Alberta distillery policy change could discourage use of local grains
Everyone enjoys a good spirit or two, and many Canadians, when looking for a bottle of their favourite spirit, will check to see if it’s been produced from Canadian grains. A recent policy change in Alberta could lead to fewer markets for Alberta cereals and more imports of the raw materials from elsewhere.
Jan Westcott is the president and CEO of Spirits Canada, a national trade association that represents commercial distillers in the four main provinces that produce spirits: Alberta, Manitoba, Ontario, and Quebec. He recently joined Shaun Haney on RealAg Radio to discuss how the policy change will affect Alberta grain farmers.
About 75 per cent of what’s made in Canada is exported says Westcott, and in Alberta, Spirits Canada members are buying between 45,000 and 60,000 metric tonnes of grain per year for their operations — rye being the predominant purchase.
“We are a significant export industry, we buy relatively modest grains, we convert them to alcohol, we add a huge amount of value to the branding process, and then we sell these products all over the world,” says Westcott, adding that the spirits industry is an outlet for agricultural products in Canada, expressed through whisky, vodka, gin, and other kinds of spirits.
In order to give smaller spirits producers an opportunity to achieve success in their early years, many provinces, including Alberta, reduced the amount of tax that they have to pay on their products. Alberta Gaming, Liquor, and Cannabis (AGLC) also puts a mark-up on Spirits Canada members’ products, and then distributes them to retailers.
“The previous government in Alberta provided a very substantial reduction in the mark-up that small distillers pay, up to production of something like 80 per cent,” says Westcott. Spirits Canada supports the notion that within the industry it’s important to give the smaller spirits producers a leg up, but needs to be conscious that by virtue of policy, the government is picking winners and losers, says Westcott.
Previously if a small distiller wanted to qualify for the mark-up reduction, they had to produce their product in Alberta, from raw material grown in the province. The current government has eliminated that, and is enabling distillers to import grain-neutral spirit from other places, bottling it, packaging it as made in Alberta, and receiving a tax benefit.
The policy is playing havoc in the marketplace, and Spirits Canada questions if it’s the best way to invest Alberta tax dollars in subsidizing products that have very little Alberta input.