Will Pot Slow Demand for Barley Varieties?

8 months ago - Mark Halsall

Aaron Onio, a malting specialist with the Canadian Malting Barley Technical Centre (CMBTC), works with germinating malt at the CMBTC pilot malt plant in Winnipeg, Man. (Photo: CMBTC)

With the Trudeau government poised to fulfill its pledge to legalize marijuana, questions are being raised about what this could mean for alcohol sales in Canada.

Reports in recent months are predicting Canada’s beer market will take a hit when recreational marijuana becomes legally available. Is this a cause for concern for malt barley, a key ingredient in making beer?

Peter Watts is the managing director of the Winnipeg-based Canadian Malting Barley Technical Centre, a non-profit organization set up to provide technical assistance to the malting barley and brewing industries. He’s among those in the malting barley business who don’t view legalized pot as a significant threat.

“I believe it will have a minimal impact on malting barley production and demand for Canadian malting barley,” he says.

While Watts feels it’s too early to tell what the long-term fallout of legalized cannabis on the beer industry might be, he thinks its impact on beer sales would have to be “pretty significant” to affect Canada’s malting barley industry. That’s because it relies so heavily on exports.

Similarly, Watts doesn’t anticipate there being much effect on plant breeding efforts to produce better varieties and other R&D initiatives for the crop.

“In most grain products, Canada is by far and away a net exporter and that’s true in the case of our malting barley, where the bulk of the production is sent to other countries, either in the form of bulk malting barley or in the form of processed malt,” he says.

According to Watts, only about a sixth of malting barley grown in this country is used in Canada. Because of that, he says, a decline in domestic beer consumption would likely have a fairly limited impact on the nation’s malting barley production.

Brent Johnson, a malt barley grower near Strasbourg, Sask. who’s also the vice-chair of Saskatchewan Barley Development Commission, agrees.

“If beer sales were to decline, which would require less malt, that would have an impact,” he says. “But Canada isn’t the biggest market for our malt barley — it’s only a small portion of it.”

Johnson says another key consideration is the majority of the malting barley grown in Canada isn’t actually used to produce the malt necessary for beer production — most of it is used as feed for beef cattle and other livestock.

“Only a small portion of what we grow is accepted for malt,” says Johnson, who estimates this accounts for around 20 per cent of total malt barley production.

For these reasons, both Johnson and Watts believe legalized pot likely wouldn’t affect malting barley seed sales all that much, at least in the short term.

Johnson believes if there was a reduction in malt uptake due to lower beer consumption in Canada, it could affect malting barley R&D down the road, although the impact likely wouldn’t be huge.

“I don’t see it in the short-term, though,” he says. “I haven’t been shown any evidence yet that’s really going to make me concerned.”

Migrating to Marijuana

Exactly how legalized pot would affect Canada’s beer market and demand for malt barley varieties, both initially and over the long term, has been the subject of much speculation.

A study by Canadian business consulting firm Deloitte posits that the legalization of marijuana would cut into beer and other alcohol sales across Canada.

According to Recreational Marijuana: Insights and Opportunities, about 80 per cent of current cannabis consumers rarely or never mix the drug with alcohol. The study also indicates marijuana users are also drawn to drug for the same reason people choose alcohol — to have fun or help connect with others.

“Taken together, these two findings suggest a potential for some current beverage alcohol consumers to migrate away from that category and toward marijuana when it becomes legal,” the study states.

Deloitte vice-chair Mark Whitmore, who co-authored the report, says 5,000 Canadians were interviewed for the study, which predicts up to 39 per cent of Canadian adults would be consuming cannabis (some regularly but others infrequently) when it becomes legal.

The report’s findings were also based on data from U.S. states where recreational marijuana has been legalized.

“Marijuana is going to have an impact on the alcohol industry here,” he says. “The data [in the U.S.] shows that as cannabis comes onto the market, it does start to erode away market share, particularly in beer.”

Peter Schwartz is a consultant with Anderson Economic Group, a business consulting firm in New York. He predicts that in the first year of legalization, recreational cannabis would drain $70 million from Canada’s beer market, worth about $9.2 billion.

That’s only a small portion — less than one per cent of the total beer market — but that number would rise in subsequent years as marijuana use expands in Canada, according to Schwartz.

“Because of the infancy of the cannabis products industry, it’s going to take some time to grow,” says Schwartz, adding that it would be up against a very well established beer industry as well as strong wine and spirits sectors in Canada. Over time, however, he expects sustained growth for the marijuana market and says it could happen quickly.

Schwartz based his projections on alcohol sales in U.S. states where recreational marijuana is either fully or partially legalized. Factors in Canada such as spending patterns, income and demographic data were also taken into account.

New transgenic technologies may signal a brave new world of barley breeding

3 years ago - Julienne Isaacs

New transgenic technologies may signal a brave new world of barley breeding.

In Alberta, fusarium head blight, a fungal disease of small grain cereals, presents a major problem that crops up annually for seed growers in the southern and central parts of the province. While it has troubled wheat growers for years, FHB caused by the pathogen Fusarium graminearum was also detected in barley several years ago.

FHB results in reductions in yield, grade, and end-use quality. It can also cause the production of mycotoxins in grain, especially deoxynivalenol or DON, which can negatively impact feed quality as well as baking and malting quality — and poses a slight risk to humans and animals.

But there may be a new potential solution on the horizon. Using transgenic technologies, Phil Bregitzer, a research geneticist with the United States Department of Agriculture (USDA) Agricultural Research Service (ARS) is using novel technologies in the quest to develop a barley line with resistance to FHB.

“The products of my research potentially can assist any producer, in Alberta or elsewhere, to produce barley that is free of FHB and/or mycotoxin without using fungicides, thus contributing to producer profitability, consumer health, and environmental sustainability,” says Bregitzer.

The need for FHB-resistant varieties is growing yearly in Alberta.

According to James Helm, outgoing head of research at the Field Crop Development Centre in Lacombe, Alta., while seed-borne F. graminearum levels in barley still clock in at lower levels than in wheat in the province, they rose from five per cent in 2013 to eight per cent in 2014, according to data from 20/20 Seed Labs and Biovision Seed Labs. The companies’ tests also showed that F. graminearum levels in Alberta reached record highs in 2014, with 15 per cent of samples overall testing positive for cereal crops.

Helm is the spokesperson for a team of scientists at the Field Crop Development Centre including lead pathologist Kequan Xi, pathologist Kurshan Kumar, and plant breeder Flavio Cappettini.

The team says that merely the threat of FHB comes at a cost to barley producers. The zero tolerance regulation for mycotoxins in malting barley may restrict the growth and production of malting barley. Add to this the increased input costs from the use of fungicides and seed testing.

“The steady increase in the levels of F. graminearum along Hwy. 16 has proven that Alberta’s environment is not a barrier to the spread of F. graminearum,” says Helm. “With the wide spread of inoculum and a large acreage of susceptible cereal crops, there is a risk of an epidemic if conducive conditions such as abundant rainfall with relative high temperature coincide with the flowering stage of cereal crops.”

With the risk of FHB compounding annually, resistant varieties are still the grower’s top tool for battling the disease.

Transgenic Technologies

Bregitzer’s project involves introducing a gene into barley that creates double-stranded (ds) RNA, the gene’s “messenger” that carries information from DNA for controlling the synthesis of proteins.

“We are attempting to use a phenomenon called RNA interference (RNAi) to target important fusarium genes, thus disrupting its ability to infect barley and/or produce mycotoxins.”

RNAi involves introducing a transgene that encodes an inverted repeat of sequences that match the critical fusarium gene, Bregitzer explains. This produces an RNA that will fold back on itself, creating double-stranded RNA (dsRNA).

“dsRNA is recognized by a system for gene control — which can function in some cases like this one as sort of an immune system — that results in the RNA from the targeted fusarium gene being destroyed or inactivated,” Bregitzer says. “If we can inactivate the main gene that drives mycotoxin production, for instance, we hope to produce a plant that even if infected with fusarium will not produce contaminated grain.”

Bregitzer and his team will deliver the transgenes into the new varieties using a system based on DNA transposons (or mobile genetic sequences, which can include genes) isolated from maize.

“No one has used transposition for plant breeding in this way to my knowledge, although its capacity to do this has been known for several decades,” Bregitzer says.

“Because of the end result — an intact transgene — without extraneous sequences except for some very short termini derived from another, safe food crop, the resulting barley plants are expected to more reliably express the transgene.”

Bregitzer’s research is funded by competitive grant funds from the U.S. Wheat and Barley Scab Initiative (USWBSI), as well as a special grant from the USDA-ARS. The project is a long-term initiative, but Bregitzer is in it for the long haul. “The process of producing any truly useful barley line is a decade-long process,” he says.

Until the varieties that Bregitzer and his team are working on become available, he cautions that producers should use the best resistant varieties available and employ recommended best practices to combat FHB.

Management Strategies

Garson Law, research manager for Alberta Barley, says the new transgenic breeding project will have no immediate impact in Alberta, as transgenic barley is not approved for use in Canada.

“If any transgenic-derived variety is ever approved for use in Canada, the impact would be huge,” Law says. “FHB is an existing and growing problem for Alberta’s barley growers, and the economic impact for Alberta agriculture is estimated to be as high as $49 million.”

According to Law, the economic impact of the disease on Alberta’s barley growers was similar in 2014 as in 2013, with FHB noticeably concentrated primarily in southern Alberta, and higher than normal incidence in central Alberta.

“It’s difficult to predict for 2015, but we’ve seen in the last 10 years that FHB has spread throughout the province, and if the conditions are optimal — for example, high moisture during flowering — then we expect this trend to continue,” Law says. “It’s a problem that’s not going away.”

He says education is key to managing FHB in barley, as well as crop rotation, the use of resistant varieties, fungicides, seed treatments, and best agronomic practices. “Individually, they won’t manage the problem. However, taken together, these methods are much more effective,” says Law.

Helm adds that seed or feed should not be imported from eastern provinces or FHB-infested areas.

Julienne Isaacs