Grain traders issue a warning to distillers

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SCOTCH whisky distillers could face a shortage of malt next year despite the "massive oversupply" of malting barley on the market, grain traders are warning.

The acreage of malting barley sown by Scottish farmers this spring could be down by as much as 25 per cent as a result of huge losses on last year's crop, Ian Keith, chairman of the Scottish arable executive of the Agricultural Industries Confederation (AIC), said yesterday in Edinburgh.

Malting barley has been as low as 85-90 a tonne on the spot market – compared with a peak of 200 in 2007 – which farmers claim is unsustainable with growing costs of 130 a tonne.

"Growers this spring once again face the prospect of sowing barley without a contract for the resulting crop this harvest and no idea what price to expect," said Keith.

"The whisky industry has been badly hit by the recession and maltsters are unable to move because distillers will not commit to buy malt. I see little prospect of much improvement in price for this year's harvest but if existing supplies of malt are used up and growers cut back on the spring barely acreage, supplies could be tighter come the 2011 harvest."

Keith admitted that many farmers might finish up sowing barley, despite threats not to do so, because they need the straw, which is a valuable commodity, or concerns that they might lose out in the future if the reference year for the calculation of Single Farm Payment is updated, as proposed by NFU Scotland.

"But we already know that the acreage of winter wheat is up 17 per cent, oilseed rape 15 per cent, grass 40 per cent, and some farmers will be happy to return to set-aside and leave their land fallow rather than grow a loss-making crop," he said.

"I would expect the spring barley acreage to be down by anything from 15 per cent to 25 per cent in Scotland and perhaps by as much as 30 per cent in England. We are also likely to see a switch to feed varieties. Much will depend on the weather."

Keith said Scottish wheat growers were likely to derive little direct benefit from two new ethanol plants which had opened in the north of England. However, Scotland was a net importer of wheat and English wheat was likely to be diverted to the new plants, which would help firm the market in Scotland. It was possible that wheat would be shipped by sea from Southampton to ports such as Invergordon.

AIC's chairman in Scotland, Ralph MacLeod, said the industry group, representing 27 companies in Scotland and employing 6,000 full and part-time staff, had a key role to play in helping Scottish farmers rise to the challenge of increasing food output while protecting the environment.

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