Spring
2016
Grains
West
14
BY NATALIE NOBLE
THE
FARMGATE
EVENTHEODDS
AFSCOFFERS FIRST-EVERMALT
BARLEY INSURANCECOVERAGE
INCANADA
BRENT MCBEAN HAS GROWN MALT
barley on his farm near Strathmore for
decades. He is well aware of the variables
and risks that factor into producing a suc-
cessful end product—one that rewards
him with a higher price than his feed
barley.
“With malt barley, we’re exposed to
a lot of risk,” he said. “Our biggest risks
are production and chitting risks, and of
course hail.”
Every spring, McBean sits down to
crunch numbers, make predictions for the
year ahead and purchase the right crop
insurance to protect his investment and
hard work.
Up until now, malt producers have been
limited to insurance that reflects feed bar-
ley prices and does not allow for the extra
value growers are risking with malt barley.
McBean said that current options only
cover about 50 per cent of the potential
gross on his malt, whereas with a crop like
canola, growers are covered in the range
of 70 to 80 per cent.
This year, the Agriculture Financial
Services Corporation (AFSC) is taking
the first step to give growers like McBean
better coverage options. For the first time
ever in Canada, AFSC will o er specific
coverage for malt barley to reflect its
higher price point and the risks that come
with growing it.
“This process was a producer-driven
request directed to Alberta Barley to
pursue,” said Bernie Klammer, Alberta
Barley’s region four director. “Malt barley
has about a 30 per cent higher return than
feed barley. The increased e orts in terms
of agronomic practices and the added risks
involved in creating quality malt product
make it important for producers to have
this selection available.”
After Alberta Barley resolved to pursue
this program at its 2014 annual general
meeting, the initiative was communi-
cated to the AFSC research group. Since
then, with the help of a dedicated group
of growers and maltsters, AFSC has been
working out a product design to pro-
vide a good foundation for malt-specific
insurance.
“That working group approach has been
really great, and the support and informa-
tion given by the maltsters, growers and
Alberta Barley have helped us overcome
the initial barriers,” said Jesse Cole, a
research analyst with AFSC.
Cole said there have always been
challenges with insuring malt barley,
especially in terms of the risk of farmers
growing malting varieties for feed in
order to cash in on the insurance payout.
As a team, the working group united to
overcome this concern by identifying
which varieties are intentionally grown
for a malting end use.
“We need to ensure that there’s as little
moral hazard as possible, that it’s a clean
and easy program that makes sense,” he
said, adding that the relationship with the
working group will be ongoing.
So far, the eligibility criteria for the
program include two main requirements.
First, the grower must have a contract
in place with a buyer for more than 40
tonnes of barley, specifying malting as
the end use. Buyers, such as maltsters or
line companies, may be located in other
provinces or in the United States.
Second, along with the contract, the
grower is eligible to insure any malt vari-
ety grown on the farm. This includes any
variety on the Canadian Malting Barley
Technical Centre’s list of recommended
varieties, or, if approved, other varieties
specified under a grower’s contract with
a buyer.
However, producers must be growing
exclusively malt barley varieties on their
farm to qualify for the insurance in any
given year. “You can’t grow malt and feed
varieties on your farm at the same time
and be insured for malt barley,” said Cole.
“In that situation, you have to be insured
under the commercial end use, which
would not give you the extra dollar pre-
mium per bushel. It doesn’t a ect a huge
number of guys.”
The price used for malt insurance will
be the current commercial barley price
plus a premium intended to represent
an average malt price. Insurance premi-
ums paid by producers will reflect the
increased coverage, but their cost will
be shared by the provincial and federal
governments.
For now, malt barley quality falling
below No. 1 Canada Western grade will
still be eligible for grade factors. Coverage
for quality loss on select malting grades
will not be o ered, but it is something
that may be looked at after the first year of
the program. McBean said he feels this is
a necessary step to protect Alberta’s malt
growers.
“As we are seeing states like North
Dakota o ering malt-barley-specific
insurance programs, in order to stay
competitive, we need to o er it here,” he
said. “If they’re going to o er that protec-
tion to their growers, we will need to be
able to stay on as level a playing field as
we can.”
While the program will likely continue
to evolve before reaching its full potential,
the fact that it is being o ered this year is
a start, and a step in the right direction.
“We want growers to be able to insure
malt barley at a level that reflects the
market for the crop, and the industry has
helped us achieve that,” said Cole.
