The onslaught of fast-improving, high-returning crops such as canola, soybeans and corn is killing interest in prairie standby crops such as oats and barley.
Spring wheat’s sudden return to profitability has also hurt prospects for the two old crops as farmers gravitate toward large acreage crops that are easier to market.
Some analysts predict oats and malting barley will eventually reach special crop status and that feed barley will become a smaller crop.
“We’re there. We’re there right now,” oat market analyst Randy Strychar of Oatinsight.com said after a presentation during the Grainworld conference.
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“It’s time for a wake-up call in the oats industry.”
Pat Rowan of BARI Canada believes much of the prairie malting barley crop will be marketed through contracts.
Alberta Agriculture’s Charlie Pearson said even feed barley, which still has millions of acres and is a mainstay in many parts of the Prairies, will have trouble holding off the advance of wheat, canola, soybeans and corn.
“Canola’s been king of the hill. Everybody has had to compete with canola for acres,” said Pearson.
“I think it has to come down to the yield side. We have to do something to increase yield.”
Strychar didn’t see boosting yields as the answer for oats because it has a much smaller demand base. The human food market is stagnant, and the only hope to improve returns for farmers is to build more demand, which means reconquering the horse feed market.
“You can do all the plant breeding you want, you can put all the yield to it that you want. You’re still going to deal with one to two percent food growth per year,” said Strychar.
“If you want growth in the oat industry, you’re going to have to get it from the feed side, and right now the equine market is the only game in town.”
Rowan said his company has invested millions of dollars in finding agronomically strong malting barley varieties in Argentina, Russia and the United States. However, it has been dwarfed by the flood of investment into genetically modified wheat and other crops that will soon compete vigorously for farmers’ acres.
Pearson said developing new barley varieties and promoting the crop’s healthy factors could help stem the loss of acreage.
Strychar said farmers have backed away from growing oats because of pricing problems, in which even extremely bullish supply situations don’t turn into high prices. Farmers are now growing barely enough to meet demand because they feel the crop is risky.
“Production right now is sitting on top of demand, which means no residual supply,” said Strychar.
He expects that oat buyers will soon have to contract the production they need, which could cost them 90 cents to $2.60 per bushel extra. General Mills understands this danger, he added, but many smaller buyers don’t seem to realize the seriousness of the situation.
“I think a lot of them really don’t believe they’re there,” said Strychar.
“They should care because it’s going to raise the price,” he said.
“It’s not simply, ‘I can go out and contract that (acreage).’ It’s costly. It’s time consuming. And it’s not easy.”
Strychar said the danger for buyers is that they might lose these crops before they realize there’s a crisis.
The danger for growers is that formerly valuable crops might disappear from their seeding decisions and leave them with fewer choices in the future.
