Alberta Agriculture recently commissioned the Sparks Companies to research the position of Canadian barley in domestic and world markets. The resulting report, “The Canadian Barley Industry in Transition: A Study for Alberta Agriculture, Food and Rural Development” was released in April 2004. The study is available in its entirety on the choicematters.gov.ab.ca website.

The following excerpts from the Sparks Report speak volumes to the changes needed in the malt barley industry in Canada.

1. “According to industry sources, the CWB’s position as the sole source of malting barley in Canada has discouraged capital investment in the malting industry in Canada, regardless of the cost factors.”

2. “Western Canada should actually be a more attractive location as malt manufacturing costs are estimated to be in the range of US$35 to US$40 per tonne of malt produced, while US costs are more in the range of US$45 to US$55 per tonne.”

3. “By locating in the US, maltsters can source local barley production while also sourcing imported barley from Canada; the ability to contract with various sources – including farmers – is an important logistical factor when operating any processing facility.”

4. “The US system is expected to develop through value propositions to individual farmers, grain merchandisers and handlers including contract growing, paying toll fees for elevation and segregations and possibly joint ventures. There is expected also increasing pressure for sophisticated identity preserved systems as brewers, in the interests of food safety, will begin to require traceability.

5. “Unless Canadian maltsters can operate in similar fashion, it will be increasingly difficult to compete in the US, a key market for Canadian malt. Since most of the Canadian maltsters are US based, there is the risk that the US parent companies will favour operations which they can operate most freely; Canadian malt houses could be phased out of the US market, forcing them to rely on Canadian domestic and offshore business.”

6. “CWB contracts are a far cry from traditional open market contracts that have more to do with delivery access than to pricing or price risk management.”

7. “The general conclusion of this report is that the barley industry is faced with slow growth in most markets. Moreover, the CWB is seen as the major impediment in almost all areas of its activities, including pricing and price signals, risk management (contracts), pool management, and marketing and market development.

8. “The most logical steps to ensure a robust barley industry in Western Canada include either removal of barley from the jurisdiction of the CWB, or the provision of marketing choice for farmers to allow competition.”

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