Wade McAllister didn’t expect to be a direct marketer when he returned to his family’s grain farm in 2010.
But with the demise of the Canadian Wheat Board in 2012, McAllister found a whole new market open to him — direct contracts with breweries for his malt barley.
“Ever since the wheat board was dropped, we’ve noticed a huge increase in end-user relationships,” said McAllister, who operates Antler Valley Farm near Penhold with father Wayne and brother Scott.
“We never had these close relationships because it was all sold through the wheat board. A truck would come in and get it, and maybe it went to Rahr or maybe it went to Canada Malt, but we never knew that.
“Now that the wheat board is no longer in place, we’re able to market our grain on our own, and we’re able to develop these relationships and see where the product is going.”
McAllister is one of a growing number of Alberta producers who are direct contracting their malt barley crops to breweries — and not just small-scale local craft brewers, either. More and more, major international breweries — such as American craft brewers New Belgium and Lagunitas or Japan’s Sapporo — are looking to create connections with Alberta producers, in part because of the quality of the province’s malt barley but also because of the growing ‘drink local’ movement.
“Everybody wants to know where their food comes from these days,” said McAllister, who currently contracts malt barley to New Belgium through Rahr Malting and Sapporo through Canada Malt.
“I think that’s definitely where agriculture is going.”
Producers like McAllister aren’t the only ones seeing this shift. Over the past five years, Rahr Malting has noticed a growing trend toward end-user relationships between breweries and producers, said Kevin Sich, grain department manager for Rahr.
“We’re seeing more and more that the brewers want to know the farmers,” said Sich. “Everybody wants to eat and drink local, so a lot of these brewers are identifying with that, too.
“Five or 10 years ago, no brewery even cared where their malt came from. But now we’re finding that they’re coming out to do a plant tour here and they also want to see a couple of farmers, too.”
And while the trend may have started with the craft brewers, the big guys are also jumping on board with the growing consumer interest in where their food — and drink — comes from.
“It all started with the craft guys — that drink local, eat local movement. That’s just resonating with everyone now, and it’s really becoming a big part of the industry,” said Sich.
“The major accounts are waking up to this too. They’re seeing that this is important. I’ve been here eight years, and I’ve never seen such a connection.”
‘Not just a commodity’
In many ways, malt barley is “the first real true connection” that the conventional agriculture industry has with its end-users, Sich added.
“You don’t see that with wheat yet. You don’t see Robin Hood saying, ‘Where’s our flour coming from?’ he said. “Barley is the first one that’s really testing that, but I think we’re going to see more and more of the industry going that way.
“Malt barley is not just a commodity anymore.”
And producers are benefiting from these direct relationships. The McAllisters have seen roughly a 30 per cent increase in the price they can get for their malt barley since the single-desk system was abolished, in part because of the price premium they receive from direct contracting.
“I don’t think I’d be farming if the wheat board still existed,” said McAllister. “Knowing what we do now, it would be impossible to run an operation.”
But the price premium comes at a cost — namely, more paperwork. Major companies want records from seeding to harvest and everything in between — “they want to know everything you do to that crop.”
“The guys at Sapporo and New Belgium want to look back and see exactly where and how that barley was grown,” said McAllister. “It’s no problem for us. We’re not hiding anything. We get a bit of a price premium for doing this, but we’d do it anyway.”
Traceability is a key part of Rahr Malting’s program. That is, after all, what end-users expect in 2017.
“We have full traceability. We can trace a kernel of barley from the field through the plant and right out the back end,” said Sich.
“You are getting paid extra for doing that work for us. Our producers go the extra mile for us, and we want to reward them for that.”
But for McAllister, it’s not all about the money. As much as consumers want to know where their food comes from, McAllister wants to know where his food is going.
“We like having those relationships with the end-user — being able to sell our product to a brewer and having it use 100 per cent of our product,” said McAllister. “With our canola, we don’t have a clue where it ends up. Our wheat is shipped all over the world. But to have the barley stay local in our province and be used is awesome.
“It’s more exciting for us as producers to see where it goes.”