The world’s thirst for beer is forcing up the demand for malting barley at a time when global production is flat, says a British maltster.
“There is declining barley across the world, which is serious,” said Tim Stonehouse, group malt sales director for Muntons Malt in Stowmarket, England.
He told the Western Barley Growers Association annual convention in Calgary Feb. 14 that world stocks have fallen in the last four years and there is demand for an additional 500,000 tonnes.
Production would need to increase to 32 million tonnes from 22 million to meet current world demand for all barley uses.
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“That increase in barley that is required is 75 percent of the production in Canada,” he said.
In Great Britain, farmers grow about six million tonnes of barley but last year production dropped by about a million tonnes in response to poor prices.
U.S. production has dropped significantly in the last four years because of price and competing crops. Canadian production is also falling, and drought has substantially affected yields in Australia. Prices offered to farmers for malting barley on a contract basis have escalated sharply since 2006 in response to the demand for malt.
“I have never seen a market move that quickly,” Stonehouse said.
Prices for the 2006 crop moved from $116 per tonne, peaking at $305 in the European Union. That buying pattern continued in 2007 -prices started $75 less than the 2006 peak and rose to $450 during the buying season. European brewers are already pricing the 2009 crop at around $440 per tonne.
EU malt prices have steadily climbed since October 2006. With barley priced at around $440 per tonne, malt is fixed at around $800 per tonne.
World beer production is also growing exponentially.
“The growth that is coming is almost entirely driven by the developing countries.”
China’s brewing industry increased by 14 percent last year, but most of the country’s beer is consumed at home.
“China could dominate the world’s grain demand,” he said. “If they start to drink more beer I don’t know where the grain is going to come from to brew it.”
The big beer drinkers are in the western world. Last year people in the Czech Republic consumed 157 litres per capita while the Germans drank 130 litres. Canadians drank about half that amount.
Stonehouse said brewers attempt to solve the problem by reducing the amount of malt used in beer. This is already happening in developing countries. As well, brewers are increasing the use of enzymes in beer and developing new beer type products and nonmalt beer.
He also said Europe will have to accept genetically modified crops to increase barley yields on a limited land base and embrace genomic work to accelerate variety development.
Malting barley has always been a marginal crop in terms of yield. Buyers need to pay more for it to compensate farmers for lower yields.
