Inflation brews with malt shortage

Beer drinkers may need to pace themselves at the barstool. A projected spike in malt barley costs in 2011 will likely translate into a higher beer tab and shorter lineups at the beer store.

Drummond Brewing employee Brian O’Neill works on the canning line at the Red Deer location Tuesday afternoon. Increasing supply costs may drive up the cost of beer for all consumers.

Drummond Brewing employee Brian O’Neill works on the canning line at the Red Deer location Tuesday afternoon. Increasing supply costs may drive up the cost of beer for all consumers.

Beer drinkers may need to pace themselves at the barstool.

A projected spike in malt barley costs in 2011 will likely translate into a higher beer tab and shorter lineups at the beer store.

Local brewery Drummond Brewing Co. Ltd. has increased its prices 10 per cent overall (with some lower product prices) in January.

Co-owner Kevin Wood said the brewery knew what was looming because of the previous growing season. As well, the increase was required to compensate for its rising business costs and to slow down demand in order to launch other products.

“Obviously last year with all the rain, was just devastating for us,” said Wood, who co-owns the microbrewery with Cody Geddes-Backman.

“We got creamed here. Alberta is, you know, the largest producer for malt barley for brewing than anywhere else in North America. It affects us dramatically.”

Wood said his prices will hold steady until the fall of next year, when the price of barley is known. Then, the brewery that produces roughly 3,000 cans a month will take a closer look at the costs.

While Drummond has not heard the word from its supplier, Rahr Malting Canada Ltd. in Alix, Bob Sutton, vice-president of sales and logistics, said without a doubt there will be a price increase next year.

“Absolutely, absolutely, if we don’t follow the other grains no other farmer is going to grow barley,” said Sutton. “It’s hard to run a malt plant without barley.”

Sutton said all grain prices and oil have gone up and barley has no choice but to follow suit. The market will determine the increase and the timing of the purchases. The spike is not something out of the ordinary. Prices soared in 2007 and 2008, and the 2010 crop was just short of a disaster with both quality and volume down significantly.

“It is a reflection of tighter stock worldwide,” said Sutton. “There is less barley, wheat, canola, corn. Everything is lower in stocks because the 2010 crop wasn’t a spectacular crop anywhere in the world. That was kind of the same issue in 2007-2008 — production worldwide was less than consumption.”

The company will know by spring whether there are enough acres seeded to produce the needed crop. A close eye will be kept on the weather during the growing season. Sutton said there is increased demand worldwide for all grains.

“There’s more and more demand and not that much land to be able to produce it from,” said Sutton. “If we only have average to below average yields, then we are not keeping up. This could last for awhile. We need a couple of bumper crops that would change things dramatically like they did in 2008 and 2009, when prices were really strong but collapsed because two bumper stocks back-to-back put a lot stocks out in the world.”

crhyno@bprda.wpengine.com

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