BREWERS' GUARDIAN: Unease growing over European barley price

Unease growing over European barley price
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Rob Brown on 20 August, 2008 11:00:00
 
Falling grain prices and increased fertiliser costs could force European farmers
to plant less malting barley for use in the brewing industry next year,
according to EU farmers' union Copa-Cogeca.
European grain growers - already worried by the prospect of agricultural giant
Ukraine gaining access to the EU through the formation of a free-trade agreement
- are feeling the pinch from bumper barley crops and rising costs.
Copa-Cogeca’s director for commodities and trade Marie-Christine Ribera told
Brewers’ Guardian today that she expected farmers to agree to plant less
barley for next year in a bid to stifle supply and drive up the price.
She said: “Definitely they will if they don’t get the price they expect or
if fertiliser costs continue to increase. Maybe they won’t grow as much as
they could because of the price gain.”
Malting barley prices have been sliding for the past month and last week the
situation led to the Irish Farmers Association staging a protest outside the
gates of Diageo’s Guinness brewery in Dublin.  Farmers accused the firm of
“abusing its dominant position” by driving down prices while upping the cost
of a pint. Diageo dubbed the protest “unwarranted and unnecessary”.
Ribera confirmed today that the situation in Ireland and the UK is reflected on
the continent, adding: “People are reporting good yields and that’s the
reason why we have the decreasing prices; there’s more on the market.”
The cost of fertilisers such as pot ash and phosphates has increased by as much
as 700% in the past three years, adding to the woes of European farmers. Also
weighing heavy on many farmers’ minds is the likely formation of the
Stabilisation and Association Agreement between the EU and Ukraine next month.
The agreement could see free trade commence between the EU and Ukraine, which
joined the World Trade Organisation (WTO) in February, some time next year. 
According to the WTO, Ukraine is Europe’s second largest country by area and
in 2006 its exports accounted for $38.3billion – 13.4% of which was in
agricultural products.
The agreement between Ukraine and the EU may be the cause of worry for
Europe’s farmers but it could prove to be reason to celebrate for the
continent’s brewers. With brewers already complaining of rising material and
production costs, the agreement could result in lower malt prices in Europe for
some years to come.