Maltsters anticipate upturn in fortunes as demand soars

21 June 2002

Maltsters anticipate upturn in fortunes as demand soars

THE market for malting barley in Scotland, traditionally the main cash generator for arable farmers, has been sticky in recent years, with the premium over feed barley price barely enough to justify the extra costs of producing the crop.

But that could be about to change, says Pete Robson, group technical sales manager with leading UK maltster Muntons.

Iain McLean, commercial manager with Pauls Malt, agrees, anticipating that prices for malting barley will firm this year, with prospects improving over the next five years as worldwide demand for malt increases.

Although beer consumption in the UK is falling, the growth expected in countries like China is enormous.

"China has just passed the US as the number one in terms of total beer consumption," says Mr Robson.

And figures show that whisky consumption worldwide has increased by an average 2% a year in the past decade. Only last week the Scotch whisky industry announced that 2001 had been a record year, with more than 1bn bottles of Scotch sold overseas.

Europe dominates the world malt market, says Mr Robson, with the UK producing almost 10% of total world malt supplies. "That is due to our climate, good barley growing conditions and our technical expertise," he says.

About 95% of malt produced internationally goes for beer production, although Scotland bucks that trend with almost 40% destined for distilling.

"The forecast increase in beer demand means we are likely to need another 464,000t of malting barley a year internationally," says Mr Robson.

"If the UK gets its 10% of that, we are looking at another 46,000t/year," he says.

The chances are that the UK, and Scotland in particular, is well placed to get more than its fair share of that increase, Mr Robson suggests. The reason for that is that countries that might traditionally pick up any slack, such as Canada and Australia, are nearing saturation point in terms of the land suitable for growing barley.

With the distilling market and increased demand for beer, Scotlands growers have the luxury of two strengthening markets. Low nitrogen samples will continue to go to distillers, while crops at up to 1.75% nitrogen will be in demand for brewing.

But, to take advantage of the opportunities, maltsters will have to invest in new factories, Mr Robson says.

"Most of the maltings in Scotland are about 40 years old and are working at virtually full capacity.

"If we want to make the most of the huge potential out there, we need to find some support to invest in new maltings. Unfortunately, there is no way at the moment that the banks will look at investing because the industry has been making no money in recent years."

His own firm is investigating all possibilities, including linking up with farmers to see if Scottish Executive grants might be available for a joint venture. &#42

Good times could be just around the corner if maltsters can attract funds to invest in new factories.

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