E-Malt.com News article: Canada: Fears of beer prices hike grow as CWB reports tight barley supplies and shrinking acreage

Hoisting a cold one could start hitting beer drinkers in the wallet as bad weather continues to put pressure on barley crops, further tightening the supply of the essential ingredient, Calgary Herald posted on June, 17.

For a second year in a row, a smaller than usual number of barley acres are being planted across the Prairies. Add to that the late start to the seeding season - which increases the risk of harvest happening later in the fall and quality diminishing - and the amount of barley available for malting will drop.

"We are going into a year where supplies are already tight," said Lorelle Selinger, the Canadian Wheat Board's manager of marketing and sales for barley.

"We are going into this coming year hoping for good quality.

"And if that quality is not there, demand's going to be high for that quality, and that will put pressure on prices."

Prices for Labatt products recently rose, but Rick Crook, CEO of Liquor Depot, said the company typically sees increases from major brands at least once a year.

His stores posted signs notifying customers of the impending increase "so they can take advantage before it happens," but said he had no idea what spurred this particular rise.

In an e-mail, Labatt said "we don't discuss matters of pricing."

Molson didn't respond to a request for an interview.

Paul Gautreau, Big Rock's brew master and vice-president of operations, said the Calgary-based beer maker has annual fixed-price contracts for barley, so a shrinking supply won't affect them in the short term.

"We're protected in the amount of barley that we get," he said.

"It can affect price. We are locked in for our price for this year and next year, but when you take it a year further, there could be an effect on the barley price that way," Gautreau said.

He added that in the next couple of years the cost of a Traditional or Grasshopper won't increase because of the price of barley.

"It's a commodity we watch pretty closely and it's difficult to lock in that price long term, but right now we're in good shape," Gautreau said.

Barley is the biggest ingredient cost for most brewers. The wheat board's Selinger said it's expected 7.7 million acres of barley will be planted on the prairies this season, up from just under seven million acres last year.

But that's still well below the five-year average of nine million acres, she added.

Flooding last year affected the quality of those crops in Canada and Australia, and heavy rains and flooding this year delayed Canadian planting and will keep some areas from being seeded.

Selinger said with the barley getting in the ground later than usual, it could mean a delayed harvest, which increases the chance of being hit by frost before the crop can be taken off, which affects quality.

As well, barley growing areas in the U.S. are experiencing similar weather, she pointed out, which will see them looking to import more, which will drive up demand.


17 June, 2011