GRAND FORKS, N.D. — No beer. No barley.
“That’s the kind of situation we’re in,”
North American Malteurop barley procurement and trials manager, told farmers during a presentation about barley markets at the Prairie Grains conference in Grand Forks on Dec. 13.
Black’s assessment of the lack of demand for barley is a 180-degree turnaround from the National Barley Growers Association’s promotional video that proclaims “No barley. No beer,” meaning that if farmers don’t grow barley, there won’t be any beer.
Changes in consumer habits, including a younger generation drinking seltzer, mixed drinks and other liquors instead of beer, has resulted in a drop in beer sales, said Black who works for Malteurop Malting Co. in Great Falls, Montana.
Draught beer sales have seen a reduction by as much as 20% partly because of a reduction in stadium and event sales, Black said.
Meanwhile, craft beer sales declined 2% in the first half of 2023 and sales of commercial brewers dropped 3% during that time period, he said. The decline in commercial brewers sales is compounded by the commercial brewers losing 2% to 4% of their sales each year since 2020. Surveys indicate that instead of beer, they are drinking more wines, spirits and flavored malt liquors, Black said.
As demand has dropped, the input costs for beer making has increased by 40% since 2020, Black said.
On the supply side, because there was a drought in malting barley regions in 2021, which left the industry short of the commodity, beer companies increased their barley purchases from farmers in 2022.
The 2022 purchases were more than the beer companies could use so they still have some of that on hand, Black said.
“We’re still chewing through some of that crop,” he said.
In 2023, farmers produced another bumper crop of barley, which added to the supply glut.
“All of this is going on while the demand has fallen steadily over the last three years,” Black said.
The oversupply of barley likely will result in a reduction in the Malteurop North American Co. contract price, Black said.
The company plans to announce to farmers its contract offer when it determines its commitments from brewers, likely in early January 2024.
Other companies, such as Rahr Malting, have not announced their contract terms, yet.
Anheuser-Busch apparently has reconsidered the 2024 contract it originally offered farmers.
Some North Dakota farmers at the Prairie Grains conference said that Anheuser-Busch in October 2023 offered them contracts for the 2024 crop year, but have since told them that if they grow the crop in 2024 they must agree they will store it on their farms for 12 to 15 months after harvest.
The length of time they store it might be shorter if the beer companies need the barley sooner, but farmers must be prepared to store it for more than a year. Anheuser-Busch will pay farmers 6 cents per bushel, per month for storage.
Whether farmers will accept Anheuser-Busch’s contract terms will depend on factors such as how much storage they have and if there are other crop options available if they don’t plant barley.
Nikki Zahradka, Anheuser-Busch U.S. agronomy director who was part of the malting barley market presentation with Black, didn’t give any information about the company’s contracts. She also declined to answer questions from an Agweek reporter about the contracts.
Ann is a journalism veteran with nearly 40 years of reporting and editing experiences on a variety of topics including agriculture and business. Story ideas or questions can be sent to Ann by email at: abailey@agweek.com or phone at: 218-779-8093.
