Barley could get a major boost from the Trans-Pacific Partnership trade agreement.
“The potential to value add on a feed product, which is usually considered to be the bottom end of the market, is huge here, and that’s much better than exporting a raw product,” said Doug Robertson, president of the Western Barley Growers Association.
“This deal gives us access to a huge number of people — 800 million more consumers — and it gives us preferential treatment.
“We’re going to be the only G7 country to have free trade access to the U.S., South America, Europe, and Asia Pacific. That’s a unique position.”
Up to 80 per cent of barley ends up in the feed market, with two-thirds being fed domestically.
“The strongest (barley) feed grain market in the world is probably in Alberta,” said Robertson, who farms near Carstairs.
“Because of deals like this, we haven’t seen it fall off as hard as some other markets have.”
But low barley prices have driven down acres, including a seven per cent drop in Western Canada over the past three years.
“Most barley used to be planted with the hope that it would be selected for malt, and very little of it ever was,” said Robertson. “Eighty per cent of the barley was produced to try and hit malt, and only 10 per cent ever got selected.”
But the Trans-Pacific Partnership (TPP) deal will open up another market for Canadian feed grains, which could translate into increased exports and better prices for feed barley growers.
“I think the biggest potential is that TPP opens things up not just for the raw product itself, but also for the use of grains in finished baked goods and in the meat sectors, which have been severely limited before with high tariffs.”
Japan, for instance, levies a $113-per-tonne tariff on Canadian feed barley. Multiply that by current export levels of around 150,000 tonnes a year, and the value of Canadian barley stands to rise by nearly $17 million.
“A lot of the countries that are involved in the TPP on the Asia side have been using tremendous tariff barriers for years to protect their farmers,” said Robertson. “This will really help move grain into those markets.”
Producers could also see domestic demand for feed grains increase because of reduced tariffs on Canadian fed beef and pork.
“Right now, we’re very highly dependent on a healthy livestock industry, which has been hurt over a lot of years,” he said. “Our major market into the States has been severely affected by country-of-origin labelling legislation.
“The TPP will help move fed beef and pork into those markets as well, and those are good value-adding opportunities here that will help create jobs in Canada. That’s a big plus.”
But will it be enough to make barley attractive to growers?
“The advantage that feed barley has — even over some feed wheat — is that the input costs are lower than a lot of other crops,” said Robertson. “If you take into account the lower cost of inputs to produce it, feed barley comes out very well.”
But producers will need a better price discovery model for barley before there are any major shifts in Canadian barley acres, he added.
“You can’t forward contract barley right now, but you can do that with wheat and canola,” he said. “Until you have a price that both producers and feeders can rely on — something that’s fair and transparent — it’s going to be tough.”