sharper knives at the Royal Bank and the Farm Credit Corporation. Worse than that, there are a lot of potato farmers in the Lucky Lake area who aren't feeling so lucky.

The Mr. Potato Head award for this deal goes to Saskwater Minister Maynard Sonntag. But he is only the latest in a long line of politicians and bureaucrats who share blame for this sad state of affairs.

Our story of potatoes begins in the 1980s, with the government spending a lot of money on irrigation in the Lucky Lake area. To help justify the expenditure, it was decided that that taxpayers should subsidize a major expansion of the local potato industry. Crown corporation Saskwater, and its appropriately-named subsidiary Spudco, jumped in with both feet, building potato storage facilities and entering into 50-50 sharecropping agreements to attract farmers to the potato business. Believe it or not, the Saskatchewan government actually took ownership of some of the potatoes.

It is the Soviet-style potato storage facilities that turn out to be the downfall of the Great Potato Project. The central planners at Potato Headquarters ultimately spent $23 million of your tax dollars on concrete potato fortresses. The cost to store potatoes in these facilities is $30 to $35 per tonne, compared to the industry average of $12 to $15 per tonne. The sale of one of these storage facilities to LDPC was part of the January deal.

Any farmer knows that market volatility is a given, so you had better keep your overhead low. The high cost of storage put potato farmers in a difficult and uncompetitive position. Instead of sparking agricultural diversification and the entry of agribusiness and entrepreneurs, the Saskatchewan government found it had to put more and more subsidies into the Potato Project to keep it going. As subsidies tend to do, this contributed to a glut of potatoes and reduced potato prices. It also sparked the anger of American farmers, who naturally protested the subsidies.

When the price of potatoes dropped, the heavy cost of operating the storage facilities helped to sink the Lake Diefenbaker Potato Corporation, dragging creditors, farmers, and taxpayers with it. So much for good intentions.

It has been suggested that all this potato money was spent to attract a major processor like McCain's. But the french fry maker set up shop in Alberta, where taxes are lower and potato storage isn't a focus of major government activity.

The Saskatchewan government went wrong when it decided to become a leading player in the potato industry, instead of focussing on creating a good business and tax environment for farmers and agribusiness entrepreneurs. As a player, the government and its Crowns made bad decisions on a big enough scale to ultimately damage the industry and lose taxpayer money.

Government should leave farming to farmers.