With only one more month before the start of the barley harvest on the northern hemisphere, concerns about selling the barley surplus are arising amongst farmers. "There's really no trade in malt crops because there's no demand," says Brent Atthill, Managing Director at RMI Analytics. "In fact, it's the reverse with maltsters trying to get rid of barley that they can predict with good accuracy they don't need. They know there's another crop being grown at the moment."
As a consequence, French malting barley prices recently hit the lowest since at least 2015.
With the COVID-19 lockdowns now affecting beer sales, many maltings have scaled down production. Especially specialty maltsters that traditionally sell a majority of their production to the craft beer industry are suffering most. But also Malteurop, one of the largest malting groups in the world has temporarily shuttered four North American plants. Maltsters in the UK report a reduced production of about 40 percent as cask brewers who supply the on-trade in pubs, restaurants and hotel bars had to stop selling their beer during the COVID-19 lockdown.
Adrian Dyter, Group Managing Director at Crisp Malt in Great Ryburgh, and also Chairman of the Maltsters’ Association of Great Britain confirmed that Crisp’s Norfolk malting plant is currently running only at 60 percent of its normal capacity. “As an industry we are desperately trying to accommodate as much stock as we can. At Crisp we are shifting stocks around to create space, and we are encouraging our brewer customers to take as much malt as they can, but we are limited by their demand,” Dyter is quoted by The Daily Business Bulletin.
To make things worse, several expansions of malting capacity came recently on stream. In January, Boortmalt’s new maltings plant in Athy, 80 km southwest of Ireland’s capital Dublin, with a capacity of 40,000 tons of malt per year started operations (inside.beer, 9.11.2017). After the renovation of a steep which suffered a partial collapse in July last year, the whole plant will have a capacity of 140,000 tons of malt. In January 2020, Boortmalt also planned to start construction of a new 60,000 tons malting on a greenfield site around Debre Birhan city in Ethiopia. One year before Boortmalt already commissioned its fourth malting tower in Antwerp/Belgium raising the annual capacity of the plant from 360,000 tons to 470,000 tons.
Other meaningful new malting capacities, which were announced in the last years or already opened, are in the Netherlands by Holland Malt (+140,000 tons), in Vietnam by Intermalt (+110,000 tons) (inside.beer, 5.7.2017), in Scotland by Bairds Malt (+79,000 tons) (inside.beer, 18.10.2018), in Germany by Kupfermühle/Bindewald (+60,000 tons), in Australia by Coopers (+54,000 tons) (inside.beer, 12.5.2020), and in Ethiopia next to Boortmalt also by Assela Malt Factory (+64.000 tons) (inside.beer, 5.2.2019) and Malteries Soufflet (+60.000 tons) (inside.beer, 13.6.2018).
About a sixth of the world's barley is used in malt. However, in times of a shortage in demand, malting barley will not be need any more and downgraded to feed barley. Farmers will be forced to sell this barley as cattle feed at a much lower price.
“It is a very short supply chain,” says James Beamish, farm manager at the Holkham Estate in north Norfolk. “If people are not drinking beer, maltsters cannot move their malt, so we cannot move our barley. Being the primary producer at the start of the food chain, it stays with us.”
The barley market will remain sluggish for much longer. "There will be a large carryover of this product into next year," Brett Askew, a farmer from Northern England was cited by Beaumont Enterprise. "The impact is going to be felt for far more just the next six months. It will be more like 18 months to two years."