USA, ND: Local and national barley production has decreased the past few years

Barley always has been part of Mark Seastrand’s life. The crop was grown on his family farm when he was a boy, and the Sheyenne, N.D., farmer continues to raise it today. Though Seastrand still likes barley, he’s not growing as much as he once did, reported GrandForksHerald.com on August, 28.

“Barley has to have the price to grow it. Without the price, we’ll find something else to grow,” he said.

Many North Dakota farmers, also attracted by better prices for competing crops, feel the same way.

Barley acres in the state have been trending lower for years, and this spring North Dakota farmers planted 450,000 to 475,000 acres, a record low.

Wet fields this year kept many farmers from planting barley and other crops, but barley acres in the state almost certainly would have set a record low even with normal planting conditions, officials said.

North Dakota long has been the nation’s leader in barley production. But last year, the state barely edged out Idaho for the top spot.

This year, North Dakota is expected to fall to third.

The state is projected to produce 24.8 mln bushels of the crop, down sharply from 43.5 mln bushels a year ago. This year’s production will fall far short of the 44.1 mln bushels grown in Idaho and the 37.4 mln bushels produced in Montana, according to the National Agricultural Statistics Service, an arm of the U.S. Department of Agriculture.

The decline in North Dakota acres and production can be explained by two main factors:

- Many farmers in the state, particularly in the Red River Valley of eastern North Dakota, can grow other crops, most notably corn and soybeans, more profitably than barley.

- There are challenges in growing malt barley, which pays higher prices than feed barley.

Barley fares best in cool, dry conditions. North Dakota has been in what’s often referred to as a wet cycle since 1993, making malt barley more difficult to grow.

Seastrand continues to grow barley on land with relatively high salt levels that’s not well-suited to other crops.

“On the soil types around here, barley does quite well compared to other crops,” he said. “Barley has just consistently worked on that land year after year. We’ve been able to make malt more years that not.”

Malt vs. feed

Whether barley is sold as malt or feed has a huge impact on a grower’s profitability.

As their names imply, malt barley is used primarily in beer, while feed barley mainly is fed to animals. Several factors, including protein levels, determine whether barley is sold as malt or feed.

Feed barley usually, although not always, fetches considerably less than malt barley.

The spread, or price differential, between malt and feed can vary considerably. Currently, the spread is $1.50 to $2 per bushel at most North Dakota elevators, said Steve Edwardson, executive director of the North Dakota Barley Council.

Seastrand - who serves on the North Dakota Barley Council and represents barley on the U.S. Grains Council - is all too familiar with the spread between malt and feed prices.

Seastrand began farming in 1981, while still in high school, renting land from neighbors and using his father’s machinery. “I started then and slowly worked my way away from my parents,” he said. He has grown a number of different crops through the years. This year, he’s cut down again on barley acres. Other crops are more attractive because of their relative risk and profit potential, he said. “We used to sell malt barley and rely on feed barley to be our underlying price. There just isn’t enough price in feed barley to take the risk out of not making malt,” he said.

Numbers from the North Dakota State University Extension Service’s projected 2011 crop budget for east-central North Dakota, which includes Eddy County, where Seastrand farms, illustrate the financial downside of growing barley. The profitability of malting barley was competitive with the profitability of most other crops that farmers in the area can grow, projections show. Farmers who planted barley that sells for malt could expect a return of $80.02 per acre, compared with $69.43 per acre for spring wheat, $82.02 per acre for corn and $127.87 per acre for soybeans. But a farmer who planted barley that sells at the lower feed barley price would barely break even, according to projections.

On average, 40 percent of barley grown in the area is feed quality, the projected crop budget said. “If you make malt, that’s great. If you don’t make malt, then the profitability really suffers,” said Andy Swenson, an NDSU farm and family resource management specialist who worked on the projected crop budgets. Changed patterns barley once was grown across North Dakota, with the northeast leading the way, producing 23 percent of the state’s barley in 1998. That year, Cavalier County led the state with 4.7 mln bushels. But by 2009, Cavalier County had fallen to sixth in state barley production with 2.8 mln bushels.

Today, most U.S. barley is grown to be malt because of the higher price it fetches. In the year ending May 31, 2010, 75.6 percent of U.S. barley went for food and industrial use, 22.1 percent for feed and 2.8 percent for export, according to the U.S. Grains Council. Alcohol accounts for the great majority of barley used in the food and industrial category. Barley’s industrial uses include applications in paper and pharmaceutical businesses. Barley consumption by livestock has plunged through the years as producers increasingly substitute corn in their animals’ feed rations. Barley consumption for alcohol has remained stable, despite the growing U.S. population. Malting companies are using barley more efficiently, getting “more bang for the buck,” Edwardson said.

U.S. barley production is declining. It peaked in the mid-1980s at about 600 mln, bushels annually and has declined to an estimated 168 mln bushels this year, according to information from the U.S. Department of Agriculture and the North Dakota Barley Council. For every four bushels of barley grown in the United States 25 years ago, about one bushel is grown today. U.S. barley exports also are declining, in part because Japan - once a major customer for U.S. barley - now is getting most of its barley from Australia and Ukraine, the North Dakota Barley Council said. Ukraine, Australia, the European Union, Russia, Canada, Turkey, Argentina and Kazakhstan all exported more barley than the United States in the year ending Sept. 30, 2010, according to the U.S. Grains Council.

National view both the quality and availability of malting barley are worrisome for the brewing industry, said Paul Gatza, director of the Brewers Association, a Boulder, Colo., trade group that represents U.S. brewers. “It’s very much a concern,” he said. He’s hopeful that rising malt prices will encourage farmers to grow more barley. U.S. malting barley prices received by farmers averaged $5.01 per bushel in July, compared with $4.61 in June and $4.14 in July 2010, according to USDA.

One of the things working against the crop is that barley, which isn’t a genetically modified commercial crop, competes with crops such as corn, soybeans and canola that receive substantial investment from the private biotech seed sector, said Mike Davis, president of the American Malting Barley Association. The Milwaukee-based organization, which represents malting and brewing companies, works to ensure adequate supplies of high-quality malting barley through research and striving for equity in farm programs.

Idaho barley farmers take no satisfaction in their state surpassing North Dakota as the nation’s top producer of the crop, said Dwight Little, a Teton, Idaho, barley farmer and chairman of the Idaho Barley Council, “We watch very carefully what’s happening in North Dakota. It’s disappointing. It’s just amazing to see the decline in barley acres there,” said Little, who knows a number of North Dakota barley producers. When North Dakota grows less barley, the entire U.S. barley industry suffers, Little said. Less North Dakota barley hampers the U.S. barley industry’s effort to compete against crops such as corn for domestic feed grain sales and also makes it harder for the United States to compete for export sales with other countries that grow barley, he said. Idaho barley growers are in a much different situation than their weather-dependent peers in North Dakota, Little said. Idaho barley is grown on irrigated land, virtually always under contract for malt. Only rarely does Idaho barley fail to meet malt specifications, Little said. Barley production in Idaho has remained stable, so the state’s pending status as the nation’s top barley producer is a reflection of North Dakota’s decline, not of what’s happening in Idaho, he notes. Kelly Olson, administrator of the Idaho Barley Council, said growers there expected the state to take over the top spot this year after finishing a close second to North Dakota last year. Barley remains a good fit in Idaho, which has avoided the weather-related production problems suffered by North Dakota growers, she said.

A specialty crop currently, about two-thirds of barley in North Dakota is grown by farmers under contracts with the malt and brewing industry, Edwardson estimates. Barley, unlike crops such as wheat and corn which generally are sold on the open market, should be considered a specialty crop, or one grown under contract on a limited number of acres, he said. Seastrand thinks so, too. “From here on, it’s a specialty crop,” he said. Long term, North Dakota should be planting at least 700,000 to 1 mln acres of barley annually to support and maintain its existing barley infrastructure, Edwardson said. It’s impossible to predict when or if barley acres will return to that level, he said. “It all comes down to price,” Edwardson said. Seastrand, despite his long and deep ties to barley, said he and other farmers are pragmatic about raising the crop. “Barley’s price needs to be competitive. Acres will just continue to decrease until we get the price,” he said.

31 August, 2011