United Kingdom: “The resultant downward pressure on malt prices comes at a time when there are growing demands for food safety and traceability, which have cost implications throughout the supply chain. The food safety challenge has been taken up by UK maltsters who have differentiated themselves from other suppliers through the development and successful launch of AUKM, the world’s first Assurance Standard for malt. This initiative, as expected, has been well received by customers both at home and overseas and the challenge is now to capitalise on this unique offering. Informed buyers need to recognise and reward the significant benefits offered by UK malt,” MAGB Chairman Euan Macpherson mentioned in his annual statement at the Armourers Hall in London on November 8th 2004.

He added: “There is an attraction to a market that has grown over 2% per annum for the last twenty years - but the introduction of new malting capacity is, once again, outpacing the growth in brewing demand. It is believed that some of this new capacity is being built with the benefit of subsidy, an issue that is currently being investigated by the European Commission.

In order to make financial sense, it is necessary to operate malting plants at close to maximum capacity and the growing imbalance between demand and supply will make plant closures inevitable. It is a sad fact, with UK malt sales in 2004 down some 80,000 tonnes on 2003 levels, that some of these closures will occur in the UK.

The minimal margins, or even lack of profit, that can arise from having to sell malt in an oversupplied market place is not healthy for any part of the supply chain in the longer term. Malting companies are finding it increasingly difficult to justify expenditure on the modernisation and refurbishment of their facilities and, in turn, the UK farmers who have traditionally been producers of high quality malting barley face a decreasing demand for the grain and potentially unacceptable returns for their efforts.”

13 November, 2004