Rahr Malting plans to spend more than $6 million to expand barley storage capacity at its malting plant in Alix, Alta.
Bob Sutton, vice-president of sales and logistics, said the expansion will include the construction of three 9,000 tonne storage bins.
Construction will begin immediately and should be complete by next summer.
The bins will triple storage capacity at the Alix plant, adding 27,000 tonnes of aerated storage space.
Sutton made the announcement Nov. 1 in Alix.
Federal agriculture minister Gerry Ritz, who was scheduled to attend the announcement, is spearheading government efforts to eliminate single desk grain marketing in Western Canada.
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Sutton said Ottawa will not contribute money to the expansion, but he said the government’s decision to end single desk marketing influenced Rahr’s decision to invest in the facility.
“If there weren’t any changes coming, we honestly wouldn’t feel the need to build any new storage,” Sutton said. “In the new environment, we’re going to have to be much more competitive in our dealings with growers in terms of not only price but also helping them manage storage risk.”
Rahr contracts 180,000 tonnes of malting barley annually in Western Canada.
The Alix expansion will allow Rahr to take delivery of its total annual tonnage about three months earlier than normal, Sutton said.
Deliveries of farmer-contracted barley should be completed by June of each year rather than August.
This will result in a more flexible delivery schedule for farmers and will reduce business risks associated with on-farm storage and germination loss, Sutton said.
He said he isn’t convinced that proposed grain marketing changes will result in larger barley acreage in Western Canada.
Instead, he said demand for unprocessed Canadian malting barley will hinge on the ability of Canadian grain merchants, including line companies, to service existing overseas customers and identify new buyers that weren’t buying from the wheat board.
“Overall, I think it will depend on how merchants can get in there and find new markets,” Sutton said. “If the Australian example is going to be followed here, and I assume that it is, I think we’ll find a lot more niche markets that I don’t think the board was very effective at selling into.”
Rahr is one of four malting companies in Western Canada that belong to the Malting Industry Association of Canada.
It also owns a malting plant in Shakopee, Minnesota, and a barley procurement and distribution facility in Taft, North Dakota.
Other MIAC members include European-based Malteurop in Winnipeg, Prairie Malt in Biggar, Sask., and Canada Malting Ltd. (CML).
