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Canadian barley exports surging on booming demand from China for beer – CBC.ca

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Canadian barley farmers are the unintended beneficiaries of a diplomatic spat a world away, as exports of their product to China are picking up.

China is engaged in a trade dispute with Australia right now, accusing the antipodean nation of dumping agricultural products. Beijing slapped an 80 per cent tariff on imports of a number of Australian crops, including malting barley.

Australia is normally China’s No. 1 supplier of barley, but the trade tensions have caused China to look elsewhere for that product.

And Canada has seemingly stepped in to fill that gap, exporting 240,000 metric tonnes of barley internationally in May, according to the Canadian Grain Commission. That’s more than double April’s level, and most of it — some 175,000 tonnes — went to China.

Typically, barley is harvested in the late summer, and most of the export crop is shipped out in the last three months of the year. But so far in 2020 Canada has already exported almost as much barley as it did all of last year, with the biggest months yet to come.

That bumper crop is partly built on China’s insatiable appetite for another Canadian staple: beer.

China’s the world’s biggest market for beer, and barley is a major ingredient. Canadian barley is especially favoured by Chinese brewers because of its higher protein content, said Peter Watts, managing director with the Canadian Malting Barley Technical Centre in Winnipeg.

That’s because Chinese beer makers typically mix barley with other lower-protein grains such as rice and wheat in their brewing process, which requires more protein and other enzymes from the barley to achieve the desired balance, he said

A woman works at the production line at a beer factory in Zibo, Shandong province, China in February. (Reuters)

“Canada does have the ability to offer that higher protein content in malted barley to markets like China that are looking for it so that is part of the Canadian value proposition,” Watts said.

Watts said it’s premature to call what’s happening in barley a boom, but he’s very optimistic about where Canada’s barley industry is headed.

“We’ve been working very hard in recent years, promoting Canadian malting barley and feed barley into China and other markets and it’s paying off.” 

Errol Anderson, president of commodity broker Promarket in Calgary, agrees that “the stars are aligning for our exports this year.”

“It will pick up once we get to that October, November, December period.” 

About a quarter of the barley produced in Canada is of the malted variety, destined to be used in beer, and most of that is for export. The rest is typically used as animal feed, a good portion of which is consumed domestically and the barley boom could be a double edged sword for that part of the market. 

The price of barley has risen along with demand this year. (Scott Galley/CBC)

Prices for lower grade feed barley are also rising, and if the trend continues, farmers in Southern Alberta where most of Canada’s barley gets consumed will soon feel the pinch. “When we do get an export market brewing, that competes with domestic market and supports prices,” Anderson said.

Barley versus canola

Sunny skies for barley contrast against a gloomy Chinese outlook for another major Canadian crop, canola.

Last year, China moved to block Canadian canola shipments in a maneuver experts say was likely retaliation in a simmering trade dispute between the two countries over the ongoing detention of Huawei executive Meng Wangzhou.

China revoked the import licenses of two Canadian canola companies last summer, first Richardson’s then Viterra, alleging pests in the crop. While China has been happy to use canola as a negotiation tactic, so far they are unwilling to do the same with barley, potentially because it is a key ingredient for the country’s growing beer industry.

China consumes more beer than any other country in the world, which is why “canola is a political target, barley is not,” Anderson said.

Peter Watts, managing director of the Canadian Malting Barley Technical Centre, adjusts a label on a fermenter at the facility in Winnipeg. (Shannon VanRaes/Bloomberg)

Given what happened to canola, the executive director of the Barley Council of Canada said any increase in sales is welcome, but the current protectionist climate afoot in international trade is worrying. Erin Armstrong said China’s moves against Australian barley seem to be ” politically motivated versus … science based reasons,” so she’s concerned about taking any sales uptick for granted.

“Of course we’d like our exports to continue to grow, whether it’s China or anywhere else but we don’t want them to grow for political reasons rather than for, you know, the quality of our products,” she said.

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Telus prioritizing ‘most important customers,’ avoiding ‘unprofitable’ offers: CFO

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Telus Corp. says it is avoiding offering “unprofitable” discounts as fierce competition in the Canadian telecommunications sector shows no sign of slowing down.

The company said Friday it had fewer net new customers during its third quarter compared with the same time last year, as it copes with increasingly “aggressive marketing and promotional pricing” that is prompting more customers to switch providers.

Telus said it added 347,000 net new customers, down around 14.5 per cent compared with last year. The figure includes 130,000 mobile phone subscribers and 34,000 internet customers, down 30,000 and 3,000, respectively, year-over-year.

The company reported its mobile phone churn rate — a metric measuring subscribers who cancelled their services — was 1.09 per cent in the third quarter, up from 1.03 per cent in the third quarter of 2023. That included a postpaid mobile phone churn rate of 0.90 per cent in its latest quarter.

Telus said its focus is on customer retention through its “industry-leading service and network quality, along with successful promotions and bundled offerings.”

“The customers we have are the most important customers we can get,” said chief financial officer Doug French in an interview.

“We’ve, again, just continued to focus on what matters most to our customers, from a product and customer service perspective, while not loading unprofitable customers.”

Meanwhile, Telus reported its net income attributable to common shares more than doubled during its third quarter.

The telecommunications company said it earned $280 million, up 105.9 per cent from the same three-month period in 2023. Earnings per diluted share for the quarter ended Sept. 30 was 19 cents compared with nine cents a year earlier.

It reported adjusted net income was $413 million, up 10.7 per cent year-over-year from $373 million in the same quarter last year. Operating revenue and other income for the quarter was $5.1 billion, up 1.8 per cent from the previous year.

Mobile phone average revenue per user was $58.85 in the third quarter, a decrease of $2.09 or 3.4 per cent from a year ago. Telus said the drop was attributable to customers signing up for base rate plans with lower prices, along with a decline in overage and roaming revenues.

It said customers are increasingly adopting unlimited data and Canada-U.S. plans which provide higher and more stable ARPU on a monthly basis.

“In a tough operating environment and relative to peers, we view Q3 results that were in line to slightly better than forecast as the best of the bunch,” said RBC analyst Drew McReynolds in a note.

Scotiabank analyst Maher Yaghi added that “the telecom industry in Canada remains very challenging for all players, however, Telus has been able to face these pressures” and still deliver growth.

The Big 3 telecom providers — which also include Rogers Communications Inc. and BCE Inc. — have frequently stressed that the market has grown more competitive in recent years, especially after the closing of Quebecor Inc.’s purchase of Freedom Mobile in April 2023.

Hailed as a fourth national carrier, Quebecor has invested in enhancements to Freedom’s network while offering more affordable plans as part of a set of commitments it was mandated by Ottawa to agree to.

The cost of telephone services in September was down eight per cent compared with a year earlier, according to Statistics Canada’s most recent inflation report last month.

“I think competition has been and continues to be, I’d say, quite intense in Canada, and we’ve obviously had to just manage our business the way we see fit,” said French.

Asked how long that environment could last, he said that’s out of Telus’ hands.

“What I can control, though, is how we go to market and how we lead with our products,” he said.

“I think the conditions within the market will have to adjust accordingly over time. We’ve continued to focus on digitization, continued to bring our cost structure down to compete, irrespective of the price and the current market conditions.”

Still, Canada’s telecom regulator continues to warn providers about customers facing more charges on their cellphone and internet bills.

On Tuesday, CRTC vice-president of consumer, analytics and strategy Scott Hutton called on providers to ensure they clearly inform their customers of charges such as early cancellation fees.

That followed statements from the regulator in recent weeks cautioning against rising international roaming fees and “surprise” price increases being found on their bills.

Hutton said the CRTC plans to launch public consultations in the coming weeks that will focus “on ensuring that information is clear and consistent, making it easier to compare offers and switch services or providers.”

“The CRTC is concerned with recent trends, which suggest that Canadians may not be benefiting from the full protections of our codes,” he said.

“We will continue to monitor developments and will take further action if our codes are not being followed.”

French said any initiative to boost transparency is a step in the right direction.

“I can’t say we are perfect across the board, but what I can say is we are absolutely taking it under consideration and trying to be the best at communicating with our customers,” he said.

“I think everyone looking in the mirror would say there’s room for improvement.”

This report by The Canadian Press was first published Nov. 8, 2024.

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TC Energy cuts cost estimate for Southeast Gateway pipeline project in Mexico

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CALGARY – TC Energy Corp. has lowered the estimated cost of its Southeast Gateway pipeline project in Mexico.

It says it now expects the project to cost between US$3.9 billion and US$4.1 billion compared with its original estimate of US$4.5 billion.

The change came as the company reported a third-quarter profit attributable to common shareholders of C$1.46 billion or $1.40 per share compared with a loss of C$197 million or 19 cents per share in the same quarter last year.

Revenue for the quarter ended Sept. 30 totalled C$4.08 billion, up from C$3.94 billion in the third quarter of 2023.

TC Energy says its comparable earnings for its latest quarter amounted to C$1.03 per share compared with C$1.00 per share a year earlier.

The average analyst estimate had been for a profit of 95 cents per share, according to LSEG Data & Analytics.

This report by The Canadian Press was first published Nov. 7, 2024.

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BCE reports Q3 loss on asset impairment charge, cuts revenue guidance

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BCE Inc. reported a loss in its latest quarter as it recorded $2.11 billion in asset impairment charges, mainly related to Bell Media’s TV and radio properties.

The company says its net loss attributable to common shareholders amounted to $1.24 billion or $1.36 per share for the quarter ended Sept. 30 compared with a profit of $640 million or 70 cents per share a year earlier.

On an adjusted basis, BCE says it earned 75 cents per share in its latest quarter compared with an adjusted profit of 81 cents per share in the same quarter last year.

“Bell’s results for the third quarter demonstrate that we are disciplined in our pursuit of profitable growth in an intensely competitive environment,” BCE chief executive Mirko Bibic said in a statement.

“Our focus this quarter, and throughout 2024, has been to attract higher-margin subscribers and reduce costs to help offset short-term revenue impacts from sustained competitive pricing pressures, slow economic growth and a media advertising market that is in transition.”

Operating revenue for the quarter totalled $5.97 billion, down from $6.08 billion in its third quarter of 2023.

BCE also said it now expects its revenue for 2024 to fall about 1.5 per cent compared with earlier guidance for an increase of zero to four per cent.

The company says the change comes as it faces lower-than-anticipated wireless product revenue and sustained pressure on wireless prices.

BCE added 33,111 net postpaid mobile phone subscribers, down 76.8 per cent from the same period last year, which was the company’s second-best performance on the metric since 2010.

It says the drop was driven by higher customer churn — a measure of subscribers who cancelled their service — amid greater competitive activity and promotional offer intensity. BCE’s monthly churn rate for the category was 1.28 per cent, up from 1.1 per cent during its previous third quarter.

The company also saw 11.6 per cent fewer gross subscriber activations “due to more targeted promotional offers and mobile device discounting compared to last year.”

Bell’s wireless mobile phone average revenue per user was $58.26, down 3.4 per cent from $60.28 in the third quarter of the prior year.

This report by The Canadian Press was first published Nov. 7, 2024.

Companies in this story: (TSX:BCE)

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