Canadian malting barley exporters will be moving less grain to overseas markets this year.
Robert McCaig, managing director of the Canadian Malting Barley Technical Centre in Winnipeg, said production problems that affected barley growers across most of Western Canada last year could leave exporters and foreign brewers in a tight spot.
Canada’s barley acreage was down drastically in 2010, quality was poor and selections for malting are expected to be well below normal.
“It’s going to be a tough year,” McCaig said. “We have poor quality and less volume.”
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To satisfy domestic and foreign demand for finished malt and malting barley, the Canadian malting barley industry usually tries to select about two to 2.2 million tonnes of high quality malting barley per year.
About half of the barley selected for malting – approximately one to 1.1 million tonnes in a normal production year – is used for domestic brewing and domestic malt production. The 2010 crop is expected to cover domestic needs but barley exports will suffer.
“I think it’s not a stretch to believe that we’re going to have half of the normal exports,” said Bruce Burnett, a market analyst with the Canadian Wheat Board.
Canada’s malting barley industry has been trying to increase exports into emerging markets or markets that have high growth potential.
Beer sales in countries such as India, China and Vietnam are expected to increase steadily in the future.
“You can tell a market is heating up when all the big international brewing companies move in and starting buying up breweries,” McCaig said.
“That’s what’s happening in Vietnam, that’s what happened years ago in China and that’s what’s happening now in India.”
This year, Canadian exporters will have little to offer.
Most of the top quality barley that is available will likely end up in Canadian malting plants. Much of what remains will probably go to reliable, established foreign customers that are willing to pay top prices.
Some of the industry’s best customers are already feeling the pinch, McCaig said.
“(Some breweries) are panicking a bit because they really rely on Canadian,” he said.
In an effort to promote foreign barley sales, the CMBTC has been working directly with foreign buyers to familiarize them with new malting varieties produced in Canada.
McCaig said uptake of promising new varieties by domestic and foreign brewers often occurs slowly.
In many cases, foreign brewers are reluctant to use new Canadian varieties until they have been widely adopted by Canadian maltsters and brewers.
The market for CDC Copeland was based largely on early uptake by Chinese brewing giant Tsingtao.
“We brought two people over from Tsingtao, we malted CDC Copeland for them, brewed it to their specifications and then the Canadian Wheat Board arranged to ship over (a few thousand) tonnes,” said McCaig.
“Then our director of malting technology … spent a couple of months over in China, malting that Copeland in Chinese malting houses.
“The end shot of the whole thing was that CDC Copeland was picked up by Tsingtoa and driven from the external market before it was picked up domestically.”
The shortage of Canadian malting barley could have a heavy impact on the Chinese malting industry.
According to the United States Department of Agriculture, China is the world’s largest importer of malting barley.
Canada and Australia are usually its top suppliers.
“China has seen a tremendous growth in the building of malting plants, such that they are now competing with our Canadian maltsters unfortunately,” said McCaig.
“Last year, I think they exported about 400,000 tonnes of finished malt out of China, principally (using) Australian and Canadian (barley).”
In April, the Canadian Wheat Board signed a deal that will see at least 500,000 tonnes of Canadian malting barley shipped to Chinese barley buyer COFCO over the next three years.
The contract guarantees minimum annual sales of 150,000 tonnes.
According to the CWB, the board sells an average of 400,000 tonnes of bulk malting barley to China each year.
