| | Malting barley | Malt | Total malting barley and malt
Malting Barley
Improved Canadian malting barley varieties and higher selection rates will enable Canada to increase exports of malting barley in line with the projected increase in world trade. The Canadian industry has developed new Canadian malting barley varieties that will remain the global standard for superior quality while at the same time being agronomically attractive to farmers. The portfolio of Canadian varieties today has lead to an expansion of two-row malting barley acreage in Western Canada. The new varieties are more adaptable to the eastern prairie region as they have enhanced disease resistance. They also yield more than older varieties such as Harrington. As the yield gap between malting barley varieties and feed varieties has closed considerably, producers now incur less of a revenue penalty if their barley does not get selected for malting. As a result, malting barley varieties now approach 80% of the total seeded barley area.
Selections as a percentage of total western barley production averaged 19% during 1997-2001. To achieve a projected malting barley pool of 3.2 million tonnes by 2011, selections will have to reach an attainable 23%.
The CWB’s Long-Term Trade Forecast predicts world malting barley trade to increase from about 4.5 million tonnes to 6.4 million tonnes by 2011. Canada’s share of world trade should also increase, from 28% to 32%. China’s import demand is expected to increase steadily to about 3.4 million tonnes (53% of world trade) by 2011.
Canada’s malting barley exports are projected to rise to over two million tonnes by 2011 and China is expected to account for close to 50% of these exports. The characteristics of Canadian barley/malt will continue to be very desirable for Chinese brewing and Canada is expected to increase its market share in China. Chinese malting capacity continues to grow with the construction of large efficient plants. China is not expected to import significant amounts of malt but will increase imports of malting barley. Malt imported into China continues to be disadvantaged by a 10% tariff versus 3% on barley.
Premium beer sales continue to grow in China as their brewing industry rationalizes and the large brewing companies increase their market share. These companies will continue to demand high quality malting barley.
Canadian malting barley exports in 2001-02 (‘000 tonnes).
 | Two-Row | Six-Row | Total |
| China | 417 | 46 | 463 |
| USA | 215 | 300 | 515 |
| South Africa | 73 | -- | 73 |
| Colombia | 51 | -- | 51 |
| Japan | 1 | 29 | 30 |
| Mexico | -- | 10 | 10 |
| | | |
| 757 | 385 | 1,142 |
Potential Canadian malting barley exports by 2011 (‘000 tonnes).
| Two-Row | Six-Row | Total |
| China | 875 | 75 | 950 |
| USA | 200 | 450 | 650 |
| South Africa | 125 | -- | 125 |
| Colombia | 100 | -- | 100 |
| Japan | 15 | 45 | 60 |
| Mexico | 50 | 50 | 100 |
| Others | 50 | 5 | 55 |
| | | |
| 1,415 | 625 | 2,040 |
In the past three years, Canada has been successful in recapturing market share in two important markets, South Africa and Colombia. This was the result of crucial market developmental work by grain handling companies and the CWB to gain the acceptance of new varieties including AC Metcalfe. These two markets can potentially take 200,000 tonnes annually from Canada. Market development continues in all markets, with the assistance of the recently established Canadian Malting Barley Technical Centre, to educate maltsters and brewers on the characteristics and benefits of Canadian malt and malting barley. This work and the continued improvement of malting barley varieties will enable Canada to increase market share in many countries.
The growth in malting barley exports is forecast to be predominantly two-row. Canada’s six-row customers are the USA, Mexico, Japan (for barley tea) and China. Total sales to these markets will grow more slowly, but are expected to approach a total of 625,000 tonnes annually by 2011.
Malt
The Canadian malting barley and malt industry has been a success story over the past two decades. During the 1990’s, malting capacity in Canada was increased by over 350,000 tonnes (40%). The new malt plant construction was all in the Prairie Provinces and was geared to offshore malt sales. In 1980, fifty-five per cent of Canadian malting capacity was in Western Canada. Today, over seventy-five per cent of the capacity is on the Prairies.
Malting capacity in Canada currently is about 1.2 million tonnes (grain equivalent) of which almost 70% is dedicated to export sales. Canadian malt exports have more than doubled since the early 1990’s from 300,000 tonnes to about 650,000 tonnes (grain equivalent).
Canadian maltsters are currently facing some challenges. Japan has been Canada’s largest export malt market in recent years accounting for about 40% of export malt sales. However, Japanese malt demand has been declining due to economic conditions and lower sales of full malt beer. Other malt markets such as Brazil have been very difficult to compete into in recent years due to competition from lower quality and lower priced EU winter barley. Prices for this barley have at times, over the past two years, been below Western Canadian feed barley values. The declining malt sales to Brazil have been replaced with increased sales to the USA and Mexico. This has been a positive development. However, new malting capacity in the EU, Russia and Ukraine are increasing competition in the offshore malt markets.
Global malt trade will continue to increase. Much of the increased demand will be in Asia (excluding China) where Canadian maltsters should be able to compete and capture market share. Demand in South America is expected to also continue expanding but this will remain a difficult market due to EU competition.
In the past year, there have been announcements for the construction of two new malting plants in the USA with a combined capacity of about 375,000 tonnes malt when fully completed. The plant locations in Idaho Falls and Great Falls, Montana are situated to supply the expanding markets in the South Western U.S.A. and Mexico. They will also be replacing older malting capacity. International Malting Company (building in Montana) has announced the closing of a 100,000 tonne plant in Milwaukee and ConAgra Malt has closed their 60,000 tonne Los Angeles plant. Further rationalization in the U.S.A. can probably be expected. These new plants do create some uncertainty as to whether Canadian malt exports to the USA and Mexico will continue to grow as in recent years. However, Mexico’s growth in beer production (4% annually) should ensure continued demand for Canadian malt.
In the CWB’s Long-Term Marketing Plan, it is assumed that Canadian malt exports will increase by approximately 100,000 tonnes by 2011 to about 640,000 tonnes (815,000 tonnes barley equivalent). This will require minimal plant expansion with existing plants running at capacity.
Malt sales for domestic brewing will continue to increase slowly due to the slow growth in Canadian and U.S. beer consumption. Domestic beer demand is projected to consume 375,000 tonnes of malting barley in 2011.
Total Malting Barley and Malt
The malting barley pool is expected to grow to 3.2 million tonnes by 2011. This is a very positive development for Canadian producers as malting barley is expected to continue to yield one of the highest net returns per acre.
Bob Cuthbert
Canadian Wheat Board
Presented at the 3rd Canadian Barley Symposium, June 19-20, 2003 |
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