For the second time in less that a month, a capital spending announcement by a grain processor has served as the backdrop for a federal government defence of its efforts to strip the Canadian Wheat Board of its monopoly powers.
Canadian Agriculture Minister Gerry Ritz was at the Rahr Malting Co. plant in Alix on Tuesday, where the company confirmed plans for a $6-million expansion. Minnesota-based Rahr Malting wants to triple its storage capacity, with an 800,000-bushel addition.
“This additional storage will allow us to help our contract farmers better manage storage risks and provide our malting plant with a steady supply of the highest quality barley throughout the year,” said Willie Rahr, president of the family-owned company.
Rahr also hinted at the possibility that the Alix plant’s malt output might be expanded in the future.
“While this project won’t add to our production capacity at this time, it is a necessary step before expansion can be considered.”
Rahr Malting has a capacity of 180,000 tonnes of malt per year, with its barley feedstock sourced from farmers in Alberta and Saskatchewan.
On Oct. 7, Alliance Grain Traders announced plans to build a $50-million durum- and pulse-processing plant in Regina. Alliance did not point to the government’s proposed changes to the wheat board as a motivating factor, but Ritz and Prime Minister Stephen Harper — both on whom were on hand for the announcement — drew a connection.
The agriculture minister delivered the same message on Tuesday.
“As we’re seeing here today, just the promise of marketing freedom is attracting investment and creating value-added jobs.”
Rahr also spoke positively about the initiative to eliminate the CWB’s single-desk control over the marketing of barley.
“The expected changes in the Canadian barley marketing system that the government of Canada is in the process of making are expected to result in a much more competitive environment as buyers, such as ourselves, compete for the farmers’ highest quality barley.”
Also in attendance Tuesday was Brian Otto, who provides barley to Rahr Malting from his Warner-area farm and is president of the Western Barley Growers Association — which supports CWB reform. He said the Alliance and Rahr Malting announcements support the case that an open market will encourage more value-added processing in Western Canada.
Otto added that barley growers will get clearer market signals from maltsters if the wheat board monopoly is removed, and potentially be able to enter into longer supply contracts.
Ritz noted that Canadian barley exports and the number of acres seeded to barley have been declining for decades. He expressed optimism that greater marketing freedom will reverse this trend.
“We have seen tremendous growth in value-added opportunities for oats, pulses and canola across the Prairies over the last two decades. We have every reason to believe that our barley growers and processors have what it takes to succeed just the same.”
Ritz said he expects changes to the Canadian Wheat Board Act to be approved by year end, with farmers to be able to market their wheat and barley independent of the board by Aug. 1.
The Rahr Malting plant at Alix has been operating since 1993.