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Crop Year 2021

As we descend into the depths of winter during the cold and blustery months of December & January, it is a great time to reflect on the farming year and take stock of decisions we made and the outcomes we achieved.  2021 will be looked back on fondly as being a year of fine weather, great quality and good prices, the holy trinity of outcomes which only come around once every decade or so.

Sowing took place under very generous conditions and was completed relatively early in the year. The growing season was kind with ample sunshine and adequate rainfall bringing us a bountiful crop for harvest under superb conditions during late August. Overall the weather of 2021 fell in the middle of the Goldilocks zone, at least as far as spring-sown malting barley was concerned. The primary outcome of this weather was a crop of outstanding quality with record low protein levels and very small amounts of screenings. It is reasonable to expect this year’s crop to deliver some of the best malt used by Irish brewers and distillers in quite some years, with excellent extract and brewing characteristics as well as well rounded flavours.

 

Normally, during times of strong yields and excellent quality, excess supply of barley leads to a fall in prices and we as farmers seldom get to reap the rewards of what would have been hoped for. 2021 has turned out to be quite different, as global commodities are currently enjoying a boom time. This extends all the way through to the energy sector (oil & gas), into metals (iron & aluminium), and agricultural commodities such as maize, wheat, and barley. These 3 cereals make up approximately close to two-thirds of the world’s food energy intake and changes in their price have huge global consequences. As all 3 cereals can often be used interchangeably in the animal feed market, a significant price change in one will normally lead to a price change in the other two and this is what has been seen over the past 18 months.

Since June 2020 all three cereals have shown remarkable and sustained prices rises, with maize up 69%, wheat up 64% and barley up 68%. These price changes can be attributed, broadly speaking, to an increased and sustained demand from China for maize in order to meet the needs of their fast grow pig herd which is being repopulated after being decimated by African Swine Flu during 2018-2019. Furthermore, dryness, much of it extreme, in North and South America have led to a lack of supply just at a time of an unusual and unexpected spike in demand. This is especially true to malting barley where North American output was decimated by drought across the northern prairies of America and Canada. This global misalignment of cereal supply and demand is being further compounded by shipping and logistical challenges, as bulk carriers, usually restricted to carry bulk commodities such as grains, cereals and ores are being repurposed to carry containers from China to America, due to extreme rise in online shopping and global trade in the aftermath of Covid 19.

As we look forward into the future, it is reasonable to assume that these new price levels will be maintained through harvest 2022, and that it will be harvest 2023, at the earliest, before we begin to return to “normal” price levels. However, much of that depends on both harvest ’22 and harvest ’23 being “normal,” with no significant weather events across any of the worlds major grain growing regions. As the rate of climate change continues to accelerate and rainfall patterns deviate from what is typical, achieving 2 consecutive “normal” growing seasons is not a foregone conclusion.

The upshot of this is that while harvest ’21 did deliver strong returns to Irish farmers, the on-going and sustained rise in other commodities, especially fertiliser (up 350%), means that up coming harvests (’22 & 23) will not be as rewarding, and that benign growing conditions will be needed to achieve the required margins for both farmers and maltsters.

This situation is extreme, dramatic and will not be short lived. It’s consequences will be profound and global as the daily cost of food for millions will rise beyond what they can afford. Closer to home, this situation will drive food inflation at rates not seen in many years. This in turn will be further compounded by the on going logistical and supply chain challenges being experienced by every sector across the world .

From a brewers perspective, this situation is going to have a significant effect on the cost of their finished product. Malt prices for calendar year 2022 are still being finalised and volatility in the price of gas used to kiln the malt is making this more difficult than expected. However, it is safe to assume that all prices for coloured, roasted, and based malts as well as unmalted cereals will all increase by approximately 10% to 20% per tonne, and that these prices will be maintained until at least Q1 2024. Furthermore, while Irish malting barley is in good supply, European grown barley is less plentiful due to increased exports to China. This has the potential to impact upon the availability of roasted and coloured malts on the Irish market later in 2022. Unfortunately, while there is little that brewers can do toavoid these price changes, there are steps that can be taken to mitigate against the impact. It is important to talk to your malt supplier during 

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Crop Year 2021

As we descend into the depths of winter during the cold and blustery months of December & January, it is a great time to reflect on the farming year and take stock of decisions we made and the outcomes we achieved. 2021 will be looked back on fondly as being a year of fine weather, great quality and good prices, the holy trinity of outcomes which only come around once every decade or so.

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