Lack of storage adds to barley industry’s troubles

The recent decision by agribusiness AFGRI Grain Management (AFGRI) not to continue with the storage of barley is another risk factor that has increased the woes of the South African barley industry, according to Dr Dirk Strydom, Grain SA’s manager of grain economy and marketing.

This followed a directive put out by AFGRI in March that the company had been unable to reach an agreement with Anheuser-Busch InBev (AB InBev) in terms of the storage of both dryland and irrigated malting barley for the 2021/2022 season.

In the directive, Jerry Maritz, managing director of AFGRI, nonetheless stressed the business’s intention to continue communicating with AB InBev about its storage requirements and to find a solution to the problem.

Josh Hammann, director of agricultural development for AB InBev Africa, said the decision by AFGRI would make it difficult for AB InBev to achieve its projected volumes for beer production of about 400 000t of barley per annum. “Nowhere in the [beer value] chain do we as the malting industry have sufficient storage capacity. In South Africa, barley is also not stored on farms. The industry depends on service providers for the storage of the crop.”

He said barley would have to be imported should AB InBev fail to enter into an agreement in terms of storage. However, the company’s first priority was to try to find another storage partner locally.

“We couldn’t reach an agreement with AFGRI in terms of storage because there are certain requirements on our side that they wanted to change, and to which we couldn’t agree. We nevertheless remain open to further negotiations,” Hammann added.

He said barley growers would bear the biggest burden should the issue of storage not be resolved. Although it would be the very last resort, barley could be imported at a price below or above import parity, as prices on Safex were connected to the movement of wheat prices. Strydom said in a statement it was a pity that barley quality requirements had become so high that local production was being affected, especially after the past three years’ efforts to establish production in an area such as the Swartland.

The barley industry as a whole therefore needed to urgently explore solutions to limit further negative effects on the risk and production of producers.

Although the storage issue was a matter between a buyer and a storage operator, it held significant consequences for barley producers, Strydom added. – Annelie Coleman