Easy on the tipple, Trevor
THE ONGOING GLOBAL DRIVE TO FIND energy alternatives to oil (nuclear power and coal aside) is leading, inevitably, to some curious outcomes.
One such consequence is increasing upward pressure on the price of beer.
No, this isn’t simply another variation of the familiar theme of pushing up taxes on drinkers to finance other social objectives.
It’s the workings of good old supply and demand economics.
Kevin Morrison of Britain’s Financial Times notes: “The rapid expansion of biofuel production may be welcome news for environmentalists, but for the world’s beer drinkers it could be a different story.”
He explains: “Strong demand for biofuel feedstocks such as corn, soya beans and rapeseed is encouraging farmers to plant these crops instead of grains like barley, driving up prices.’’
Jean-Francois van Boxmeer, CEO of Dutch brewing giant Heineken, warned in February this year that a major growth in the biofuel sector was starting to cause a “structural shift” in the European and American agricultural markets.
Van Boxmeer said this could lead to a longterm upward move in beer prices. Barley and hops make up some 7%-8% of brewing costs.
Says Levin Flake, grains trade analyst at the US department of agriculture: “Land that was cultivated for growing barley has been given over to corn because of ethanol demand.”
In the Eighties the US was a leading exporter of barley. Now it’s a big importer. Barley acreage has shrunk from 13m to only about 4m.
And barley is not the only problem for beerdrinkers.
Brewers also face surging price rises for transport, energy, aluminium and glass bottles.
So here’s an early tip for Trevor for the 2008 Budget: go easy on the ale, for once.