A TOUGH SEASON FOR MALTING BARLEY HIGHLIGHTS SUPPLY CHAIN VULNERABILITIES

Oregon State University professor Pat Hayes doesn’t mince words when it comes to the North American 2021 barley harvest. “It was a bloodbath,” said Hayes. “If [Martin] Scorsese did a movie about malt, 2021 is what it would look like.”

The size of the crop in major North American barley growing regions (which includes Idaho, Montana, Wyoming, Oregon, Washington, Alberta, Saskatchewan, and British Columbia) shrank about 40 percent between 2020 and 2021. Heat and drought were the major culprits. Dryland growers were hit especially hard, but even irrigated barley suffered in the extreme high temperatures that descended on the inland Northwest last summer. “In some places you just couldn’t get enough water onto the crop to deal with the water demand because of the heat,” said Hayes. Other regions, such as Oregon and California’s Klamath Basin, lost access to irrigation water altogether.

Adding insult to injury, widespread rain just before harvest led to pre-harvest sprouting, which is when the grain starts to sprout while it’s still on the head. The resulting crop is both smaller in quantity and higher in protein content than expected, leading to a painfully familiar set of circumstances in the COVID-19-disrupted economy: Reduced inventory and higher prices. Many of the largest malt suppliers have sent out pricing notices telling customers to expect to pay more for malt in the months to come, and to get in orders well in advance.

“The reduction in 2021 barley crop availability will mean supplies will be very limited over the course of the year,” said Scott Garden, director of research and technical services at Great Western Malting Company. “For some maltsters, imported barley may be necessary to ensure supply.”

Imports might help avoid a shortage, but they probably won’t keep prices down. Global trade continues to be rattled by slowdowns in ship and truck transit. Barley in particular was also impacted by a 2020 trade dispute between China and Australia that led to a Chinese tariff of more than 80 percent on Australian barley, which led many Chinese companies to shift their purchasing to other sources and altered the global trade balance. At the same time, 2020 sales of alcoholic drinks increased 23 percent in China, which the Financial Times reports was the largest increase of any major market. That, in turn, boosted demand for malting barley in China so acutely that some maltsters turned to feed barley to fill the gap, a situation Nikkei Asia described as “unprecedented.” Intense demand led to a willingness to pay more, driving up malt barley pricing in exporter nations around the world.

American distillers and brewers are already starting to see the effects. Campbell Morrissy, head brewer at pFriem Family Brewers, says he’s seen “across the board” increases in malt prices impacting everything from workhorse base malts to the specialty malts pFriem relies on to brew around 100 styles of beer each year. That’s taking place against a backdrop of higher prices on many other supplies, including cans. “Nothing is reliable anymore,” said Morrissy. “You have to be really tight on incoming materials. You can’t just place a phone call and hope it shows up.”

“The reduction in 2021 barley crop availability will mean supplies will be very limited over the course of the year. For some maltsters, imported barley may be necessary to ensure supply.”

—SCOTT GARDEN

Director of research and technical services, Great Western Malting Company

Protein Problems

While every lot is different, maltsters are reporting exceptionally high protein levels in the 2021 barley, often nearing 14 percent. Brewers and all-malt distillers usually look for moderate protein between 9.5 percent and 12.5 percent. Plumpness, which refers to the size of the individual kernels, is often inversely correlated with protein: High protein usually means low plumpness, as if barley were an adherent of the Paleo diet. Both factors are linked to moisture and heat stress.

This matters in economic and qualitative terms. Fermentable sugars are produced from the endosperm, the starchy interior part of the grain. Thinner kernels have a higher ratio of husk to endosperm, which means you need more grain to produce a given amount of alcohol — and that means increased ingredient cost and storage needs. A high husk-to-endosperm ratio can also lead to hazy beers, and make it harder to produce very pale-colored beers. Neither of those factors are deal breakers for distillers, although handling concerns could necessitate modifications in the distilling process.

Not everybody sees high protein as a terrible thing. Many older or heritage grain varieties have high protein content as a matter of course, and some small distilleries are willing to make a tradeoff between yield and what they perceive as better flavor.

“The big companies want malt to produce more alcohol, and they could care less about the flavor,” said Rob Masters, head distiller and partner at The Family Jones in Denver and Loveland, Colorado. The Family Jones sources all of its grains from local farms, including non-commodity varieties like Abenaki flint corn. “Us craft distillers care more about protein and flavor development. That’s why we’re able to play with heirloom grains.”

Higher protein levels can also mean increased diastatic power, or the ability for malted barley to help convert carbohydrates in other grains like corn, wheat, or rye into fermentable sugars. “Distillers may be seeing a slight uptick in quality in their malt supply in the form of higher enzyme content,” said Garden. “For some, this may be a bit of a ‘silver lining’ in what is a challenging year for malt.”

Hayes and Morrissy both advise purchasers to keep an eye out for blended malt barley lots. A mix of two or more malt lots with different protein levels can improve the figures on a specification sheet, but it doesn’t handle the same way that a single lot of homogenous malt might. “Some blending is probably carefully and professionally done, and some could really make life a nightmare for the end user,” said Hayes.

In 2021, Smaller May Have Been Better

While the largest maltsters struggle with the fallout from 2021, some small craft maltsters are entering 2022 virtually unscathed. Jesse Bussard, executive director of the North American Craft Maltsters Guild, said that craft maltsters in the Northeast, MidAtlantic, and Midwest actually had a pretty good harvest.

“Because most of our craft maltsters are sourcing barley from within a 500-mile radius of their malthouse, they may not be affected by those negative conditions” in the Northwest, said Bussard. “The quality could possibly be way better on craft malt than maybe some of the malts being sourced from Western states.” Bussard also said craft malt pricing and availability has held relatively steady.

Masters said he’s experienced that dynamic firsthand. The Family Jones purchases all of its malted barley from Root Shoot Malting in Loveland, Colorado, which is about five miles away from the distillery. Masters said it’s one of the only things he buys that hasn’t recently gone up in price or become harder to get. “We’re getting elbowed out in the glass market, we’re getting elbowed out in the barrel market by the big guys. But in the malt market, we’re OK, because we have a relationship with our farmer,” he said.

“We’re getting elbowed out in the glass market, we’re getting elbowed out in the barrel market by the big guys. But in the malt market, we’re OK, because we have a relationship with our farmer.”

—ROB MASTERS

Head distiller and partner, The Family Jones

Looking Forward: More of the Same

Climate change means the West can expect more hot, dry growing seasons like 2021. Already, major maltsters have a watchful eye on the 2022 harvest. “As with any agricultural crop, there is always the chance that Mother Nature won’t cooperate and that shortages will exist,” said Garden. “It will be necessary to have an adequate 2022 crop to ensure supply.”

Just planting more barley isn’t necessarily a solution, particularly since there are few other viable markets for barley that don't meet malting specifications. “What if you wind up with too much good barley? Then you’ve got to pay for something you’re not going to use, or you turn your back on those farmers,” said Hayes. “It’ll be sold for feed at a loss.”

Oregon State University and other universities are working to develop barley varieties better suited for local conditions. In the West, heat and drought tolerance are key. In the East, which tends to have wetter and more humid summers, it means resistance to fungal diseases. Bussard said craft maltsters often work directly with local universities with small grain breeding programs to develop varieties adapted to their specific region that stand the best chance of success in a changing climate.

“A great example from New York is Cornell University creating the Excelsior Gold barley variety,” said Bussard. “It’s adapted and designed for New York environmental conditions.” Other possible agronomic strategies for a more flexible and resilient barley ecosystem include fall-planted barleys, which are seeded in the fall, overwinter as small plants, and are harvested in the spring; and multi-use barleys such as naked barley, which can be used for food, feed, and malting.

When one component in a supply chain fails, everyone who depends on that supply chain suffers. When a supply chain is so highly concentrated or globalized that everybody depends on the same one, the pain is widespread, extending even to the end consumer in the form of higher prices. “If we can’t get the powers that be to deal with climate change directly, then it becomes a user fee, and we’ll all pay a user fee on our spirits and beers,” said Hayes.

As climate change increases the likelihood of supply chain disruptions for every agricultural product, the benefits of smaller, shorter, more local supply chains are thrown into stark relief. Just ask Masters. “I got a call in late December saying [our glass supplier] isn’t going to live up to the orders I put in in June, and there’s nothing anyone can do about it,” he said. “But my stills are running and I’m still putting whiskey in barrels, because I get my grain just right up the road.”

Margarett Waterbury is a drinks writer who lives in Portland, Oregon. Her first book, Scotch: A Complete Introduction to Scotland’s Whiskies, released in fall 2020.