Canadian farmers will produce 10.8 million tonnes of barley in 2009, 1 million tonnes or 8 per cent less than last year due to lower feed demand, the Canadian Wheat Board said last Monday.
Last year’s production of 11.8 million tonnes was Canada’s largest in four years.
Feed barley growers have been sideswiped by the global economic crisis’s impact on the livestock industry.
An 11 per cent reduction in Canada’s hog inventory and five per cent drop in the size of the cattle herd has stripped feed barley demand by more than 1 million tonnes, said Bob Cuthbert, the CWB’s senior marketing manager, at the CWB’s annual GrainWorld conference.
About 73 per cent of Canada’s barley crop was used as feed last year.
The prospects are better for malt barley growers. The CWB forecasts steady demand for the crop used in beer production, but that optimism hinges on a bullish answer to an open question, Cuthbert said. “Do people drink more or less beer when times are hard?”
“You might say beer is a more recession-proof beverage,” Cuthbert said in an interview, adding he doesn’t know if sales will sustain themselves during the global recession.
Malt barley growers’ hopes rest on China. Beer production has spiked 30 per cent between 2005 and 2008. There’s a bearish sign from Russia, however. Russian beer production dropped for the first time in 12 years in 2008 to 114 million hectolitres, as vodka became cheaper, Cuthbert said.
World barley is forecast to drop 5.1 million tonnes to 144.4 million tonnes from 149.5 million tonnes.
Cuthbert projects demand for malt barley will be steady this year and lower for feed barley.
The CWB released its first pool return outlook for barley Feb. 23. Feed barley prices are projected to decline $26 per tonne to $161. Malting barley prices are expected to drop $57 per tonne to $263 for two-row barley and $243 for six row.
Australia is expected to increase malting barley production, which will be partially offset by a drop in Canadian seeded area and expected yields.