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Jan 13

Alberta Barley focuses attention on malt barley insurance

Posted on Jan 13 By: Ellen Cottee

With Alberta’s craft beer industry expanding, the province’s grain producers continue to take advantage of the opportunities this market provides. Thanks to the strong demand for malt barley, a key ingredient in beer, Alberta farmers will be including this high-value crop in their rotations in the years to come.

Existing barley insurance is currently designed for feed crops and did not recognize the malt price premium producers receive for a successful crop, a gap that can leave farmers wary of committing to the input process required to grow malt barley. With this in mind, Alberta Barley has begun working directly with the industry to make this process more farmer-friendly than ever before.

The idea for malt barley insurance was about as grassroots as you can get.

In early 2014, a farmer from Paradise Valley approached his Alberta Barley region director, Bernie Klammer. As a malt barley producer, the farmer found there was no malt-specific insurance to protect himself from potential losses.

“He was quite concerned he couldn’t select malt barley versus feed barley insurance because of the high risks involved, the input costs and the potential of greater return,” Klammer recounted.

When grown and sold specifically for malting, barley can be worth up to 30 per cent more than feed, according to Klammer. However, malting barley must meet specific requirements in order to be selected.

As Klammer explained, malt barley can be fickle. Despite the hard work farmers put into the crop, a bad growing season or extreme weather can damage the malt barley beyond malting or general purpose use, which is a big loss for farmers.

Alberta Barley identified malt barley insurance as a priority after it was submitted as a resolution during 2014 regional meetings. This resolution was then carried forward and approved at the Alberta Barley AGM in December 2014. Almost immediately thereafter, Alberta Barley staff began working with the Agriculture Financial Services Corporation (AFSC) to explore an insurance program that would cover the price premium for malt.

Alberta is the first province in Canada to tackle insurance for malt barley, according to Jesse Cole, a research analyst at AFSC. The U.S. Department of Agriculture recently started offering an insurance product for malt barley, providing some guideposts in the exploration process. The USDA product indicated that it was feasible, but designing a new program is a demanding job. It requires doing research, identifying stakeholders and evaluating the viability of the proposed program.

“We’ve looked at malt coverage in the past and found some sizeable hurdles,” Cole explained. “We had to work toward getting over some of the issues.”

Luckily, this time around, AFSC had a partner to help hash out the details.

“Alberta Barley was pretty instrumental in putting together a working group with members of the industry,” Cole explained. “That’s been the difference: the support from the industry. The working group has helped overcome barriers and provided information to build a concept that will work for growers”

Alberta Barley helped AFSC bridge the gap between researchers, farmers and buyers. “Working with industry groups in the past has been a great way to hear what the needs are and how things are working for our clients. Those relationships are very important,” said Cole. “They’ve become a focus of the Research and Product Development area here.”

Going forward, partnerships like this will allow the entire agriculture value chain to align their work and find solutions that work for everyone.

“It’s great that it’s a group effort,” said Cole. “Alberta Barley, AFSC, and some of the buyers and sellers getting together and figuring out how we can do it.”

As the important work on this program continues, malt barley insurance will ideally be similar to coverage for high-protein wheat and speciality canola. Like malt barley, these varieties take more care to produce and are more likely to have a higher value at point of sale.

Klammer said the idea of malt insurance was well received, but led some farmers to worry about the specifics. “A few guys started talking about what-if scenarios,” he said. “I said ‘well, we shouldn’t dwell on the what-ifs. At least the option will be there.’”

Klammer explained that if malt barley insurance becomes a reality for Alberta farmers, it will allow for better risk management. “Farming best-practices can take place,” he said. “But risk management is an important part of the whole equation.”

Currently, the program is under review with the federal government. Alberta Barley and AFSC are hopeful malt barley insurance will be available for the 2016 crop season.

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