Demand for Scottish malting barley is likely to increase by as much as 25 per cent over the next five years on the back of booming whisky exports, a leading maltster said yesterday.
Eddie Douglas, commercial director of Bairds Malt, told farmers at a Home Grown Cereals Authority (HGCA) seminar at Inverurie, Aberdeenshire, that the expanding world market for Scotch whisky presented a “tremendous opportunity” for Scottish barley growers.
“We are seeing real growth and whisky exports are forecast to increase by 15 per cent by 2015,” said Douglas. “Malt production will have to increase even faster to satisfy demand.”
He admitted that malting capacity might be a limiting factor, although three new plants had provided additional capacity over the past two seasons which had provided a market for an extra 200,000 tonnes of barley. But some barley was having to be exported to England for malting and was returning to Scottish distilleries as malt.
The Scottish malting barley acreage has declined from a peak of 320,000 ha in 1988 to 220,000ha in 2006 and was likely to recover to an estimated 263,000 ha this year as farmers responded to higher prices. In addition, many farmers in central Scotland had been unable to sow wheat in the autumn because of wet conditions which would result in increased area being available for sowing barley this spring.
“A further increase of 5 per cent is forecast for 2012 but we need the area of barley to continue expanding over the next four or five years to 300,000ha to meet expected demand from maltsters,” said Douglas.
“We need to encourage the professional grower who can meet the quality specification consistently and market his barley sensibly.”
NFU Scotland combineable crops chairman Andrew Moir assured Douglas that farmers would respond positively provided the right incentives were in place.
“The problem is that the barley contracts being offered by maltsters this year are not all that exciting,” said Moir. “If maltsters come along with attractive contracts, they will get the barley.”
A suggestion from Douglas that too generous premiums would encourage farmers to grow barley in unsuitable areas brought an angry response from Hamish McIntosh, who said growers who had sold barley on the spot market last year had fared better than so-called professional growers who had contracted earlier in the season.
The main demand, added Douglas, would be for low nitrogen varieties for the malting market.
Demand for higher nitrogen varieties for brewing was likely to be sluggish following a 22 per cent decline in beer consumption in the UK since the introduction of the smoking ban in pubs and the forecast of a further 2.5 per cent decline per year over the next two years.
HGCA market analyst David Eudall indicated the world cereals market was likely to remain buoyant although much would depend on the weather in various parts of the world. Maize stocks were tight but wheat stocks had recovered over the past two years and had put a cap on any increase in world prices. However, the figure to look out for was the area planted to maize this spring in the USA which was likely to be announced on 30 March.
Barley was facing strong competition for land from other crops, such as oilseed rape, but the area devoted to barley was increasing in the EU, Russia, Ukraine and Argentina. The world market was fairly balanced and supplies were tight in the EU which had created an export market for UK barley.
“We will have to wait and see how crops in the EU have survived over the winter to make an assessment of likely market trends,” he said.
Stocks of barley were likely to remain low, even in the event of a good harvest, and the market would remain volatile, and influenced by global trends, such as the euro crisis, the possibility of reduced oil exports from Iran and the slow-down in the Chinese market.
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