A Closer Look at Honey Production in Alberta Since 1987

by Allen Dick, Retired Commercial Beekeeper

 With data and charts from "The Economics of Honey Production in Alberta 2002",
available from Alberta Agriculture Food and Rural Development: Agdex 821-62
See also Commercial Honey Industry.

Alberta is a fairly young province.  The town I live in, Swalwell, was established in 1917, electricity came here in the 1950s and the town had declined before I arrived in 1968, largely due to the drought and depression in the thirties and the War.  When I arrived, a lot in town was $5, and a good house went for $350 -- with several lots, a forced air gas furnace, and water!

By the mid-70s, however, Alberta was on the upswing.  Oil development had been well underway for a decade, and a lot of money was being spent on roads and infrastructure.  This made travel easy and facilitated the expansion of beekeeping, since extensive beekeeping requires easy access to lots of land via all-weather roads.

Also fueling the growth was the fact that, Japan started to buy honey in the early 70s, and the price doubled, then tripled, very much as it has recently.  After a year or two of disbelief, and making good money, beekeepers had some savings, and bid the price of used hives with drawn comb up to amazing levels.  Any piece of old equipment went for new price and more.

Unlike today, package bees in the seventies and early eighties were available in any quantity, cheaply, and packages with queens or bulk bees to boost weak overwintered hives could be had well into the spring.  The price of 2 lbs and queen was $6 in 1970 and went up to $8 by 1975. That would be about $40 in today's dollars, for a 2 lb package delivered, based on cost of living calculation on the web. (Here's a link to a COLA calculator on the web). Interestingly, that price -- $40 -- is right in line with the delivered price of packages today in the USA (in C$), but not in Canada; here the price is about twice that amount.

The price of honey, after the big rise, peaked at about 45¢ in 1975.  That would be about $1.60 in today's money.  So, we can see that, although the price has held up, and even gained in purchasing power -- depending on how long this current price spike lasts -- over 1975, the price of bees, when available, has doubled in real terms, even while availability and quality has deteriorated.

From 1970 to 1990, honey production fluctuated from year to year, but, when averaged over the years until 1990, was quite consistent.  We can detect a slight decline, during the last decade, but must take into consideration the fact that pollination hives, which totaled almost 20% of the hive count by the end of the nineties, produce much less honey per hive, and thus drag the provincial averages down.

Looking at the third chart, we see clearly that beekeeping in Alberta grew at a steady pace until 1987, then dropped drastically, and recovered slowly over the next two decades, but did not reach the 1987 total again until 1999.  The increase in the number of hives had quite closely followed the pattern of the honey price until the major setback in 1987. 

In fact, Alberta hive numbers did not recover until hybrid canola pollination expanded and created a new industry for beekeepers.  During the nineties, seed companies progressively placed tens of thousands of hives under favourable contracts and guaranteed a good, almost risk-free return.  In spite of some false starts and difficulty obtaining bees for expansion, in spite of high prices, and in spite of questionable bee stock quality, beekeepers expanded to fill the demand.

The Number of beekeepers is added for interest, and I divided by ten so it would be the same scale more or less as the others.  The return per hive (yield x price in 1974$) is expanded by a factor of ten to get all the lines on the same scale.  So, the left axis is Beekeepers (multiply times ten), returns per hive in constant 1974$ (divide by ten), and number of colonies: actual numbers. Click to enlarge.  Raw chart data This chart is interesting inasmuch as it is 'stacked'.  The average annual return is taken as a constant, and is shown as a straight line across the top.  Each of the other parameters is plotted according to how it varies in relation to that return. The grey line is price (not smoothed), the red line is the number of hives, and the blue line is the number of beekeepers in Alberta. I took the time to do more charts.  The first one plots the per-hive average return to honey production in Alberta for each year since 1970, in constant 1974 dollars, along with number of beekeepers, and number of hives reported.  This graph is quite interesting, in that it reveals a lot more about the effect of average total return per hive (defined here as price converted to 1974 dollars times average provincial yield for each year) than the price chart, where no consideration is made for the decline in the significant purchasing power of the money over time -- especially during the 1970s.  This new chart shows the combined effect of the good and bad crops and price along with hive numbers and colony numbers. The second chart is not quite as easy to understand, since, using the same empirical data that is shown in the other charts, we hold the return, smoothed back over three years1, as a constant, and plot the other parameters against it.  That way we see how both the number of beekeepers and the number of hives have varied, when honey return is not a factor. Since that is really what we want to see, this view is very instructive.  It is very obvious in this view that 1987 was a watershed year, and that, given a constant return, the number of hives has declined since then, until pollination came onto the scene.  The effect of pollination is the bump in the red line on the right side that runs against the trend. Click for a closer view of the charts. Note 1. The returns for each year, plus the two previous years was added, then divided by three to give a smoothed figure.  The reasoning was that most beekeepers get paid in the year following production, and that expansion decisions are based on what they have I the bank and what they can convince a banker to provide.  In most case, the effects of price or crop size lags by a year or two.

When we examine the charts, we see that total industry hive count today only exceeds its 1987 maximum -- achieved 15 years ago -- by roughly 40,000 hives, in spite of record honey prices, and we know that about 40,000 hives are on pollination. 

If we consider those 40,000 pollination hives to be a separate industry, we see that the Alberta honey industry has not managed to recover beyond 1987 numbers!  In fact the hives in honey production are still fewer than in 1987!

In fact, the Alberta hive count today only exceeds its 1987 maximum -- achieved 15 years ago -- by about 20% (roughly 40,000 hives) in spite of record prices, and, significantly, about 40,000 of those hives are on pollination.

It is clear that, until about five years ago there was no significant increase over 1987 numbers at all, and that all the net increase since 1987 can be attributed to pollination.  Compared to growth in other Alberta industries and agriculture, and the province's population growth, our honey industry growth has been very static since border closure.  Pollination has grown quickly and added new hives and beekeepers to our industry², but why has honey production not recovered and grown in Alberta when it had formerly been growing at an annual rate averaging 10% until 1987?

---

Why has honey production stagnated in Alberta, when it was growing at a steady 10% average annual rate from 1970 to 1987?

---

The reasons for the poor performance of our honey industry since 1987 are related to increased risk, workload, complexity, and more difficult financing:

1. Profitability and risk, not price, drive the hive count, and the certainty of profit has not risen as quickly as the price of honey, due to increased risk and complexity of operation, which is due largely to the lack of a good supply of replacement bees.

2. Beekeepers can no longer expand and contract their numbers quickly in response to market conditions as they did in the past.  Today, they must plan ahead, a year or more, to make splits, then risk a change in the market after they are committed.

3. Beekeepers are kept occupied by the extra work involved in wintering and making splits.  The work necessary for success takes more time per hive than previously, and skilled help is difficult to retain for smaller operations.  So operations either stay small, or must somehow gain the finances to expand enough to support extra people year-round. 

4. Bankers see honey production as much more risky than when production decisions could be made in spring and the operation completed by fall.

5. Many sideliners and seasonal beekeepers left the honey industry because of the extra work and non-availability of bees.  Moreover, the appeal of a 'six months a year' business was no longer there.

When we study the charts, we see clearly that border closure in the mid nineteen-eighties, coinciding with a drop in honey prices, dealt a death blow to many Western beekeepers, some of whose equipment is still stacked in storage, and to businesses supplying beekeepers.  There was a 26% drop in hive numbers from 1987 to 1993.

Relying on wintered bees in the West is risky, especially when last minute replacements cannot be had.  An operation relying on wintering success is comparatively complex and requires far more management, capital, and labour than an operation that has easy access to good replacement bees.

Due to a poor risk/reward ratio, related to unreliable supplies and complexity, beekeepers in honey production are regarded with suspicion by bankers. Financing can be hard to find.  On the other hand, beekeepers in pollination have easy access to financing, both through advances by the seed companies, and by banks.

Although pollination has provided some expansion in the nineties, in the decade and a half since 1987, our honey industry has never managed more than to barely make back the loss in hive numbers, and still languishes behind where we were when the border closed and far, far behind where we should be today.

Although huge productivity gains have been made in extraction, trucking, and management, the high price and uncertain supply of replacement bees makes nuc-making and wintering necessary activities.  These currently necessary, but less profitable and more risky activities demand a great deal of expertise in many fields, and divert much of a Western beekeeper's management, time and effort away from honey production.

If these resources were put into honey production they would give a far higher return, at much lower risk.  Alberta has a comparative advantage in honey production, but California, our traditional partner during our years of industry growth,  has a huge advantage over us in low cost, quality bee production.