Shortage of barley challenge for beer producer

Global barley supplies are at their lowest level in 38 years. Partly due to poor yields in the United States and Canada. The United States is experiencing its lowest barley yield in a century this season. The harvest amounts to 105 million bushels. This is also a decrease of 40% compared to last season. The largest two-row malting barley producing states all show declines: Montane (-40%), Idaho (-30%) and North Dakota (-20%). The yield of six-row malting barley in the latter state also drops by another 20%. The main reason for the decline is drought, although the decrease in acreage does not help either. It concerns a minimum of 270.000 acres. This amounts to a decrease of just over 109.000 hectares.

In recent years, agricultural entrepreneurs in the United States have increasingly opted for the cultivation of feed corn instead of feed barley. The proportion of barley grown specifically for the beer industry has even been described as 'exceptional' by some analysts. This leads to challenges in the industry. Demand remains stable (or even increases slightly in various segments) and beer brewers must therefore actively encourage growers to sow more barley next year. But the cultivation of malting barley is not immediately popular. After all, the weather plays a major role. Especially now that western states are struggling with low moisture content. Other regions, on the other hand, are highly dependent on spring rains.

Demand is good to very good
At the same time, (malting) barley is a crop that is currently in great demand. This means that the demand for beer and other alcoholic drinks remains stable. American consumers aged 21 and older drank 26 gallons of beer and cider per person last year. This amounts to 98 litres. This is evident from figures from the National Beer and Beverage Wholesalers Association. Last year the United States had almost 6.500 breweries, although more than 90% of them produce less than 15.000 barrels of beer per year. The large breweries dominate the sector.

The consumption and production of beer is also popular in neighboring Mexico. The industry has grown tenfold in four years and beer is now one of the most important agricultural export products. To expand production, 500.000 tons of malting barley and 343.000 'raw' barley are needed annually. Mexico is dependent on the United States for this. In the 2020/2021 season, the country imported 412.000 tons from its neighboring country. The declining acreage and lower production figures are therefore also a thorn in the side for Mexican beer brewers.

Fodder barley or malting barley
Barley growers also find themselves in a dilemma: brewing barley or feed barley. The second seems to be gaining popularity – just like feed maize. The prices at EU-Rotterdam show why all too clearly. In week 49, the quotation for feed barley stood at €283 per tonne. That's a plus of about 4% compared to a month earlier; when the quotation was €273 per tonne. A year earlier, €199 per tonne was quoted at EU-Rotterdam for feed barley in the same month. A difference of no less than 30% compared to today. In Wexford, around €300 per tonne was paid for feed barley in the past period. Both the high demand from the animal feed industry and rising wheat prices are helping to boost the listing.

China also proved this week that demand is good. The country has - rumor has it - purchased several hundred thousand tons of wheat, barley and corn from France and Ukraine. Exact figures have not been disclosed. Analysts have learned that this involves four ships of French barley and up to ten cargoes of Ukrainian barley, with delivery in July/August next year. The fact that Chinese buyers are striking now is due to the stabilization of the world market price for barley. At the same time, according to experts, it illustrates that the need for grain products from the country is still not decreasing. The European Union put a total of 29 tons of barley on the world market between November 5 and December 72.782. That was 47.956 tons a year earlier.

Some relief in the market may be provided by Australia. This is the only country where a decrease in demand is visible. The bountiful harvest is one reason for this. Government agency Abares expects a production of 2021 million tons for the 2022/13,3 season. That is 2% more than last season and just below the record of 2016. Australia remains the second largest producer of barley after Russia. More than half of production goes to the animal feed industry. The rest is for the beer industry. Here too, the latter sector has a smaller share.

Innovation to solve problem
South African Breweries (SAB), part of beer brewer AB InBev, is therefore taking a different tack. The company focuses on drought-resistant barley varieties. For example, the new variety 'Kadie' ripens faster in dry lands than other varieties. “This will enable us to achieve record production in key domestic beer markets while meeting demand elsewhere on the continent,” it said in a press release. “No barley means no beer, so it is crucial to have a sustainable supply chain.” AB InBev's target was to produce 475.000 tonnes of barley this season. This turned out to be a record harvest of 560.000 tons, although favorable rainfall also had a major hand in this.