With marketing freedom now achieved for Western Canadian barley growers, creating robust marketing systems is a vital next step.
“As far as challenges go, I don’t see a lot of challenges,” said Brian Otto, president of the Western Barley Growers Association (WBGA).
“Barley producers have been asking for this for a long time. This challenge, of trying to free up barley, we started on this back in 1996. Malt companies are out there offering malt prices right now, trying to contract production.”
The WBGA is exploring options and opportunities to re-focus and re-invigorate Western Canada’s barley industry.
Through their study In Search of the Optimal Marketing Structure, the WBGA has consulted with many industry representatives (including in China and Japan) in all sectors of barley’s domestic and export supply chains.
The study is gathering information to put forward recommendations for the best commercial model for Western Canada’s newly deregulated barley market place.
“The transition challenge, I think is just what new markets are out there,” said Otto.
“We know they’re there — we found them in our barley study. So it’s how they’re going to be accessed. I fully expect the industry will adjust to that fairly shortly. We proved it in 2007, the last time Minister Strahl gave marketing freedom to barley, and it lasted about four months. The industry, in that short space in time, did 800,000 tonnes of barley sales offshore. So the industry adapts very quickly to changing market environments.”
In the past decade, barley has seen a steady decline in acreage, production and profitability — something Otto believes will soon come to an end with the advent of marketing freedom.
“I certainly see an increase in barley acres. We’ve gone from a high from five or six years ago of 12 million acres, to a low of less than six million acres here a year-and-a-half ago. We were between six and seven million acres last year. I expect to see barley acres increase. Profitability, of course that will all depend on the marketplace and the prices that are offered for barley, but more than anything it’s the bottom line — what is the net return on barley compared to other crops that we’ve grown in Western Canada. Certainly what I see happening in the barley industry in the new market environment is that we’re going to have open transparent pricing for barley producers, so what we’re quoted we will see when we deliver into a malt plant, or into an elevator, or into feedlots.”
New global markets exist that the barley industry is just barely scratching the surface of, according to Otto.
“In our barley study that we’re just finishing now, there are markets that we’re not participating in right now. A very good example is what we call mid-range barley. Mid-range barley is  not quite good enough for the high quality malt market, but it’s better than feed quality. There’s a large market in the world for that mid-range quality barley. In China, they would use it for malt. And we have not pursued that market aggressively in the present circumstance that we’re in right now. There’s a market we can pursue right there. The Australians, they have been pursuing that market for two or three years now, and it’s one we should have been pursuing, too, but we just haven’t been. One of the other markets is what we call the craft brewing market. You see all of these craft breweries offering their own in house made craft beer — that’s a growing market. And it’s a niche market — each little brewery is not a large market, but when you put them all together it’s significant, and it’s growing. So that’s one we should be pursuing also.”
While malting barley delivers returns comparable to crops such as canola and spring wheat, the majority of barley grown is typically sold for livestock feed.
The feed market has seen declining domestic consumption and increased competition from grain corn and wheat DDGs (dried distillers’ grains, a by-product of ethanol production) from Western Canada and the United States.
“In the feed market, certainly there are overseas international markets that we can pursue, and we just haven’t been,” said Otto.
“There’s going to be more competition for feed barley in Western Canada from offshore — I see that happening. Will the barley industry grow? It most certainly will. From a malt market point of view, our malt market is around 2.1 million tonnes — I fully expect we can add a million tonnes to that, easily. When you talk about feed markets, we grow between eight and 12 million tonnes, depending on how many acres are in the ground.”
Western Canada has a number of unmatched strengths in barley, including top-notch production, storage and handling infrastructure, as well as a reputation as one of the world’s best producers of high-quality barley.
“When you take a look at the value of the barley industry to Western Canada, it ranges anywhere from about $1.4 billion to $3 billion, at farm gate. When I say farm gate, that’s at my yard. That’s not taking into account all the added value of processors, malt plants and feed lots. Just at the farm level, it’s significant to the Western Canadian economy,” said Otto.
Making barley a more attractive crop moving into the future will require a concerted effort from a variety of producers. 
“What we foresee out of our study is that we can talk about expanding and growing our market, but it’s going to take an effort from all the players working together in this industry, right from producer to end user,” said Otto. “We can’t expect one sector in the value chain to build this industry — it’s going to take co-ordinated effort amongst all of us to build this industry. There’s an effort being put forward now to develop a national barley council where you bring all the players to the table to discuss the industry and how we’re going to proceed forward. We’ll be hearing more about that down the road. I would say in the next two or three months there’s going to be a lot of talk.”
The WBGA’s In Search of the Optimal Marketing Structure study is funded by the federal government’s Canadian Agricultural Adaptation Program, as well as Big Rock Brewery, Rahr Malting Canada, the Alberta Barley Commission and the WBGA. Final study findings and recommendations will be released at the WBGA’s 35th annual conference, Feb. 15-17, at the Deerfoot Inn and Casino in Calgary.