Cider Press Hill

Grow barley, get rich

In the annals of unintended consequences, this one is bound to be a blockbuster. Beer drinkers beware:


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.

Strong demand for biofuel feedstocks such as corn, soyabeans and rapeseed is encouraging farmers to plant these crops instead of grains like barley, driving up prices.

Jean-François van Boxmeer, chief executive of Heineken the Dutch brewer, warned last week that the expansion of the biofuel sector was beginning to cause a “structural shift” in European and US agricultural markets.

One consequence, he said, could be a long-term shift upwards in the price of beer. Barley and hops account for about 7-8 per cent of brewing costs.

Barley, which is used for making beer, whiskey and animal feed, has seen prices prices soar over the last 12 months.

Futures prices for European malting barley, which is used for brewing and distilling, have risen 85 per cent to more than €230 ($320) a tonne since last May.

Barley feed futures have risen by a third to C$180 ($155) a tonne on the Winnipeg Commodity Exchange over the same period.

Meanwhile, barley production in America fell to 180.05m bushels in 2006, the lowest level since 1936. The value of the crop was the lowest since 1970 – at $498m.

Fun times ahead, eh?

(via The Oil Drum)

Posted on 02/28/07 at 06:19 PM
 




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