Canada: Opinions divided over 2008 barley acreage
Opinion is divided as to how the debate over the Canadian Wheat Board's (CWB) barley marketing monopoly will affect barley acreage in the 2008-09 crop year, Resource News International reported February 13.
Based on conversations he has had with barley farmers, Western Barley Growers' Association (WBGA) past president Doug McBain of Cremona, Alta., said he believes fewer acres will be seeded with barley this coming spring, though he didn't have an estimate as to what acreage levels would be.
McBain said he believes it's not so much the uncertainty surrounding the issue, as it is the CWB's poor price offerings that will dissuade Prairie farmers from seeding barley.
"The price being offered for malt barley through the CWB is not competitive enough to encourage them to seed more acres," he said.
"If you have the location and soil conditions required to grow anything but barley you will, because barley is the poorest-margin crop."
Mike Jubinville, a consultant with ProFarmer Canada in Winnipeg, also said relatively low prices will have farmers thinking twice about seeding barley this spring, as will the uncertainty surrounding barley marketing in Western Canada.
From historical perspective barley prices are high, he said, yet compared to other crops this year, in terms of return per acre, barley prices are on the low end of the spectrum.
"Based on today's conditions, the returns on barley are not sufficient enough to warrant an increase in acres relative to other commodities," he said.
Farmers will also be looking for certainty as to what type of marketing system they can expect, according to Jubinville.
"In light of the uncertainties regarding marketing systems for barley for the year ahead, people want some clarity as to what kind of a system they will be operating in and without that clarity, they're asking why they should plant barley when they can grow wheat and lock it in at historically high prices."
"Marginal" increase
Joe Wang, coarse grains analyst for the market analysis division of Agriculture and Agri-Food Canada in Winnipeg, offered a different perspective. Strong domestic usage, combined with lower carry-in stocks, will encourage the seeding of barley. He noted, however, that the increase projected in the report was marginal.
"The thing about barley is that unlike wheat, the domestic market is larger than the export market. The majority is domestic feed use and if there is any impact from marketing choice then I'm not sure how big the impact would be given that the major market for barley is the domestic market," Wang said.
Wang, in his Feb. 5 report, forecast an increase in barley acreage, albeit a "marginal" one. He estimates 10.922 million acres will be seeded with barley during 2008-09. That compares to seeded area in 2007-08 of 10.865 million acres and the 2006-07 level of 9.118 million acres.
He also predicted barley exports will fall to 2.4 million tonnes in 2008-09, down from the 2007-08 level of 2.8 million tonnes. Domestic usage, however, is expected to rise significantly, up from 8.411 million tonnes in 2007-08 to 9.435 million tonnes for 2008-09. The increase, according to Wang, will be the result of increased supply and lower feed barley prices.
The report noted, however, that the "CWB pool returns for malting and feed barley are projected to decrease."
Although change in marketing choice for barley could affect 2008-09 crop year estimates, Wang said, the report assumes a continuation of current marketing conditions.
"We cannot make any assumptions about possible change in the marketing system so we base our projections on what the system is today," Wang said.
"The view we have is that until a new policy is implemented, until we are told that we're dealing with a new scenario, we will use the current system as our baseline," he continued.
"Everything looks good for this year (2007-08) and next year (2008-09), so in terms of which acreage goes up and which goes down, it's pretty hard to project," Wang said.
McBain, meanwhile, said he does not expect the barley marketing dispute to be settled anytime soon, despite meetings between the CWB, the Canadian government and key industry players.
Agriculture Minister Gerry Ritz "has asked the board to present a new proposal but we don't see one coming forward and so in the meantime we have the CashPlus program or the old pooling system and that's it," McBain said.
As far as the WBGA is concerned, he said, both the Canadian government and the CWB have the ability to move the process forward.
The malt industry will likely face a crisis, he said, if they are not able to source enough barley this upcoming year.
13 February, 2008
