Is malting barley expansion really a good news story?
The announcement of the expansion of Boortmalt’s malting barley plant in Athy, Co. Kildare, should be a good news story.
Farm organisations welcomed the 30,000t expansion of the malting plant. However, they are finding it difficult to see it as a viable industry; especially at the €154.80/t price offered this year.
The reaction wasn’t one that the farm organisations would have hoped to give.
Irish Farmers’ Association (IFA) – Reaction
Liam Dunne, IFA Grain Committee chairman, stated that Boortmalt might find it hard to fill the extra tonnage if prices don’t change dramatically.
“The expansion of the malting capacity in the country is a welcome development. But, we hope that the benefits of expanding the plant are going to come back to the farmers as well.
There should be an increased demand for malting barley. However, the plant has to be paid for. They can’t continue to expect to buy barley at the price that they got it at this year.
Following the poor prices this year, farmers are seriously considering not growing malting barley in the future; simply because the margins aren’t there.
Dunne continued: “I think it’s probably worrying them. They are going to need an increase in contracts and they may find it difficult to get the supplies that they require. They’re going to have to review the situation quite seriously.
“I think they need to come out and reassure people that they have a package that’s going to make it worth while to grow.
“We’ve seen malting barley prices from Glanbia, which are significantly better than what Boortmalt has been paying.”
The IFA are in talks with Boortmalt, but Dunne didn’t see any prospect of this year’s price moving. Despite the low price paid, the pricing structure in place was adhered to.
“In relation to where we are going from here; the deal was complied with by all sides. The price is based on a formula attached to the Matif wheat price. The Matif wheat price collapsed this year and it has caused major problems. We are talking to Boortmalt about the year gone out and the forthcoming year as well.”
“There is a review ongoing. I think Boortmalt, the distillers and the brewers are going to have to except that there are difficulties,” explained Dunne.
The area under cereals in Ireland is continuing to fall. We’ve seen a 50% drop in the area of winter cereals being sown this back end, which is alarming.
“There has been a significant amount sown in the past two weeks, but it’s only in the drier areas. Once you draw a line from Dublin to Limerick, there is almost nothing being sown north of that,” he said.
“There’s no enthusiasm out there to do it either. There is a lot of competition for land for other purposes.
Everyone in the industry is going to have to look very closely or there won’t be an industry very soon.
Irish Grain Growers Group (IGGG) – Reaction
Bobby Miller, IGGG chairman, also welcomed the expansion. However, he said it is coming at a price and the farmer is the one taking the hit.
“The Irish Grain Growers Group have always supported the rebirth of the Irish distilling industry and the fledgling craft beer industry. However, should it be at the expense of the Irish tillage farmer, farm contractors and farm machinery businesses?”
Miller pointed out that Irish whiskey and beer may no longer be made from Irish barley if the current situation continues.
“Maybe Boortmalt could address current issues like expensive seed and the lack of a bonus for distilling-grade barley before making any other moves. Is it time to revisit the Irish whiskey act to help ensure the sustainability of the Irish tillage farmer?
You have to start asking how ‘Irish’ are our products going to be into the future or are they Irish as it is?
“Malting barley growers have options now of growing feed-grade crops and making more money. Malting barley isn’t a premium crop anymore.
“In the past if a farmer wanted to stop growing malting barley, there were other farmers there to take their place and Boortmalt still claim that. Next spring will be crunch time to make up their mind.
“Up to now, farmers were growing the crop in March and April with no contract. This was before the crop was sown and they were put in a catch-22 situation.”
Many of the farmers growing malting barley are not the first generation to grow the crop in their family and there is a tradition of growing the crop in certain areas.
On this, he said: “The tradition of growing the crop has come into play now too. The argument is going out the window now. I think that the picture is changing.
We’d love to see the growth of the malting and distilling industries. It should be a good news story, but it’s not.
“That’s the point we’re making. We don’t want to say ‘don’t grow malting barley’ – far from it – but money talks at the end of the day.
Miller advised farmers to sit down over the winter and examine their books.
“This is a quiet time of year now for tillage farmers. We’re trying to highlight to people that farmers should sit down with their accountants or advisors and do the maths,” he concluded.