O Brother, Where Malt Thou

Last week I wrote about the "Great Global Hop Crisis of 2007," so this week I thought I'd talk about the rising costs of arguably the most important beer ingredient...Barley Malt. The barley malt market differs from the hop market in that barley has other uses, whereas hops are only used in the brewing industry. The main competition for the malted barley we use in brewing is barley grown for animal feed. As formerly third world countries become richer and the Chinese middle class grows and becomes more prosperous, those people want to eat meat. Consequently, feed barley demand has risen and the higher agronomic yield of feed barley varieties forces malteries to pay a premium to growers to insure that malting barley varieties will be grown in sufficient quantities. This phenomenon in and of itself would have been sufficient to push up the price of barley malt, but two other factors have also caused the upward spike in malt prices. The increase in biofuel production, and poor weather conditions in the three main growing regions: Europe, Australia and Canada.

As energy costs have skyrocketed, the demand for biofuels has risen. In the US the emphasis has been on corn derived ethanol, the result has been an increased demand for corn, from 400 million bushels in 1995 to more than 2 billion bushel in 2006 and consumption is now estimated to surpass 4 billion bushels from the 2007 crop. This requires the production of 26 million acres. Just two years ago, the US was the world's largest exporter of corn, this year it will need to import stocks. Corn is typically not grown in barley growing regions and therefore does not compete directly for acreage. However, the explosive demand from the corn-based ethanol industry has caused corn prices to double and diverted corn from traditional uses including animal feed. As a consequence, the feed barley prices has risen sharply. In Europe, the focus has been on biodiesel production from oilseed rape or canola. In the case of canola, this crop can be grown on the same land as barley and therefore is a direct threat to barley acreage. Until barley malt prices rise enough to make it more profitable to grow than biofuel crops, we will see farmers devote less and less acreage to malt-specific barley varieties.

Poor weather conditions in the main barley growing regions has exacerbated already low barley malt stores. It begins in Europe in the summer of 2006, where hot and dry weather caused higher than ideal protein levels in the barley crop. The rains eventually came late in the year, but at the wrong time and in too great of quantities, causing pre-sprout damage. The result was as much as 75% of the German, Polish and Czech crops were lost, translating into a 1 million metric ton malting barley shortage. In Australia, barley raised as a winter crop on the southeast, south and southwest fringes of the country suffered a drought in 2006. The conditions were so bad that many farmers turned animals onto the fields in an attempt to get some value out of the land. In other cases, farmers simply walked away, abandoning the farms. The Australian harvest expected to yield 9.5 million metric tons only amounted to 3.7 million metric tons. As for Canada, the 2006 harvest was better in quality but fell short of it's expected quantity, only yielding 9.5 million metric tons against it's estimate of 10.85 MMT.

Given the very poor crop in two of the three major growing region in the world, maltsters needed a good harvest in 2007, since all the grain in storage was to be exhausted come the 2007 harvest. It is expected that Europe will have a 2007 crop malting barley deficit of 335,000 metric tons. Since the 2007 harvest was being relied upon for immediate use due to the lack of 2006 crop carry over stocks, this places even more importance on the yield elsewhere in the world and on the 2008 crop. Meanwhile barley prices continue to rise.

So what does this mean for us at Bluegrass Brewing Co. and you the consumer? Not a whole lot actually. The barley malt situation is not as dire as the hop shortage mainly because there is malt to be had, the problem is that it is that we will be receiving lower quality barley at double the price. Not exactly the ideal situation but manageable. As for now we are not planning on raising beer prices and hopefully we can hold the line on quality. But as for the big picture, malt quality is fairly far down on our list of concerns, in our 15 yr old brewery, we just hope that the roof doesn't cave in on us.

never trust The Sober Brewer
Jerry Gnagy

The Sober Brewer's Tribute To That One Guy From Estonia That Visited Our Blog.

As a tribute to our blog's recent visitor from Estonia, and also spurred on by a few pints of our Baltic Porter, we present this video. We apologize in advance for anything perceived offensive to Estonians. Please stop on by the BBC for a traditional taste of Estonia, our Baltic Porter. If you are lucky enough the Sober Brewers just might be singing again to contribute to that authentic mood.





Kick in the Baltic Porter
Baltic Porter is a real beer for real Nordic men and women. Baltic Porters were originally brewed strong in order to withstand the long travels from the UK to the Baltic Region. the Style was well suited to the cold winters in that part of the world. Baltic Porters (sometimes called Imperial Stouts or Double Brown Stouts) are jet black with a dense tan-colored head and have coffee, chocolate and toffee-like flavors and aromas, with some smoky and sulphuric notes. Warming alcohol strength and a full body, balance out a distinct bitterness originating from the German Hallertau Hops, and UK Black Patent malt
ABV 8.5%
IBU 42.8

Dude, Where's My Hops?

First off, I'd like to apologize for the lack of updates from the sober brewer. I have been too embarrassed by my college football picks, to show my face on this site. But I feel I owe it to the one guy from Estonia that visited our blog to suck it up and write something down. So today I think we'll talk about the "International Hop Crisis," the factors causing it and of course our unwise and irreverent response.

For those of you that don't know, hops are one of the four main ingredients in beer, along with malt, water and yeast. Hops contribute bitterness, flavor and aroma to finished beer. The bitterness comes from compounds called alpha-acids present in hops and certain hop varieties have more alpha-acids then others, and that amount can vary from year to year. As a general rule, the higher the alpha-acid value the less hops you have to use to achieve the same bitterness level. It's important to talk about alpha-acids and how that effects the hop supply because over the past 35 years the development of high-alpha hop varieties has led to an oversupply of hop products, which in turn led to a reduction in prices obtained by hop growers. The reduction in prices caused many hop farmers to plant less acres, or to get out of the market altogether. As a result the number of U.S. hop growers has fallen from 515 in 1950 to only 45 in 2007. Which sets us up for what happened this year where a string of unfortunate events has led to a shortage.

Unfortunate event number one happened on Oct. 4, 2006 when a fire in a 40,000 sq/ft warehouse containing 2 million pounds of high-alpha hops, destroyed roughly 4% of the U.S. hop crop. Although on a global scale the loss of hops was small, the fire did serve as a turning point in the global pricing of hops.

Unfortunate event number two is the poor weather in Europe last year has had a large effect on the constriction of supply. In Europe, hops are not irrigated and when rain in not forthcoming, alpha-acid content and total yields drop. The average drop in alpha-acid content in the major hop growing countries from 2005 to 2006 was a whopping 43%.

Unfortunate events number 4,5 and 6 were severe storms in first, northern Idaho and Oregon where hail and heavy rains destroyed 450 metric tons of hops. Secondly, a similar event happened in Germany destroying 1,000 metric tons. And finally, two separate storms in Slovenia destroyed 33% of their hop crops.

Unfortunate event number seven affected U.S. high alpha hops during harvest. A suspected infection of Alternaria brought on by red spider mites, drastically reduced the alpha-acid content and turned hops from green to brown.

So what this all means is that there is not enough hop supply to satisfy global demand. In turn hop prices have nearly tripled which will undoubtedly bring more growers to the market, but their impact probably won't be felt for at least a year, possibly two. And since we, small craft brewers, don't have the buying power of the macrobrewers, we will have to settle for the table scraps that are left over.

I have painted a pretty grim picture for the immediate future of craft brewing, so you would expect the intelligent, prudent and rational response of a wise brewer, would be to brew more malt-forward beers, cutting down on hop usage in order to ensure and adequate supply for the rest of the year and possibly for years to come. Since the sober brewer is neither intelligent, prudent or rational, our brewing philosophy in the year of the Hop Crisis will be "Going down in a blaze of glory." We have finished brewing our highly hopped IPA and are planning on resurrecting the Homewrecker Double IPA and Amber Waves of Pain Double Amber. So be sure to make it into Bluegrass Brewing Co. (this means you too, Estonia guy) and get the hoppy beers while they last before we have to replace the hops with ditchweed, or worst yet, we have to start brewing light American lagers, gasp!

never trust The Sober Brewer
Jerry Gnagy