Open Letter to Honourable Norm Letnick, Minister of Agriculture

Via email to AGR.Minister@gov.bc.ca

March 1, 2017

We request that you update Section 2 (2.3) of the ALR Regulations to ensure the feasibility of farm-based breweries growing agricultural crops, including hops.

Specifically, we recommend updating Section 2 (2.3) to read:

A brewery, distillery or meadery, and ancillary uses, are designated as farm uses for the purposes of the Act if

(a) at least 50% of any of the farm products used to make the beer, spirits or mead produced each year is grown on the farm on which that brewery, distillery or meadery is located, or

(b) the farm on which the brewery, distillery or meadery is located is more than 2 ha in area and at least 50% of any of the farm products used to make the beer, spirits or mead produced each year is grown

(i) on the farm, or

(ii) both on the farm and on another farm located in British Columbia that provides any farm product to the brewery, distillery or meadery under a contract having a term of at least 3 years. And,

(c) any permanent structures used to produce beer, spirits or mead must not exceed the lesser of 10% of total parcel size or 1000 square meters.

The Provincial government deliberately included breweries in the ALR Regulations in 2015,

“Agriculture Minister Norm Letnick noted hops farming is on an upswing in areas such as Chilliwack and Kamloops, and predicts the rule change will create an incentive for more farmers to take a risk and get into beverage production.” http://www.newwestrecord.ca/news/alr-reforms-ease-way-for-breweries-value-added-plants-1.1974503

Unfortunately, however, the ALR Regulations as written for breweries have had unintended consequences and thus require revision. Here are a few key assumptions underlying our recommended changes.

Key Assumptions and Acknowledgements

This intent followed directly on the experience of wineries, on ALR, in BC. BC Wine is a $2 billion dollar industry and the Canadian Wine industry contributes $879 million in taxes annually, not to mention bringing in tourist dollars and tourist related economic impact to the tune of $1.2 billion annually. We believe that breweries can similarly have a positive economic impact in BC, while contributing to both the cultural and agricultural aspects of our communities.

Hops and hop farming are a perfectly valid and beneficial crop for BC farmers. Hops are a critical ingredient, for both flavouring and as a preservative, that require only drying and storage to be usable in brewing. Hops grow well in the range of soil and climatic conditions that exist in much of BC. The hop market is growing and profit margins can be achieved as a result of the growth and procurement patterns of the craft brewers. Many craft brewers are committed to buying locally including barely and hops from BC farmers. We believe that the ALR Regulations are meant to govern land use, not crop choice.

Barley, however, cannot be used without undergoing extensive processing through malting to convert their starches to usable sugars. This is in direct contrast to grapes and apples, which are more like hops in that they require minimal processing to be usable. There is no custom maltster in western Canada, so the only option would be for on-farm breweries to take up more land by installing in-house malting and significant storage facilities. Gambrinus Malting, in Armstrong, BC, works closely with BC grain farmers, producing organic and BC-only batches of malt. Long-term contracts with Gambrinus Malting would be effective in encouraging both BC growing and malting of barley.

Craft breweries are independent, BC owned and operated, small businesses that add social, economic and financial value to communities all over the world. In BC, we have 125 craft breweries, whereas both Washington State and Oregon State have well over 200 each, with similar sized populations. So, we anticipate continued growth of the craft beer sector and plenty of room in BC for more breweries. Wineries have paved the way providing a world-class BC product that is both enjoyed locally and exported globally. Breweries, we believe, will follow suit.

Wineries (and cideries) and breweries (and distilleries and meaderies) are both fundamentally value-added agricultural products that required different ingredients. For that reason, they should all be included explicitly in the ALR Regulations yet be treated differently therein.

Craft breweries can, if located on agricultural land, add substantial agricultural value to that land. Rapidly escalating land costs in BC are making it increasingly difficult for new farms to get started or grow. Including value-added processing improves those economics, motivating agricultural land uses previously not possible. Additionally, the “waste” products from brewing including spent grain, hops and water are directly useful, once treated, as agricultural amendments in the form of compost, livestock feed and irrigation. Growing conditions of marginal farms can be improved substantially with the addition of on-farm brewing.

ALC Land Use Policies

The above proposed changes to the Regulations will require an updating of the ALC Policies. In particular, Policy L-21, published in October 2016. This policy should be updated to recognize that the term “any of the farm products” implies that barley alone is not the only farm product to be considered in calculating the minimum 50% required to meet compliance. For example, yet not limited to this example, a farmer may grow hops and purchase any farm product used in brewing, from BC farms to meet the 50% requirement of farm product needed in their brewing process.

The latter recommended clause, Section 2 (2.3) (c) above, is a new, yet we believe, important addition to the Regulations. Recognizing again that these Regulations are meant to govern land use and not crop choice, we recommend restricting the amount of the land used for the production to be right-sized for both the parcel and surrounding community. This, quite frankly, will help prevent large, industrial breweries from effectively co-opting agricultural land for industrial processing. We would also support policies which require that water use be restricted in a ratio of water used to beer produced and that all outgoing water be treated onsite to irrigation standards.

In Conclusion

The current ALR Regulation Section 2.3, has, we believe, resulted in unintended consequences. Foremost as an example of these unintended consequences is the situation that both Persephone Brewing Company and Crannog Ales find themselves, wherein, they are now in non-compliance, cannot reasonably achieve compliance, yet are highly regarded as sustainable and innovative farm-based business models. What is more, common sense dictates that these are indeed farms. Persephone recently won a Real Estate Foundation of BC Land Award celebrating the model that brings together sustainable agricultural land use with the craft brewing business model and positive social impact in their community. The ALC visited Crannog in 1999 and 2000 approving their operation. Crannóg has for 17 years advanced sustainable agriculture by advocating farmland remain in the ALR and reducing water use in breweries, as well as teaching organic hops production as part of sustainable mixed farming. Crannóg Ales also won the VanCity Ethics in Action award for their farm business model. Both of these breweries, we believe, exhibit what we all want to encourage on ALR, throughout BC.

We request that the Provincial government act quickly and decisively in this matter. These changes will allow for growth of small businesses in all regions of BC in a manner that connects the Agricultural Land Reserve to the formal economy, provides and keeps jobs and investment dollars in those regions and advances both economic and agricultural development for future generations to come.

Signatories endorsing this statement include,

Persephone Brewing Company Inc.

Crannog Ales Ltd.

Sumas Brewing Co.

BC Craft Brewers Guild

BC Hop Growers Association

The Campaign for Real Ale Society of BC

Organic Hop Growers Association