E-Malt.com News article: 3260

USA: While workers are building the $60 million International Malting Co. plant near Great Falls, farmers are waiting to see if the new plant will reshape the malt barley business in Montana. "We are really looking forward to them opening up and working with them," said Dave Henderson, a Cut Bank-area barley grower.

Tribune Business posted that along with expanding the market for Montana barley, producers are hoping the contracts with IMC will yield better prices for high-quality malt barley. Higher prices will not only help farmers but also could put additional money into circulation in many northcentral Montana communities, officials say.

An IMC official says the Milwaukee-based company likes what it sees in Montana so far. "Montana is getting a pretty good barley crop," said Alain Caekaert, who heads IMC barley buying in the United States and Canada. "It's a good start to our program."

Caekaert said IMC, working with staffers from its buying agent in Montana, Columbia Grain, signed contracts with about 80 Montana growers early this year. He declined to discuss how much barley the company hopes to land from the 2004 crop. The contracting is just a start to what IMC plans to do in coming years, Caekaert said. "It was a small program to get the farmers familiar with us," he said, noting IMC was pleased with the reception it received from barley producers.

The contracted barley, coupled with barley IMC will buy on the open market, will be used to fuel the Great Falls plant, which is slated to begin production in June 2005. In the long-term, the company hopes to be able to buy all the barley it needs for the new plant from Montana growers. IMC says it will use about 12 million bushels per year at the plant. Some of that amount could come from customers who supply their own barley as part of "toll malting" deals with IMC.

The malt produced in Great Falls will be sold to brewers, distillers and food producers. It is expected to help IMC meet increasing demand for malt in the western United States, as well as overseas. While the brewing industry has been growing only slowly in North America, markets in the China, Southeast Asia, Mexico and other places in Latin America are fueling demand.

At full operation, the Great Falls plant is expected to employ about 35 workers, IMC says. The barley buying will hit full stride early next year, when IMC will work to line up more growers. "We will open the contracting process to more growers -- how many more I don't know," said Caekaert. IMC hopes to line up deals with experienced growers and also encourage other farmers to diversify into malt barley production.

"We need producers to look at is and try it," said Mark Black, a Columbia Grain employee working with IMC. "We want to put contracts in the hands of people who have the highest chance of success." Producing a barley crop that meets malting standards is no sure thing. Most of the new production will likely come in dryland farming areas, where moisture levels have been far from predictable in recent years. Malt barley must be handled separately from other grain crops. "This is a value-based product," Black said. "Everything is controlled, from the planting to the malt plant."

Along with the established irrigated malt barley areas near Fairfield, areas stretching north to Cut Bank and around Valier also offer the rainfall and cooler nights conducive to quality barley production. "We look to grow the Hi-Line and central Montana barley acreage substantially," Black said.

The Plentywood area in northeast Montana and spots in southwest Montana also have good barley potential, he noted. The risk for farmers lies mostly in experimenting with what for many is an unproven crop. "It will be just another option for them to consider," said Black. "It may not be right for everybody. Every farmer cannot grow barley just as every farmer cannot grow winter wheat."

While IMC officials have vowed to pay a competitive price, controlling costs will be critical in remaining competitive in world markets. "This isn't going to be a windfall" for growers, Black said. In most cases, the arrival of IMC is good news for Montana producers, said Herb Karst, a Sunburst-area barley grower and grain-industry leader.

At 12 million bushels per year, the IMC plant will consume a sizable chunk of the malt barley currently grown in the state, Karst noted. Even if the company ended up bringing in barley from other states or even Canada, adding even two to three million bushels of demand in Montana will have a substantial impact, he said.

The new player will add competition for Anheuser Busch, the largest buyer of Montana malt barley, and Coors, a smaller player in the market. "For the most part, people are excited about signing fixed-price contracts," Karst said. Such contracts, which are also offered by the brewers and other grain buyers, often make borrowing money easier for farmers and also help qualify growers for added crop insurance, Karst and others noted.

Henderson, the Cut Bank-area farmer, said about 60 percent of his barley crop in recent years has been sold under contract to Anheuser Busch. The remaining 40 percent he typically sold at market price. "The open-market bids are usually considerably lower," he said. Henderson has a new contract with IMC for a portion of his 2004 crop, which he was scrambling to get in the bin last week. There are plenty of barley growers in his neck of the woods who are pining for a chance to sell to IMC. "There is a pretty fair amount of malt barley grown up here in Glacier County -- about 3 million bushels or so," Henderson said. "We are excited to prove that we are a viable area up here."


15 September, 2004