USA: North Dakota Barley Council chairman comments on the US malting barley industry

North Dakota Barley Council chairman Doyle Lentz attended the World Barley, Malt and Beer Conference in Madrid, Spain and addressed those attending on what the United States is doing to stabilize and perhaps even expand barley acres in the U.S, Farm & Ranch Guide reported on May, 16.

This was the seventh gathering for this group, which was held in mid-March. Hosted biennially since 2001, the three-day event is attended by more than 300 people from about 40 countries.

“When we started seeing a decline in barley acres in the U.S., we started going to these so we could get a feel for what was going on in the world,” Lentz said. “When these conferences first started there was no problem with barley supply in other parts of the world. But now those other areas of the world are seeing a decline in barley acres as growers switch to other crops.”

“So all of a sudden they are quite interested in what we have done in the U.S.,” he said.

In his presentation titled “Challenges to the barley supply chain in a ‘specialty crop environment’ – ideas to prevent the U.S. scenario”, Lentz outlined how barley has basically become a specialty crop with most of the malting barley needed by the brewing industry directly contracted from farmers.

“One of the things I mentioned was how we determine the economics of whether we as farmers will sign a contract or not,” he said. “We showed them that malting barley can be one of the most profitable crops, but if it fails to meet malting standards it’s off the chart on the bottom end. And I was trying to explain how farmers determine that risk. There is more than just the cash price for that barley, there needs to be more money in there for the risk they are taking.”

In the United States, and especially North Dakota and northwestern Minnesota over the past few years, barley acres have been replaced by biotech crops such as corn and soybeans. However, in Europe they are growing wheat in place of barley due to the better price structure wheat has had in recent times.

“And feed barley isn’t the best market for them as well, so it is the same type of risk that they are talking about as we are experiencing here,” Lentz said.

Conferences such as this also allow for opportunities to learn about where new supplies of barley might be coming from, such as Argentina, and where demand is developing, in countries such as India and China.

He noted that Argentina would like to develop their barley export market, but there are few malting facilities in the country. Instead, they are trying to ship barley to countries such as the U.S. where there are many malting facilities.

“We have few barley farmers out there right now, but I think we have happier barley farmers because they know what they are going to get for that crop,” he said.

According to Lentz, efforts, are also underway by the N.D. Barley Council in the area of crop insurance to help the growers manage the risk a little better on whether the crop makes malting grade or not.

He added the U.S. is seeing increases in malt sales, but it not from the major brewers, where sales have been relatively flat, but rather from the smaller breweries.

“The small brewers are actually using about 27 percent of all malt in America and they are expanding about 10 percent a year,” he said. “That’s why we are trying to get to know these guys better.”

In that effort, the N.D. Barley Council organized a barley tour last year for small brewers that included stops at growers, malting barley storage facilities and the Cargill malt facility at Spiritwood, N.D. That tour focused mainly on six-row barley production. This summer another tour will be held, again focusing on the smaller brewers, but this tour till take place in the western part of the state and will concentrate on two-row barley production, since many of the small brewers are interested in using malt from two-row varieties.

Looking to the future, Lentz feels the U.S. malting barley industry is in good shape. He doesn’t look for much competition from either European or Canadian production. The growers in Canada who raise barley are pretty much content with raising feed barley, since the livestock industry in Canada consumes a lot of feed barley. This allows growers there to plant high yielding and high protein varieties and fertilize those stands for high yields without worrying about the need for low protein barley like those growing for the malt industry are concerned about.

Lentz feels there shouldn’t be too much concern over the decline of barley acres and barley becoming more like a specialty crop.

“Right now the industry is happy and the producers are pretty happy,” he said. “I don’t get people running up to me at the start of the crop year and say they wish they could grow more barley. I do get some who come up to me at the end of the year and say they wish they had contracted a few more acres because it worked out pretty good, and I would rather have them be like that than mad at me.”

17 May, 2013