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Slump in beer sales hits growers
A farmer threashes barley on a farm in Twin Falls County. Declining beer sales are forcing brewers to scale back contracts, and an above average crop in 2009 has loaded bins to the rim — making it a difficult year for growers. Times-News file photo

Malt barley pays the bills for barley producers across southern Idaho.

Problem is, the better deals seem a long way off. America’s beer consumption is on the decline and that’s keeping malt from Idaho’s barley out of brown bottles.

Some growers, who received a $13 per hundredweight contract for 2009 malt barley, are looking at a significantly lower price this year.

Analyst Eric Shepard of Beer Marketer’s Insights Inc., said beer hasn’t been recession-proof.

“The industry is down somewhere between 3 and 4 percent, depending on what dates you use, this year versus last year,” said Shepard, who tracks the beer economy nationally and internationally. “Calendar year 2009 ended up being down 2.3 percent from the year before. That’s about 5 million barrels.”

A barrel of beer holds 31 gallons.

The decline in beer sales is alarming because for decades American beer consumption has neither increased nor decreased significantly, Shepard said. The beer industry is considered a mature market, with an annual growth rate of zero to 1 percent. The number of new customers entering the market roughly equals the number of older consumers getting out.

But new customers, the predominantly male-21-to-30 crowd, have been hit hard by the recession, and they’re not drinking as much beer. Earlier this year, the federal government reported a 15.2 percent unemployment rate for workers ages 16 to 29, the highest rate since 1948.

And the numbers didn’t improve when the under-21 crowd was pulled from the equation. There were 2.3 million new college graduates unemployed in March, roughly 1.45 million more than three years earlier.

“If you talk to the higher-up executives in the industry, they say as soon as employment bounces back, particularly for males 21 to 30, they’re fairly confident overall consumption will come back,” Shepard said.

Traditionally strong sellers like Coors Light are doing well, but the strong growth is elsewhere.

Pricey craft brews are seeing growth, but so are “economy beers,” cheaper labels with wide regional or national distribution.

On the farm, prosperity’s return will be gauged by the level of barley in the bin, rather than beer from the bottle. Things are so backlogged that there’s rumored to be 2009 malt barley still for sale with the 2010 crop just a couple months from being harvested.

A farmer unable to sell his barley as malt will probably be forced to sell it as animal feed for about two-thirds the price. The economic dominoes that fell into place making this year’s malt barley market so tough couldn’t have been stacked much worse against farmers, said Dave Henderson, president of the National Barley Growers Association.

“We kind of had a perfect storm as far as the malting industry goes,” said Henderson.

Barley followed wheat up the price ladder two years ago, enticing more farmers to plant. The grain didn’t fetch as high prices as wheat for some, but malt barley didn’t require the expensive fertilizer wheat did either. In wheat, the fertilizer is needed to drive up the grain’s protein count. In malt barley, low protein is preferred because high protein causes problems in the brewing process, Henderson said.

Most years, only 60 percent of malt barley crops makes the grade, as the rest has protein levels that are too high. But lately, weather conditions were just right for most malt barley to make the cut.

“The acceptance rate has been over 90 percent the last couple years,” Henderson said. “Even when acres are down, yields have been up.“

This year, fewer farmers are getting into the barley game. Plantings are down 8 percent nationwide, possibly creating the lowest barley planted acreage on record, according to the U.S. Department of Agriculture. Henderson expects the smaller planting could begin to turn things around.

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