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Changing Structures in the Barley Production and Malting Industries of the United States and Canada

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  • Buschena, David
  • Gray, Richard
  • Severson, Ethan

Abstract

Substantial changes have taken place recently in the regulation of agricultural trade in North America. The effect of these changes on trade in agricultural commodities is of particular interest to producers and policymakers in the Northern Plains and Rockies region. In this paper, we discuss specifically the malt barley production, malting, and brewing industries in light of these new trade agreements and their ramifications. We evaluate the incentives that free trade provides for mergers between barley malting firms, and then we assess the consequences of these mergers on the realized gains from trade for consumers, barley producers, and malting firms. The globalization of markets has fundamentally changed the world in which economic agents operate. Trade has been liberalized through multilateral world-wide agreements such as the General Agreement on Trade and Tariffs (GATT) and through regional free trade agreements such as those within the European Union, the Canadian/United States Trade Agreement (CUSTA), and the North American Free Trade Agreement (NAFTA). A striking phenomena which has accompanied trade liberalization has been the international merger of firms and the creation of many jointly owned multinational operations. There are two distinct types of malt barley that differ in their yield and in their production areas in North America. Montana and the Canadian provinces grow primarily high-quality two row barley, while North Dakota and Minnesota produce primarily six row malting varieties. Two row barley yields more malt per bushel for maltsters, but it is more prone to disease for barley producers. The opening of the border between the United States and Canada has made large quantities of two row barley available to U.S. malting firms and brewers. The trade policy literature suggests that trade liberalization will have a profound impact on domestic policy choice, making the costs of any government action to increase market prices above the prevailing w
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Suggested Citation

  • Buschena, David & Gray, Richard & Severson, Ethan, 1998. "Changing Structures in the Barley Production and Malting Industries of the United States and Canada," Conference Papers 258712, Montana State University, Department of Agricultural Economics and Economics, Trade Research Center.
    • Handle: RePEc:ags:motpco:258712
    DOI: 10.22004/ag.econ.258712
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    References listed on IDEAS

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    1. Richard Gray & Alvin Ulrich & Andrew Schmitz, 1993. "A Continental Barley Market: Where Are the Gains?," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 41(3), pages 257-270, November.
    2. Schmitz, Troy G. & Koo, Won W., 1996. "An Economic Analysis Of International Feed And Malting Barley Markets: An Econometric Spatial Oligopolistic Approach," Agricultural Economics Reports 23286, North Dakota State University, Department of Agribusiness and Applied Economics.
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    Cited by:

    1. Johnson, D. Demcey, 1999. "Grain Quality In The Canadian Barley Sector: A Review Of Regulations, Industry Practices, And Policy Issues," Agricultural Economics Reports 23408, North Dakota State University, Department of Agribusiness and Applied Economics.
    2. Vollrath, Thomas L., 2003. "North American Agricultural Market Integration And Its Impact On The Food And Fiber System," Agricultural Information Bulletins 33639, United States Department of Agriculture, Economic Research Service.

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