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Beer Sales Down, BUT Barley Outlook Strong

Beer Sales Down, BUT Barley Outlook Strong

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Strong local demand coupled with the opportunity to plant winter barley is helping the once-popular grain earn a place in crop rotations again.

"This is a great year for grain producers in the Magic Valley to consider a fall planted barley - either feed or malt - for 2012," said Kelly Olson, administrator for the Idaho Barley Commission.

Although winter barley accounts for 10,000 acres in Idaho, the winter varieties can yield 140 to 180 bushels per acre, 20 to 30 percent more than traditional spring varieties. But growers need to plant winter barley by Sept. 20 to ensure plants are large enough going into winter.

Barley acreage has been on a steep decline over the last 20 years. Idaho growers seeded 510,000 acres this year, up 4 percent from 2010. But nationwide growers seeded just 2.82 million acres - the lowest acreage on record.

"It's very challenging to get barley back into crop rotations," Olson said. "Growers have increased risks with growing barley and can often get better returns from other crops."

However, developing market trends may give barley acres a boost. One of those is strong feed grain prices that will likely last through 2012, thanks to the disappointing crops in the U.S. and continued strong global demand.

In the Magic Valley, open market feed barley prices have more than doubled in the last year, rising from an average of $2.87 per bushel in July 2010 to $5.75 per bushel in July 2011.

But malt barley, which has traditionally been more profitable, has some potential problems. Supplies of malt barley in the U.S. are tight. Fewer acres were planted this spring and weather problems across the Northern Plains have hurt malt quality. Malt companies began contracting acres for the 2012 season at the end of August, reflecting both the need to secure acres early and the recognition that winter barley is an option for some growers.

But beer demand remains sluggish. Research firm 24/7 Wall St. looked at the 23 largest-selling beer products in the U.S. and found eight have lost 30 percent or more of their sales in the last five years. The list included Budweiser, the best-selling beer in America for years, along with several other Anheuser-Busch InBev and MillerCoors products. But sales of light beers such as Bud Light held steady over the same time.

Although Budweiser is waning as a brand in the U.S., it is on the rise worldwide, Olson said. Given the large malt plant located in Idaho Falls, she expects Anheuser-Busch to continue to have a presence in Idaho despite the gloomy sales news.

In fact, Olson sees strong support for malt barley prices in Idaho. Craft beer consumption was up 9 percent in 2010 and up 14 percent for the first half of 2011. Craft beer only accounts for 5 to 6 percent of the overall beer market, but craft brewers prefer to use two-row malt barley grown in Idaho and the western U.S.


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