Barley may experience a renaissance when the CWB’s marketing authority changes this summer.
Farmers are signing malting contracts with major brewing companies even before the board’s status changes from a single desk agency to a voluntary marketer Aug. 1, said Brian Otto, past-president of the Western Barley Growers Association.
The board acted as a middleman between brewers and food companies, but now farmers can do their own deals, he added.
“Anheuser-Busch has been contracting malt barley directly with farmers and we are going to see a change in the trading patterns of barley and we will see more barley going into the U.S., especially from Alberta,” Otto said.
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The association commissioned the Barley Sector Analysis project two years ago to determine how Canada might reverse the trend of reduced plantings and profitability for barley growers.
Prairie barley acreage has dropped from 14 million to six million acres.
The study also examined an optimal marketing structure.
“Everybody feels an open dual market is the best market for the barley industry,” Otto said.
The study defined a dual market as an open system with the added component of a pool offered by an independent party such as the board, although conventional grain firms would handle the barley.
The study also recommended allowing mid-grade malt into the marketplace. It was anticipated that allowing more malt graded as fair average quality (FAQ) into the system, along with improved prices for feed and malt barley, may help the old standby crop rebound.
Only 20 percent of the best barley was ever accepted for malt, which Otto said should change because private companies can offer a contract with price and delivery times if the grower meets specifications.
“Private trade will pursue that FAQ barley, which is not quite top quality malt but it is not poor quality feed,” he said.
Otto said Canada could be selling medium range barley to China and Japan. Australia recognized the market 20 years ago, he added.
He does not know how much change might occur for the feed market because it competes with U.S. corn.
However, prices are likely to rise if international interest in feed increases.
“You will see the local feed price more related to the world price of feed barley so we will see price arbitrage,” he said.
