Growth in craft beer industry flattens
The spike in U.S. beer consumption fueled by the rise of the craft beer industry has hit at least a temporary lull.
And it is being felt by the malt barley growers of the Shoshone Valley.
Simple economics led to a 2017 reduction in acres under contract to Briess Malt and Ingredients Co. in this area, said Rick Redd, manager of the Briess malt barley receiving station and storage facilities west of Ralston.
Redd could not reveal the number of acres under contract in 2017, saying only that “acreage has been reduced some.”
The craft beer industry is the main focus of malt produced by Briess. The majority of barley grown for Briess is grown in this area and southern Montana, and its malt makes its way into beers under many labels.
From its three plants in Wisconsin, “Briess services 85 percent of the craft breweries in the country,” Redd said, including local craft breweries in Powell and Cody.
The craft beer industry has experienced rapid growth in recent years. At one time growing 18 percent year over year, that rate slowed to 6 percent in the last year, and is predicted to be flat zero next year, Redd said.
In the short term, that translates into an over-supply of malt barley and leads to the reduction of planted malt barley acreage.
“This is the fourth really good crop in a row,” Redd said. “Your yield is outgrowing demand.”
“Eventually it will work itself out,” said Redd, who also noted that weather events can curtail production. “Hopefully, beer consumption will pick back up.”
Meanwhile, the 2017 barley crop appears to be high quality.
“The crop is looking really good,” said Redd. “The spring was kind of erratic with a few isolated showers, but the extra heat of July has really pushed the crop along.”
First barley deliveries to Briess were received July 20, a little earlier than usual. Deliveries are now steady, and “so far yields and quality are above average,” Redd said.
Briess can store 3.8 million bushels in its on-site silos. Anything over the 3.8 million bushel capacity must be shipped directly to the Briess malt house in Manitowoc, Wisconsin.
“We built these new big bins because the dry climate here is ideal for storing barley until ready to ship,” he said.
The barley harvest usually lasts about six weeks, roughly from the last week in July until Labor Day.
“We just want nice stable weather for the next six weeks — no rain, no hail. It can stay hot and dry just like it is,” Redd said.
The 2017 malt barley crop looks exceptional as it matures in the area’s golden fields, so why does a Powell ag banker call it “a cautious year for agriculture?”
In short: commodity prices.
Whether it’s barley, sugar beets or beef, prices paid to producers have trended downward, says Greg Borcher at First Bank of Wyoming.
“It’s a cautious year,” said Borcher. “I don’t like to say it, but even with a good crop, it could be basically a break-even for the farmer.”
He describes a situation where the margins have tightened for producers.
“It’s a cyclical business,” Borcher explained, “a little the like boom and bust cycle of the energy industry.”
“When farmers don’t control price, the only control they have is with their input costs,” he said.