Brewers and barley growers receptive to long term contracts
By Ben Wright
20 July 2012
Some of the UK’s biggest users of the malt used to make beer are investigating the use of long-term contracts with growers to ensure the continued supply of winter barley malt. Concern has arisen amongst brewers as to how to best secure supplies at a time when world production of all barleys is falling.
The suggestion of a long term contract linking the end user with the primary producer was mooted at a ‘meet the grower’ day hosted by Openfield in conjunction with a local maltster.
Visiting three barley producers across East Anglia, the day was a chance for growers to explain why they grow winter malting barley, the varieties they prefer to plant and the competition from other crops is increasing the pressure on the crop for its place in the rotation.
“The message was understood and they recognised that malting barley is struggling to retain its competitiveness given the rising world price for oilseed rape and wheat,” said Adrian Fisher, Openfield malting barley marketing manager.
“They recognised that to secure supplies for the long term there is a need to develop a long term contract with suppliers similar to that used with baker Warburtons for milling wheat. The growers were generally supportive of the suggestion and were encouraged by the proposal of a contract that gave them a local market,” added Mr Fisher.
The three growers represented a mix of farm business from small family farm to large commercial agri-businesses each with a different reason other than price for growing the crop. For some it is a crop that fits their farming system, for another it helps spread the harvest workload while another holds a long term affection for the crop.
“Prior to the visit the end users hadn’t appreciated the complex interaction of factors that lead to growers planting the crop or the skills needed to achieve the desirable quality. The day promoted a deeper understanding of the market and raised awareness of challenges facing the crop if it is to retain its place in a farmer’s rotation,” said Mr Fisher.
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Part of the reason for the falling competitiveness of winter malting barley was the slowdown in new varieties coming to the market and the length of time it takes end users to switch preferences.
“There remains strong brewer interest for older varieties such as Maris Otter, but little understanding of why growers would prefer to grow newer varieties which have greater productivity. This was a chance for the grower to explain the difference in economic output between competing crops and older varieties.”
The day was largely a success with all parties developing a greater appreciation of the factors affecting the other’s businesses while the suggestion of a grower contract is subject to further consultation.
“We’re supportive of the idea and should we able to find sufficient buy-in among growers and end users we will look to take it further,” said Mr Fisher.