What impact would an open market have on Alberta malt and feed barley pricing?

How much does the CWB cost?

What is the state of wheat and barley value added processing in western Canada?

What impact would an open market have on Alberta malt and feed barley pricing?

In an open test market, market fundamentals rather that CWB policy will determine barley price levels. In the case of feed barley, the domestic feed market will remain the dominant factor in setting feed barley prices.  Export feed barley sales will only occur if these prices are competitive with domestic feed prices.  Malt barley prices will continue to be established in a North American and world market as they are today.

The long and short of it? Better market and price signals will occur in an open market. Better customer signals will result in better marketing decisions by farmers. Better decisions equal better profits. Customers will see barley more as a higher value crop, and western Canadian farmers will be better able to meet domestic demand for feed.
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How much does the CWB cost?
The CWB administrative expenses were $66 million in 2002-03 (source: CWB 2002-03 Annual Report, page 53). This is about $4/tonne or roughly 10 cents/bushel. This is over and above the costs of handling, storing and transporting your grain. Administrative expenses are deducted from the grain sales revenue before the final payment is issued.
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What is the state of wheat and barley value added processing in western Canada?
The Government of Alberta and the Canadian Wheat Board agree that growth in the value added processing sector is important for stimulating economic activity and that there has been value-adding expansion in some areas in western Canada. However, there is evidence that the CWB's single desk marketing discourages further processing of wheat and barley at home.
 
Western Canada should be attracting investment in malt processing facilities, because we have lower malt manufacturing costs than the U.S. and a larger production base. Further, malt production tends to be located close to barley production areas due to the fact that it is more costly to ship barley than to ship malt. However, Alberta lost out on two malting plant opportunities when the companies decided to locate in Montana and Idaho, citing the CWB as part of the reason for not locating in Alberta. (Source: Barley Industry in Transition - Sparks Companies Inc., April 2004)
 
Only 5.5 per cent of the wheat produced in the prairies is processed in the prairies. Ontario processes the equivalent of 117 per cent of its total production, because it processes much of its own wheat and western Canadian wheat. Nearly 40 per cent of the wheat and 88 per cent of the durum produced in the U.S. is processed domestically. In Canada, we process only 17 per cent of our wheat and 7 per cent of our durum. Most of western Canada's wheat is sold as a raw commodity into world markets where prices are in a long-term decline.
 
Oats processing has grown 300 per cent (from a relatively low base) since oats were removed from CWB jurisdiction in 1989. Forty per cent of the canola grown in western Canada is processed domestically. Canada has become the world's largest exporter of peas and lentils with a concurrent rapid expansion in pulse processing capacity in western Canada.
 

Alberta recently launched a long-term value-added strategy – Securing Tomorrow's Prosperity. It states: "Exporting wheat is an important part of the Alberta economy, but Alberta also has the capacity to make more bread, pastries and pasta."  Alberta wants to "refocus our economic strategies, adding knowledge and innovation to our traditional commodity sectors and to new and emerging sectors in order to keep Alberta globally competitive." "Without this change in economic strategy, Alberta's economy will remain reliant on resources and fluctuating commodity prices, and it will grow at a slower rate."
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