Diageo seeks €1m worth of cuts in malt prices

Diageo has told Boortmalt that it wants to make €1m worth of savings on malt prices, according to IFA Grain Committee Chairman Liam Dunne.

“This is an intolerable request,” he said.

“Prices should be strengthening by €1m, not going in the other direction.”

Dunne said that he was aware of the ongoing negotiations between Boortmalt and Diageo.

“These discussions take place every four years. But, obviously, problems have arisen. And this is why no attempt has, as yet, been made to reach agreement on grower prices for 2017.

“Boortmalt has called for this week’s meeting. I assume that the company will want to tell us where matters stand between themselves and Diageo.

“This deeply concerning news will also be discussed at the highest level within IFA. We will not be accepting any price cuts for malting barley this year.

“Boortmalt is already indicating that Diageo’s proposals are unacceptable. However, it will be a priority for IFA to meet with the top management at Diageo on this matter over the coming days,” he said.

Dunne said that Diageo had secured reductions in the prices that it paid for malt four years ago.

But this cannot be allowed to happen in 2017. There is also the matter of paying for the research and development that is undertaken within the malting sector. Currently, this is split 50:50 between growers and Boortmalt.

“There is a strong need for new research into the development of agronomy practises that will ensure a higher level of crop compliance, from a malting perspective.

“But the brewers and distillers must make a contribution when it comes to paying for this work. We had previously spoken to Diageo about the contribution it could make in funding research and development work for growers.

“Initially, they seemed to be very keen on the idea. But we need to follow this issue up as a matter of priority,” Dunne added.