New Zeeland: New Zealand brewers face rising malt barley prices

Malt barley prices are on the rise, bringing difficult times for New Zealand's beer brewers and predictions of increasing prices in pubs and bottle stores, The Press reported November 2.

"The price of malt for beer makers is certainly on the rise," said the owner- operator of the Three Boys Brewery in Christchurch, Ralph Bungard.

"A lot of the problem is down to an increase in biofuel production. A lot of it is also down to a drought in Australia."

Malted barley is imported to New Zealand mainly from Australia and Europe.

Farmers overseas have begun growing biofuel crops instead of barley, creating a shortage, and prices have increased. A severe drought in Australia has made for a bad crop, which has also boosted prices.

"Luckily enough, our malt is grown in Canterbury," Bungard said. "This has given us a buffer against the price increases. Bigger breweries don't have this."

Bungard estimates that he uses 500g of malt for every litre of the 1200 litres of beer he produces each week.

"It is making things difficult for us, particularly if you consider that we are making all-malt beers and not using sugar in the production," he said.

David Cryer, the owner of Cryer Malt, an importer based in Auckland, said prices for European barley had risen 30 percent in the past week.

Brewers are waiting for the harvest to finish in Australia, in December. "We will then see what the stable price for malt barley is expected to be."

He said malted barley delivered to New Zealand ports was worth about $850 per ton. This had risen from about $590 per ton in March.

Worldwide, biofuel crops were competing for space and were encroaching on the malting barley areas, Cryer said.

"We are seeing the (barley) crops being ripped out and crops grown for cars instead. Also there is the drought in Australia."

Brewers' Guild vice-president Luke Nicholas said he did not expect the price of beer to rise immediately.

"No one wants to be the first to put up prices," said Nicholas, who owns the Epic Brewing Co. in Auckland.

"The big brewers will put prices up next year when the excise goes up," he said.

"They will tie that in with a general increase in price due to transport and other factors.

"This year, malt prices will be on the top of the list. I think when people do make an increase it will be a much bigger increase than we have seen recently. This time around, everyone is going to have to put up prices to recover some of the margin lost through malt prices."

In Germany, the barley harvest was halved this year and malt prices rose by 40 percent owing to crops being used for biofuels.

Professor Stephen Wratten, an ecologist at Lincoln University, said seeing biofuels as entirely positive could be a mistake.

"Some major governments around the world are pushing strongly for biofuels. They think it is a stable fuel for replacing carbon-based fuels," he said.

Biofuels such as maize were grown on the same land as food crops, and competition was pushing up prices.

Food prices were rising, partly because of biofuels.

"Biofuel crops require good land, which can create the treadmill of prices going up, including for beer," he said.

07 November, 2007