Pick up a beer in China and there’s a good chance it contains a bit of Canada.
The world’s largest beer-brewing country, producing more than 43 billion litres a year, is also the world’s largest importer of Canadian malt barley, an average of 386,000 tonnes each year for the past decade.
And for the past 40 years, only one organization – the Canadian Wheat Board – has been authorized to sell all that grain to China.
That will change this summer. Along with the legislated end to the CWB’s sole rights to buy wheat and barley in Western Canada, its role as sole Canadian exporter of those grains to the world is set to end as of Aug. 1.
The shift raises questions about how the board’s long-time Chinese customers will take the news, given that, in China, relationships are key to business deals.
“We’re keeping our customers heavily informed,” said wheat board president and chief executive officer Ian White, in Beijing this week as part of Prime Minister Stephen Harper’s trade delegation to China.
“It’s a very different environment for the Canadian Wheat Board,” he added. “We’re looking ahead, we’re not looking behind. And we’re trying to make the best possible business out of the tools we’ve been given.”
Canada’s first foray into grain exports to China began more than 50 years ago, when tens of millions of Chinese were dying in a severe famine, brought on by a collision of natural disasters and Chairman Mao’s violent Great Leap Forward, a brutal campaign to accelerate the country’s industrialization.
In 1961, Canada became one of the first Western countries to send the isolated Communist country much-needed wheat; Canadian grain continues to enjoy a good reputation in China thanks in part to that move.
The wheat board has had an office in Beijing for nearly 20 years, guiding imports away from Canadian wheat as China has become more self-sufficient in that grain, and toward Canadian barley as the beer industry has taken off.
This week, Mr. White was in the Chinese capital to reassure his customers, even as wheat board rivals, such as Viterra and industry organization Grain Growers of Canada, joined Mr. Harper’s tour to explore the Chinese market.
“It’s nice for them to meet a farmer and to hear we’re still open for business,” said Stephen Vandervalk, an Alberta grain farmer and Grain Growers president. “It’s been an eye-opener, it’s been very educational.”
The two men – one representing the old board, one the new approach – come from different backgrounds. Mr. White is an Australian grain-and-sugar executive brought in to the CWB four years ago as the federal government began drawing up plans to end the board’s monopoly. Mr. Vandervalk is a fourth-generation farmer in his mid-30s who admits to being “travelled out” after a busy few months.
Mr. White travels to China twice a year and refers to his Chinese customers and cities without hesitating over difficult names. Mr. Vandervalk, on his first trip to the country, gamely tried but stumbled over the pronunciation of Tsingtao, while ordering one of China’s most popular beers – which is also a major buyer of Canadian malt barley.
But the two men agree on one thing: New opportunities in China for all players will come from broadening the CWB’s traditional focus on wheat and barley.
China has a healthy appetite for canola, crushed into cooking oil, while pulse crops, such as peas, beans and lentils, are also gaining ground.
Mr. White said the board is planning to draw on its current Chinese contacts to try to expand its sales beyond wheat and barley to other Canadian crops.
“We know the business very well, and we still feel we can be a very important player here,” he said.
Special to The Globe and Mail
Global beer sales rose 2.7 per cent 2011, driven by demand in emerging markets.
Industry research group Plato Logic says sales will rise 2.5 per cent this year.
2011’s top beer sellers