Canadian barley exporters turn to China

Canadian barley farmers are benefiting from a China-Australia trade spat, yet ongoing tensions between Ottawa and Beijing mean nothing should be taken for granted.

Australia has long been China’s No. 1 supplier of barley but after Beijing slapped an 80% tariff on imports of a number of Australian crops, accusing the latter nation of dumping agricultural products, Canadian producers stepped in to fill the gap. According to the Canadian Grain Commission, the country exported 240,000 metric tons of barley internationally in May, more than double the quantity reported in April. Some 175,000 tons of that product went to China.

Typically, barley is harvested in late summer and most of the export crop is shipped out in the last three months of the year. But so far in 2020, Canada has already exported almost as much barley as it did all of last year. The reason is beer, and China’s growing demand for the beverage. According to industry experts, Canadian barley is especially well liked by Chinese brewers because of its higher protein content. In China, barley is typically mixed with lower-protein grains such as rice and wheat in the brewing process, which requires more protein and other enzymes from the barley to achieve the right balance.

The good news for Canada is that about a quarter of the barley produced here is of the malted variety, destined to be used in beer with the rest typically used as animal feed, a good portion of which is consumed domestically. The bad news for some is that prices for lower grade feed barley are rising, and if the trend continues, farmers in regions such as Southern Alberta will feel the pinch.

The boost for barley contrasts with the fortunes of another major Canadian crop, canola. Last year, China moved to block Canadian canola shipments in a move widely seen as retaliation for the ongoing detention of Huawei executive Meng Wangzhou. Yet it’s notable that while China has been happy to use canola as a negotiation tactic, thus far they seem unlikely to do the same with barley, potentially because their domestic beer market is growing so rapidly. China now consumes more beer than any other country in the world. The unstable climate of international trade is such, however, that Canadian barley exporters shouldn’t take anything for granted.