Craft brewers feel sting from rain-damaged barley crop

Bad weather from Canada to Europe is about to alter the economics of the beer industry’s fastest-growing market.

Craft brewers such as Jeff Orr, who co-founded Tool Shed Brewing in Calgary, rely on high-grade barley malt used to create the unique flavours that have led to a boom in the popularity of small-batch beers.

Malt accounts for 43 per cent of Orr’s ingredient costs. This year, grain quality has dropped after parts of the Prairies got three times the normal rainfall.

And it isn’t just in Canada, the world’s sixth-largest barley grower. France and Germany, the biggest producers after Russia, are also harvesting less this year because of heavy rain.

Global barley output is set to drop for the second time in three years, U.S. Department of Agriculture data show. That’s boosting costs for brewers and distillers, who use an estimated 30 million tons of malted grain annually.

Some are passing that cost on to customers.

“We don’t have a lot of choices,” because malted barley is essential to the process, said Charlie Bredo, cofounder of Troubled Monk Brewery in Red Deer. “At the end of the day, you’ve got to filter that down to the price per pint.”

In Canada, demand for craft brews are growing a lot faster than massproduced products. The number of licensed breweries has more than doubled in the past five years to 644, with three out of four producing fewer than 23,500 cases, according to Beer Canada, the Ottawa-based industry association.

Craft brewers use one bushel of barley (22 kilograms) to make about 300 bottles of everything from pale ales to stouts, while makers of massproduced beers usually stretch the same amount of grain to make 400 or 500 bottles, according to Rahr Malting Co., a supplier of malt with a plants in Alix, Alta., and Shakopee, Minn.

The International Grains Council last month estimated global grain stockpiles will reach a record 492 million metric tons in the 2016-17 season, and a surplus has kept prices low for everything from corn to wheat. But all that changed after the rain began falling during the summer months.

A deluge in Alberta, Canada’s biggest barley producer, has slowed the harvest. Of the 350 millimetres of rain recorded this year, two thirds arrived after mid-May.

“It’s just one big mess on my farm,” said Trevor Petersen, 53, whose 400 acres of malt barley got so wet it started to grow sprouts. “It’s raining as I speak,” he said recently. “It just won’t quit raining.”

When barley gets too wet, it starts to germinate in the field. That makes it more difficult to convert the grain into malt, said Kevin Sich, the supply chain director at Rahr Malting, one of Canada’s biggest processors.

Malt companies need barley to be dry enough to start and then halt the germination process, which changes the starches into sugars that can then be used by distillers and brewers, Sich said.

While Canadian barley output is expected to rise 5.8 per cent from last year, the quality will suffer. Malt processors and brewers will have a harder time finding good supplies this year, said Peter Watts, managing director of the Canadian Malting Barley Technical Centre.